“It’s probably the only time you’ll hear about a doughnut being healthy,” economist Kate Raworth jokes as she explains her economic model - Doughnut Economics.
Raworth, from Oxford University’s Environmental Change Institute, rejects conventional economics and, particularly, the conception of GDP growth in the 20th Century. It was a model that was, at its heart, ecologically damaging, she says.
In New Zealand to speak at the Auckland Writer’s Festival, Raworth says the 21st Century must incorporate human and planetary prosperity, not just balance sheet prosperity.
Doughnut Economics, which was explained in her 2017 book Doughnut Economics: seven ways to think like a 21st century economist is based around a circular (doughnut-shaped) figure.
“The hole in the middle shows the proportion of people who do not have access to essential resources such as healthcare, education, housing and income,” Raworth explains.
The outside layer of the doughnut represents the ecological ceilings that human life depends on such as the fertile land, biodiversity and fresh water.
“The boundaries around the edge is our thriving balanced space where we can live. We know we need to use earth’s resources but we have put our planet out of balance and are collapsing the eco-system.
“Humanity is falling short on climate change, biodiversity loss, land conservation and nitrogen and phosphorus loading. We are outside of the doughnut on both sides,” the economist continued.
Raworth says the 20th Century was based on extractive enterprises, where companies would see how much financial value they could extract from their enterprise.
The 21st Century should focus on generative enterprises that focus on how many kinds of value they can generate for people and the environment.
Raworth, who has been showing her diagram to different governments with positive reaction, says that companies can change their expectations and direction of business to make a positive impact on the planet.
She encourages all businesses to make drastic change now, such as taking on science-based targets of zero carbon emissions and changing ownership models where employees can be small shareholders of large companies.
“Corporates should be doing more than what just pays now. They should be using ethical supply chains worldwide, pay fair tax rates and get the planet back into balance,” she said.