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Amsterdam’s ‘doughnut economy’ puts climate ahead of GDP

Amsterdam is the first city in the world to adopt a radical economic theory that suggests economic growth shouldn’t be the ultimate measure of success. Instead, “doughnut economics” focuses on protecting the environment while meeting citizens’ basic needs. Special Correspondent Megan Thompson reports as part of our ongoing series “Peril & Promise: The Challenge of Climate Change.”

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  • Hari Sreenivasan:

    When the COVID-19 pandemic hit, cities worldwide were already facing environmental crises. Many of them are vulnerable to climate change induced flooding, heatwaves and drought.

    The pandemic added a health and economic crisis on top of that.

    But Amsterdam is now experimenting with a radical new theory to rebuild its economy and create a more sustainable post-COVID future for its residents.

    Special Correspondent Megan Thompson has more. This story is part of our ongoing series: Peril & Promise: The Challenge of Climate Change.

  • James Veenhoff:

    So welcome to the Denim clubhouse!

  •  Megan Thompson:

    James Veenhoff is taking us for a tour of Denim City. It's a combination workshop, foundation, archive and trade school in Amsterdam, a city with a high concentration of big-name demin brands and denim wearers.

  • James Veenhoff:

    We wear it to work. We wear it to school, weddings and funerals. We wear denim all the time.

  • Megan Thompson:

    But denim is also one of the most resource-intensive fabrics in the world. Each pair of jeans requires thousands of gallons of water and the use of polluting chemicals to produce.

  •  James Veenhoff:

    Clearly if you use 7,000 liters of water per jean and you are producing about a billion a year that's something that is going to end at some point because there's just not enough water for everybody.

  •  Megan Thompson:

    So Veenhoff is experimenting with different ideas like increasing the use of recycled materials.

  • James Veenhoff:

    This fabric is made using 20% recycled cotton fiber. This is part of the high tech part. This is cool.

  •  Megan Thompson:

    And rather than using gallons upon gallons of water to give jeans that finished look they are trying lasers instead.

    Denim isn't the only industry in Amsterdam focusing more on sustainability. The entire city is in the midst of a massive shift, launched last year. Embracing a radical new economic theory with a catchy name: "Doughnut Economics."

  • Kate Raworth:

    This is the shift we need to make if we, humanity are going to thrive here together this century.

  • Megan Thompson:

    Kate Raworth of Oxford University calls herself a renegade economist. She came up with the model, outlined in her 2017 book, which made waves around the world and was even commended by the Pope.

  • Megan Thompson:

    What is Doughnut Economics?

  • Kate Raworth:

    So Doughnut Economics, it's not about doughnuts, but it's about the future of humanity. We offer a doughnut shaped compass for creating the 21st century that we want.

  • Megan Thompson:

    What makes the theory radical is Raworth's assertion that governments need to stop looking at GDP growth as the ultimate measure of success.

  • Kate Raworth:

    We're getting very, very clear signals from the earth system, from climate breakdown, from ecological breakdown, that the way we are pursuing growth is destroying the living systems in which we depend.

  • Megan Thompson:

    Instead, she says societies should strive to operate within two concentric circles that look like a doughnut. She uses a diagram like this to explain.

    The outer ring represents Earth's "ecological ceiling"–limits on damage being done to the planet, including climate change, air pollution and shrinking freshwater supplies. The inner ring represents a "social foundation"–minimum living standards like having enough food, housing, work and a political voice. The ring in between, described as "humanity's sweet spot," is the doughnut.

  • Kate Raworth:

    So let's leave no one in the hole in the middle. Everybody into this lovely green ring.

  • Megan Thompson:

    Don't we need economic growth in order for economies to survive and provide resources to their citizens?

  • Kate Raworth:

    What we need are economies that enable people to have good jobs in communities where they reap some of the value that's created. So we need to reorient our economies away from the notion that growth is success to the notion that thriving that meets the needs of all people within the means of the planet. That's success.

  • Megan Thompson:

    Amsterdam was the first city in the world to formally adopt this model and they did it last April right after the Coronavirus crisis began.

  • Deputy Mayor Marieke Van Doorninck:

    … the historical part of Amsterdam with the canals…

  • Megan Thompson:

    Deputy Mayor Marieke Van Doorninck saw it as an opportunity.

  • Deputy Mayor Marieke Van Doorninck:

    Actually this is a time where people start thinking about what is really important in life. Maybe money making isn't the most important. It's about having enough. But not having everything.

  • Megan Thompson:

    Van Doorninck says Amsterdam is now full speed ahead with the doughnut. Part of that means becoming a so-called "circular city" by 2050.

  • Deputy Mayor Marieke Van Doorninck:

    A circular city is a city where we don't have waste. If something is broken we want to have it repaired. If something can't be repaired we want to have the materials that are– the products are made of can be reused, but we also want to cut down on consumption as a whole.

  • Megan Thompson:

    In short, reduce, reuse and recycle. And they want to do it in three key areas: food, consumer goods and construction. They have come up with a system called "The Monitor" to measure their progress. Among the goals:

    By 2030 the city must reduce overall consumption by 20% and reduce food waste by 50%. And starting in 2022, all new urban development in Amsterdam must use sustainable materials as much as possible.

    For example, on Amsterdam's east side, Beach Island is being built with the doughnut principles in mind. The city requires construction companies to list a "materials passport", so if the building is ever demolished the building materials can be reused. There will be 8,000 new homes here helping address the city's housing shortage. 40% allocated for social housing. And the homes will be environmentally friendly.

  • Yvonne van Sark:

    Yeah, I think the doughnut model– yeah, I embrace that. Totally.

  • Megan Thompson:

    Yvonne van Sark lives in another new development on the North side of Amsterdam. A floating community that embraces sustainability.

  • Yvonne van Sark:

    So we have five entrances to the jetty, but they are all connected. You can just walk through the area which is really nice.

  • Megan Thompson:

    In all 46 families live here.

  • Yvonne van Sark:

    This our house, this is where we live

  • Megan Thompson:

    Her house like the others was built elsewhere and towed to this site. Van Sark's home is super-insulated with natural straw between the walls and solar panels on the roof.

  • Yvonne van Sark:

    So we produce our own electricity and we have a smart grid that shares it among the households.

  • Yvonne van Sark:

    It's vacuum, so…

  • Megan Thompson:

    They have special toilets that use much less water. And they contract with a company to share electric cars and bikes.

  • Yvonne van Sark:

    Some of the techniques we have been piloting, we hope they will be spread around the city and around Holland and around the world. Yeah.

  •  James Veenhoff:

    The doughnut model started us thinking and also was a great segway to talking to government.

  • Megan Thompson:

    Back in Denim City, James Veenhoff credits the doughnut with giving government, activists, and business leaders a much needed space to collaborate around shared goals.

    Last October, Veenhoff and the city of Amsterdam helped organize some 30 denim related businesses and organizations to form the "Denim Deal", an agreement to produce 3 billion garments that include 20% recycled materials by 2023.

  • James Veenhoff:

    Usually jeans people don't really talk to government a lot. They talk about style and street and cool. But since we have the same intentions it was very easy to align with the city of Amsterdam and the Minister of Infrastructure to make this happen.

  • Megan Thompson:

    Amsterdamers like Veenhoff are enthusiastic about the Denim Deal and other doughnut-related projects.

  • Kate Raworth:

    … impact of climate breakdown…

  • Megan Thompson:

    But will they be enough to address the global environmental crisis that Kate Raworth describes?

  • Branko Milanovic:

    It's not an even situation situation…

  • Megan Thompson:

    No, says economist and income inequality expert Branko Milanovic, one of Kate Raworth's most outspoken critics.

  • Branko Milanovic:

    When it comes to real policy advice, it's very, very weak and it's purely voluntary and there is really no bite in that advice.

  • Megan Thompson:

    Milanovic also thinks Raworth's ideas about limiting global economic growth are unrealistic and would lead to trade-offs the world isn't prepared for.

  • Branko Milanovic:

    The issue is really, if we were to espouse Kate's ideas, that we should not have an increase in the world GDP. That means that we have to either make rich people become much poorer than they are now, or we will have to keep all the poor people at the very same very low level of income for a very long time.

  • Megan Thompson:

    Are these ideas politically viable?

  • Branko Milanovic:

    Well I think that they are not viable. And I think that she uses the word for example, "thriving". That we can keep flourishing and thriving without having higher income. Yes, maybe we could. But maybe also the fact is that many people want to have higher incomes in order to live better.

  • Megan Thompson:

    How realistic is all of this? How do you convince the world's largest economies to get on board?

  • Kate Raworth:

    Well, I would flip it around, say how realistic is it to keep running economies that think they can grow endlessly while we are visibly, evidently destroying the life supporting systems on which our planet depends.

  • Megan Thompson:

    To help promote her ideas, Raworth launched the Doughnut Economics Action Lab. She says cities including Brussels, Copenhagen, Portland, Philadelphia and others are reaching out to her to learn how to incorporate the concept of doughnut economics into their long term plans.

  • Deputy Mayor Marieke Van Doorninck:

    It seems like something that a lot of people are waiting for, this idea there is an alternative. There's another way we can arrange our economics that is better for the people and better for the planet. And don't wait for the perfect moment because the perfect moment is now.

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