What is Circular Economy?

By Giacomo D’Alisa

Keywords: societal metabolism, resource efficiency, reuse, sustainability, growth

Circular Economy (CE) is an emerging strategic vision aiming to decouple economic growth and environmental impacts. Its core strategy aims to:

  1. Reduce the use of raw material in order to revert the extractive model of the current economic system;
  2. Boost reuse practices, avoiding discarding patterns for matters and stuffs that still have use value for different actors in society; and
  3. Increase the recyclability of goods by implementing effective market arrangement for secondary materials.

Technical and design-related as well as managerial solutions are at the forefront of CE research and applications. These solutions counteract the planned obsolescence – the engineered limited useful life of products in order to increase their long-term sales volumes – of the standard business model and extend the life usability of materials.

The appearance of the CE concept can be traced back to pioneers of ecological economics such as Kenneth Boulding. In the mid-60s, he criticized the idea of an economy in a continuous and linear expansion, a cowboy’s economy based on ever-more land to colonize and expand their livestock production. He foresaw the advent of the spaceship economy, where the expansion towards new extractive frontiers is not possible anymore and the recycling of materials and energy become the main worry of a businesses. Later on, in the ’80s, the material balance of the economy also became a central argument of very influential environmental economists such as David Pearce and Kerry Turner (1990), who, probably for the first time, used the term ‘circular economy’. They explained that only if one ignores the environment – the closed system that sets the limits and boundaries for the extraction and discard of stuff – can the economy appear to be a linear system in expansion. In the same period, industrial ecologists and eco-designers started to develop applied research on how to increase the efficiency in material use and extend the life of products. Those studies contributed to the development of the so-called industrial metabolism, that is, the integrated assessment of labour activities as well as technological and physical processes necessary to convert raw and secondary materials and energy into finished products and waste. The urgency of reducing waste has influenced enormously the development of CE ideas and application. This also explains why CE policies originate from or are directly part of waste legislative framework and waste programmatic plans (Ghisellini et al. 2016). Insights for a CE are coming from many other disciplines. In the field of architecture, for example, the concept of cradle-to-cradle is pushing designers to imagine regenerative products. Natural scientists and natural resources managers are fostering the spread of the biomimicry approach, which tries to imitate the qualities of well-adapted elements and structures present in nature to solve human issues. Circular Economy also applies principles emerging out of permaculture, an integrated system of cultivation that simulated the evolution of a self-organizing biological ecosystem.

Nonetheless, the current patterns of the ‘real’ economy of material and energy flows suggest caution is needed about the redeeming qualities of CE. The current economy is much more efficient than the one existing a century ago, but it uses resources at a level never seen before. It extracts an unprecedented amount of raw materials and releases unsustainable quantities of solid and gaseous wastes. The material footprint of nations, an indicator that accounts for the impact associated with raw material extractions to the nation that actually consume the end-chain products, shows that no absolute decoupling is near the horizon. Becoming wealthier
does not ease pressure on natural resources at all (Wiedmann et al. 2015). A first-of-its-kind empirical study aiming to estimate the circularity of world economy clarifies that only 6 per cent of the materials extracted are recycled and go back to feed the loop of production and consumption. The current maximum potential for recycling is actually about 30 per cent; the other 70 per cent is composed mainly of energy and to a lesser extent of waste rock that cannot be recycled (Haas et al. 2015). It is not difficult to conclude then that the current pattern of global economy is very far from the CE objective.

Furthermore, while there are expectations, though not always fully demonstrated, that CE will boost employment and create meaningful jobs; it is astonishing that there is no discussion on the possibility of increasing unequal distribution of and access to resources, products, and services even under CE scenarios.

The wariness expressed earlier should not be conducive to a shallow dismissal of CE principles and applications. Indeed, CE actors deserve attention. These actors would be, among others, the open source circular economy communities, that is, experts, designers, and innovators who wish to promote transparency, open access to information, products and technologies and who offer open source solutions to environmental and resource problems. These grassroots movements challenge not only the business model, but the very essential institution of capitalism, that is, the private property of knowledge and information. The hesitation to engage with these actors of the blooming commons-based digital economies could be a missed opportunity, since some of the most important innovations that may make a low-carbon ‘degrowth’ society technically and socially possible are taking place there. It is thus extremely impotant to follow and create synergy with them.

Further Resources

Ghisellini, Patrizia, Catia Cialani and Sergio Ulgiati (2016), ‘A Review on Circular Economy: The Expected Transition to a Balanced Interplay of Environmental and Economic Systems’, Journal of Cleaner Production. 114:11–32.

Haas, Willi, Fridolin Krausmann, Dominik Wiedenhofer and Markus Heinz (2015), ‘How Circular Is the Global Economy? An Assessment of Material Flows, Waste Production, and Recycling in the European Union and the World in 2005’, Journal of Industrial Ecology. 19 (5): 765–77.

Open Source Circular Economies, https://oscedays.org.

Pearce, David William and Kerry R. Turner (1990), Economics of Natural Resources and the Environment. London: Harvester Wheatsheaf.

Wiedmann, Thomas O., Heinz Schandl, Manfred Lenzen, Daniel Moran, Sangwon Suh, James West and Keiichiro Kanemoto (2015),‘The Material Footprint of Nations’, PNAS. 112 (20): 6271–76.

Giacomo D’Alisa is an ecological economist and political ecologist. His research interests range from waste management to environmental justice, from illegal waste trafficking to environmental crime. He promotes degrowth visions and is interested in exploring how a degrowth society centred on care and commons would look. He is currently a Post-Doc at the Centre for Social Studies (CES), University of Coimbra.

Essay originally published in Pluriverse: A Post-Development Dictionary (Edited by Ashish Kothari, Ariel Salleh, Arturo Escobar, Federico Demaria, and Alberto Acosta)

Published with kind permission of the authors.

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