A Circular Economy, Explained

Circular economies are often portrayed as simple combinations of reduce, reuse, and recycle activities as popular definitions have come short of selling the model’s potential to increase economic prosperity, derive more value from inputs, and reduce emissions. Considering our climate emergency and volatile resource markets, a 4R framework, closed-loop production process could be a real contender for transforming our economy. 

To understand how this model could reform the current system, a comprehensive explanation of circular economies as a concept is necessary. While there are multiple definitions for the model, the following aims are almost always mentioned: to enable sustainable development at the micro-, meso-, and macro-levels; to restore environmental quality and resource efficiency; to account for future generations by discounting at low rates

By design, circular economies allow for economic growth to occur while breaking the relationship between development and the abuse of limited resources. Most firms could continue their scale of production by taking the waste from their industrial process and turning it into a valued input for another process. These are resource loops.

A 4R (reduce, reuse, recycle, recover) framework fulfills the resource efficiency goal, creates a system for mutual gains, and maintains or expands job creation patterns. Over time, economists predict that productive efforts will shift towards a 9R (recover, recycle, repurpose, remanufacture, refurbish, repair, reuse, reduce, rethink, refuse) framework. Higher levels of circularity in a production chain could further stimulate competition and remove the loss of value through waste. Loops achieve this by extending the lifespan and application of a resource, which cuts production costs and avoids jobless economic growth. To back the model’s practical success, policies directed at promoting cooperation across different industries or extending the responsibility of primary producers need to come about.

While the model promises to be an alternative to industrialization, this is not a perfect claim. Circular economies only become a reliable option for developing nations if there is enough willingness to invest and trade. Resource-dependent economies consider this a significant uncertainty as they risk the loss of employment in the extraction and processing sectors if their markets change. It is likely possible that such radical change could be met with political opposition, little policy action, and have no international plan to follow. Linking the model to the United Nations’ Sustainable Development Goals (SDGs) could address most concerns as placing pressure on transnational stakeholders and governments mobilizes the market towards supporting circularity. Yet, this argument fails again to account for the challenges of governance that are inherent to a globalized economy and limit the successful implementation of SDGs. 

Assuming all competing interests are addressed, a critique points towards the model’s probable success. As economic growth continues, consumption and production patterns will rise, canceling offsets and hurting the developing world. Circular economies ignore the fact that, on a scarce planet, limitless development is not an option for long-term sustainability.

Even if several obstacles exist, society must examine moving from a linear model towards a conscious economy. As the reality of scarcity becomes more notable, shifting will no longer be a proactive move but an imperative – and under all principles, it would be best to begin changes while economists can still account for some controls. 

About Alessandra

Alessandra is a second-year Economics student.

One Reply to “A Circular Economy, Explained”

  1. Very interesting. I’d heard the term circular economy, but didn’t know its connection to the 4 Rs and hadn’t heard of the 9 Rs. Thanks for exploring these ideas!

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