Using the Donut to evaluate an investment decision

Hello all,

In the context of balancing the various dimensions of social justice and ecological safety as captured in the Doughnut, how does one evaluate a financial decision?
For eg, a business wants to invest in building a factory. It performs extensive research about the costs, benefits and risks of the project, short term and long term, in all dimensions of the Doughnut such as its impact on the environment, society such as jobs created and destroyed. But not everything can be expressed in dollars value. So how does it balance the various dimensions to arrive an optimal point?
Thank you for any insights you may have.
Yeu Wen

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Ok, Well I’m new here but I’ll try. Firstly I think you can express everything in a dollar value - it just might not be what you expect. In the current economics the “dollar value” of something maybe a lot higher that the generally accepted economic value. That’s why art sells for such high prices - seriously millions of dollars for a piece of canvas with some splashes of red paint!
But you can value “jobs destroyed” with a cost - the cost is to the economy as a whole: both goods not purchased, and tax not paid. Easy to calculate that.

Environmental costs may seem harder, but I think we can go back to art here as a measure. What is the value of a pretty flower? When one considers the impact on bees (or other pollinators) that keep our food growing, and the flowers that convert CO2 to O2, and feed animals. Well the value is Huge! Its as valuable as humans value their future. I know I need bees, and I know I need flowers and diversity. So to me its worth more than you might think. Like art, its worth more than the canvas and paint.
Harder to calculate in todays term is the replacement cost of fossil fuels, but - what will the market bear? Simple: I want a future and I know climate change is real. Therefore the environmental cost if I don’t address climate change could be thousands of times the other costs, if they don’t have direct plans to:

  • reduce to zero fossil fuel usage (please read Bill Gates book on Climate change)
  • reduce to zero greenhouse gasses by 2050 (please read Bill Gates book on Climate change)
  • regenerative impacts on environment - ie practices that improve the environment.

And at this point - this is your optimal point:

  • zero greenhouse gas by 2050 while still being a viable (profitable) business)

J

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Thank you for your thoughts, Jeremy.

I have just come across Kate’s thoughts on this.

Yeu Wen

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