Keeping objects in circulation means sharing and repairing. Photo via envato.

What is the circular economy?

Closing the loop on the treasure-to-trash model

You’ve probably heard the saying “one person’s trash is another’s treasure,” but the reality is that most of the trash produced today will remain trash for everyone. 

Eighty percent of consumer goods are incinerated or end up in landfill because there’s no way to reuse, recycle or remanufacture their components.

And of the remaining 20 percent of products, only about five percent of their value is recaptured. Meanwhile, it takes the planet 1.5 years to regenerate the resources that humans use in a single year.

This ‘treasure-to-trash’ economy is clearly unsustainable.

Enter the circular economy: a popular framework to ensure that treasure never becomes trash by using and reusing resources for as long as possible. This would closely mimic the Earth’s regenerative processes, helping restore nature and promote the sustainable use of the resources it provides.

But what would a circular economy really look like, and what are some obstacles to putting it into practice?

What is a circular economy?

The circular economy is an alternative to the linear, business-as-usual global economy, which is based on the endless extraction of finite resources. Its goal, according to the Ellen MacArthur Foundation, is to decouple economic growth from development by designing a closed-loop system that channels resources and products between a biological cycle and a technical cycle.

Instead of ending their lives in a landfill, products in a circular economy would be designed with longevity in mind. They would be shareable and easy to reuse, refurbish and recycle or compost. 

A closed-loop system like this would help eliminate waste and pollution and regenerate nature as products and materials are circulated. 

The Ellen MacArthur Foundation’s butterfly diagram divides the circular economy into two cycles: a biological cycle (left) and a technical cycle (right). Actions in the diagram are prioritized based on how close their loops are to the center of the diagram. Maintaining a technical product is considered more favorable than recycling it, for example.

In the biological cycle, food and other organic products can be cycled so that their nutrients are eventually returned to the Earth.

The technical cycle focuses on products made with non-biodegradable materials. It depicts how products can be kept in circulation for longer periods of time by sharing, maintaining and refurbishing them. Once a product has truly reached the end of its life, recycling is a last resort to recapture its raw materials, like the rare earth metals used in batteries.

“Of course you want to recycle, but that’s almost a last resort,” noted Ellen MacArthur, the organization’s founder, in a video message. “A perfect example is the phone. Of course, the phone has value and of course the materials have value, and you want to recover them at the end of the life of that phone, but actually, the phone itself has the most value.”

When products use a mix of technical and biological components (such as clothes made from a blend of cotton and polyester), the circular economic model suggests that manufacturers should pioneer better ways for those elements to be separated and broken down at the end of the product’s life.

sharing, maintaining and refurbishing electronics can keep them in circulation for longer periods of time. Photo via envato

What could a circular economy look like?

The circular economy is a model that encompasses all sectors of the economy and society. While it hasn’t yet been fully realized at scale, there are many examples of people, businesses and governments employing circular principles in farming, technology and urban planning, to name a few.

In the tech sector, Dell, Google and Microsoft have already joined forces to create the Circular Electronics Partnership (CEP), which aims to reduce electronic waste throughout entire product lifecycles, starting with a new educational program for circular electronics design.

Smallholder farmers can also employ a circular economic model to earn multiple revenue streams. In Uganda, farmer and veterinarian Emma Naluyima has designed a one-acre farm that is almost entirely self-sustaining, using 80 percent fewer inputs than conventional farms. Such initiatives demonstrate that it’s possible to improve the livelihoods of millions of smallholders globally while also healing the planet.

Some cities have also embraced the circular economy vision. In 2020, Amsterdam announced plans to become a fully circular city by 2050, and it has begun implementing multiple strategies to shorten food supply chains and facilitate legal transitions to this new model.

The circular economy has been further developed into a related concept known as the circular bioeconomy, which is an economy powered by nature that ensures the sustainable use of the Earth’s biological resources.

By not only minimizing waste but also phasing out fossil fuel-based products with renewable ones, a circular bioeconomy could generate USD 3.5 trillion in business opportunities and 87 million jobs by 2030, according to speakers at a digital forum hosted by CIFOR-ICRAF and partners in 2021.

“The circular bioeconomy means, above all, creating an economy where life – and not consumption – is its true engine and purpose,” said Marc Palahí, director of the European Forest Institute (EFI), which co-hosted the event.

The linear, business-as-usual global economy is based on the endless extraction of finite resources. Photo via envato.

What are some barriers to the circular economy?

There are multiple barriers to adopting a fully-fledged circular economy, including anxiety or resistance to change and wide-ranging upfront investments that are difficult to execute.

Our current resource-based economy is oriented towards endless economic growth, which critics say is an unrealistic goal on a finite planet. While many of the Earth’s resources can regenerate, the escalating climate crisis and proliferation of toxic waste and pollution has shown the planet cannot keep up with the pace that we are churning through its resources.

In fact, even a fully functional circular economy is unlikely to support infinite economic growth because it is inherently limited by the finite resources that the Earth can provide and the time it will take to regenerate resources once used.

In response, some are now calling ‘degrowth’ in the Global North – a more radical change that would drastically reduce the use of resources and energy in the economy. One way this could happen is through regulations that cut the production of resource-intensive but unnecessary goods and services in sectors such as advertising, fashion and the military.

A circular economy could be informed by degrowth principles, but large-scale cuts to economic production would require major structural changes to avoid causing mass unemployment and ensure a just transition.

Some companies are already advertising their circular supply chains, but there are few regulatory bodies to ensure their sustainable claims are true and not mere greenwashing.

Revamping an entire economic system will also be expensive in the short term. Governments and corporations will need to invest in new infrastructure and technologies to capture and reuse materials. Many people will also need to be retrained for new job markets, and governments will need to pass new regulations to govern the supply chains.

However, those upfront costs for a circular economy pale in comparison to the cost of business as usual. While it could cost USD 600 to 800 billion per year to reverse biodiversity loss, more than half of the world’s GDP – USD 44 trillion – is now at stake.

“It is not a lack of capital that is holding us back, but rather the way in which we deploy it,” said King Charles III at the 2021 digital forum.

“Therefore, to seize the rapidly closing window of opportunity we have before us, we must act and act now to catalyze the paradigm shift we so desperately need.”

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economicsrecyclingwaste

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