Alternative Economic Models (DP IB Environmental Systems & Societies (ESS))

Doughnut Economics Model

• The doughnut economics model provides a framework for building an economy that meets the needs of all people while staying within the ecological limits of the planet

• It emphasises the importance of creating a regenerative and distributive economy

Regenerative and distributive design

Regenerative economy

• A regenerative economy is one that works within the natural cycles and limits of the planet

• It aims to restore and renew (i.e. regenerate) resources rather than deplete them

  • For example, transitioning from fossil fuels to renewable energy sources like solar and wind power

Distributive economy

• A distributive economy is one that shares value and opportunities more equitably among all stakeholders

• It aims to reduce inequality and ensure a fair distribution of resources.

  • For example, implementing policies such as universal basic income to provide economic security for all citizens

Doughnut model boundaries

Social foundation

• The inner ring or inner boundary of the doughnut model is known as the "social foundation"

• It is based on the social Sustainable Development Goals (SDGs)

• This boundary represents the minimum standards for human well-being, including access to education, healthcare and social protection

  • For example, ensuring everyone has access to clean water and sanitation

Ecological ceiling

• The outer ring or outer boundary of the doughnut model is known as the "ecological ceiling"

• It is based on planetary boundaries science (i.e. the theory behind the planetary boundaries model)

• This boundary represents the limits of the Earth's ecosystems and resources

  • For example, adopting water conservation measures to sustainably manage freshwater resources and prevent depletion

• Together, the social foundation and the ecological ceiling represent the minimum conditions for an economy that is ecologically safe and socially just

  • This is why the middle of the doughnut is referred to as the “safe and just space for humanity”

Moving into the doughnut

• Today, billions of people still fall short of the social foundation, while humanity has collectively overshot most of the planetary boundaries (we have "broken through" the ecological ceiling)

• Therefore, as this model illustrates, humanity's objective is to "move into the doughnut" and establish an economy that enables all societies to prosper in harmony with the rest of the living world

• Making economies that are regenerative and distributive by design is the only way to achieve it

• This requires drastic changes but needs to start with the implementation of policies and practices that promote sustainability and equity

Uses of the doughnut economics model

1. Supports environmental justice:

   • The model includes both ecological and social elements, so it supports the concept of environmental justice

2. Raises awareness:

   • The model has reached popular awareness and highlights the interconnectedness of social and environmental issues, raising public understanding and engagement in sustainable development efforts

3. Applied at various scales:

   • From countries to cities to individual businesses, the model helps sustainable development efforts by providing a flexible framework adaptable to different contexts and scales

4. Promotes interdisciplinary collaboration:

   • Encourages collaboration between economists, environmentalists, policymakers and communities to address complex sustainability challenges

Limitations of the doughnut economic model

1. Lacks specificity:

   • The model is a work-in-progress that offers broad principles but lacks detailed guidance on specific policies and actions needed for implementation. Some critics argue that the model is too theoretical and lacks practical solutions for complex economic issues

2. Challenges in application:

   • Different contexts may require specific approaches and translating the model into realistic and effective strategies at local or national levels can be complex

3. Changing nature:

   • As our understanding of sustainability evolves and new data emerges, the boundaries of the model may need adjusting

Circular Economy Model

• The circular economy model is a sustainable economic system designed to minimise waste and maximise resource efficiency

• It aims to decouple economic growth from the consumption of finite resources, promoting long-term environmental sustainability

Principles of the circular economy

• The circular economy model has three main principles:

1. Eliminating waste and pollution:

   • Focuses on reducing waste generation and minimising environmental pollution

   • Encourages the redesign of products and processes to eliminate waste at the source

     • For example, designing products that use biodegradable materials, in order to reduce landfill waste

2. Circulating products and materials:

   • It involves maintaining products, components and materials at their highest utility and value, for as long as possible

   • Promotes reuse, repair, remanufacturing and recycling to extend product lifecycles

     • For example, furniture companies offer repair services to extend the lifespan of their products

3. Regenerating nature:

   • Aims to restore and enhance natural capital while promoting economic growth

   • Includes practices such as reforestation, sustainable agriculture and ecosystem restoration

     • For example, using regenerative agriculture techniques to improve soil health and biodiversity

Butterfly diagram

• The Ellen MacArthur Foundation introduced the butterfly diagram to represent the circular economy idea visually.

  • It contrasts with the linear economic model (take–make–waste) by illustrating the continuous flow of resources in a circular manner

• Within the circular economy, there are two cycles:

  • The biological cycle is where the biodegradable products are returned to the natural environment

  • The technical cycle where products are recycled, reused, repaired or remanufactured

Uses of the circular economy model

1. Regeneration of natural systems:

   • Supports ecosystem restoration and biodiversity conservation

2. Reduction of greenhouse gas emissions:

   • Promotes energy efficiency and the use of renewable resources

3. Improvement of local food networks and support of local communities:

   • Encourages sustainable agricultural practices and local food production

4. Reduction of waste by extending the product life cycle:

   • Emphasises product durability, repairability and recyclability

5. Changed consumer habits:

   • Encourages mindful consumption and responsible product choices

Limitations of the circular economy model

1. Lack of environmental awareness by consumers and companies:

   • Challenges in educating consumers and businesses about the importance of circular practices

2. Lack of regulations enforcing the recycling of products:

   • Inadequate policies and regulations to incentivise and enforce recycling

3. Some waste is not recyclable (technical limitations):

   • Certain materials pose challenges for recycling due to technical constraints

     • For example, mixed-material packaging that is difficult to separate and recycle effectively

4. Lack of finance:

   • Financial barriers to implementing circular economy initiatives, especially for small businesses

     • For example, there can be high upfront costs for transitioning to circular production methods