Amsterdam has long been one of the most-visited cities in Europe, welcoming nearly 20 million tourists every year to its legendary tulip gardens, canals and windmills.
That changed after the coronavirus hit, and lockdowns the world over have been devastating to the city’s economy. Depending on how long restrictions last, the Dutch economy could shrink as much as 8%, while unemployment could climb to 9% by next year, according to a report from the CPB Netherlands Bureau for Economic Policy Analysis.
Amsterdam is trying to get ahead of the problem with a recovery plan it released in early April titled “Amsterdam Circular Strategy 2020-2025.” It’s a bit different from what one might expect from a post-pandemic recovery plan: Its main goals aren’t about growing the economy or increasing the gross domestic product. Rather, it’s about making the city better for people and the planet.
“What we are looking at is how we can become a healthy and resilient city again. We're going [to] look at how we're going to make sure that people actually have a job again.”
“What we are looking at is how we can become a healthy and resilient city again,” said Amsterdam’s Deputy Mayor Marieke van Doorninck. “We're going [to] look at how we're going to make sure that people actually have a job again.”
The city’s plan focuses on ensuring affordable housing and jobs, revamping recycling programs, and cutting food waste. Its overarching goals are to slash the use of raw materials in half by 2030 and phase them out completely by 2050.
With this plan, Amsterdam appears to be the first city in the world to turn to something called “doughnut economics,” an economic framework created by British economist Kate Raworth in 2012 and the focus of her 2017 book, “Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist.”
Van Doorninck said the pandemic has encouraged a change in priorities for the people of Amsterdam — that is, they are thinking about health and community, not just economic growth.
Reinforcing that, in April, 170 Dutch academics released a manifesto calling for economic change after the pandemic, building on degrowth principles, calling on the government to grow clean energy, education and health sectors while shrinking polluting industries.
That’s where doughnut economics comes in.
“It gives us the opportunity to put those other values — like social interaction, health and solidarity — much more in the forefront of how we're going to recover from this crisis that we're all in,” van Doorninck said.
The doughnut is a visual — “The doughnut is a compass for human prosperity in the 21st century,” Raworth said.
In her diagram, the doughnut hole contains the social resources we lack — such as safe housing, adequate food, and fresh water. Radiating outside of the doughnut are the environmental issues we are daunted by, like pollution and carbon in the atmosphere.
It’s the doughy ring in the center of the diagram that represents the sweet spot, where there’s a balance of the things we need.
“The aim of the doughnut is to meet the needs of all people within the means of the living planet. And the doughnut is the starting point,” Raworth said. “Then, doughnut economics asks what kind of economic thinking gives us even half a chance of getting there.”
A key part of that economic thinking is no longer using the gross domestic product as a proxy for society’s success.
“It's very different from economic thinking of the 20th century, which predominantly pursued endless GDP growth. We need to move from endless growth to thriving in balance.”
“It's very different from economic thinking of the 20th century, which predominantly pursued endless GDP growth,” Raworth said. “We need to move from endless growth to thriving in balance.”
In Amsterdam, about a fifth of tenants can’t afford rent, van Doorninck said. Under the doughnut framework, the city has to figure out a way to build more housing stock without overshooting its pollution targets. That means using recyclable materials as much as possible — and accounting for carbon emitted in the production of those materials, even when they’re made far away from the city. Thinking beyond city limits is essential to doughnut economics, Raworth said.
For Amsterdam, that means considering the poor treatment of workers on cocoa plantations in West Africa, as the Dutch city’s port is one of the largest importers of cocoa in the world, van Doorninck said. It also means examining labor rights violations in garment factories in Bangladesh and coltan mines in Democratic Republic of Congo.
Raworth said that at first, policymakers were surprised to see faraway countries included in their city’s portrait.
“Many high-income cities are connected to these supply chains, and we have to make them visible,” Raworth said. “We have to find ways of building cities that respect the rights of people worldwide and the health of the whole planet.”
Raworth’s doughnut framework has never been put to the test before. Free-market economists have criticized Raworth’s theories, saying the ambitious programs needed to meet social needs and protect the environment are impossible without massive economic growth.
But Raworth says we should be agnostic about growth, and focus instead on developing programs that meet social needs with the lightest possible environmental footprint.
Eduard Müller, at the University for International Cooperation in Costa Rica has been working with Raworth’s ideas for years. In a country more reliant on agriculture, his project, Regenerative Communities Network Hub, is focused on helping herders and farmers move toward more environmentally friendly practices.
“We have to reduce the amount of fertilizers, we have to cut down carbon dioxide emissions, and we have to reverse degradation of ecosystems,” Müller said.
Müller said Costa Rica’s biggest social concern is inequality.
“We need to focus on long-term well-being and intergenerational well-being,” Müller said. “That means identifying first what are the limiting factors that are going to make a planet unhealthy. You need knowledge and passion to do that.”
Raworth said she is also working with city officials in Philadelphia and Portland, Oregon, in the US to help them develop doughnut economic policies.
Setting ambitious policy goals without a growth imperative is new in city management, but it’s not new to degrowth economists, who contend that intentionally shrinking the economy is necessary to conserve the environment.
Giorgos Kallis, an economist at the Autonomous University of Barcelona, is glad to see places taking up doughnut economics.
“The doughnut framework is a powerful tool to rethink how we understand the economy. I'm happy that it's going to a phase where people are actually trying to do something concrete with these ideas.”
“The doughnut framework is a powerful tool to rethink how we understand the economy. I'm happy that it's going to a phase where people are actually trying to do something concrete with these ideas,” he said.
Kallis said the coronavirus crisis is a perfect time to reevaluate our economic systems and explore alternatives to growth-oriented economic policy.
“Now is the moment to do something different and establish a different type of economy,” Kallis said. “Especially given that the next and the biggest crises, even after this pandemic is controlled, are going to be climate change and global ecosystem change.”
While Raworth’s theories are not necessarily based on shrinking the economy, she says that shifting away from the mindset that growth is necessary for thriving economies is essential.
“We love to see our children grow. We love to see our gardens grow,” Raworth said. “But look to nature. In nature, nothing grows forever.”
Amsterdam embracing doughnut economics and setting ambitious environmental targets is a leap of faith.
“That's like a moonshot — John F. Kennedy saying we're going to put a man on the moon, and we don’t know the materials, and we don’t know how to get there. It's that scale of ambition,” she said.