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Circular Economy

A circular economy aims to reuse resources for as long as possible by recovering and regenerating materials at the end of a product’s life. Its traditional opposite is a linear economy, whereby materials are disposed of and new resources are constantly extracted.

In a circular economy, industry adopts the reuse and service-life extension of goods as a strategy of waste prevention, regional job creation and resource efficiency, in order to decouple wealth from resource consumption. [1]

1. Relation to other concepts
2. Technical and biological cycles
3. Origins
4. Popularisation of the concept
5. References

1. Relation to other concepts

The concept of the circular economy is closely related to that of renewable energy. Just as the economy should ideally be powered on renewable energy, so its materials should also be renewable.  

The circular economy is also based on the triple bottom line of economic, natural, and social capital.

A circular economy then, is one that does not consume finite resources. Rather it uses design to eliminate waste from the system. Products are ‘made to be made again.’ The circular economy is based on three principles [2]:

  • Design out waste and pollution
  • Keep products and materials in use
  • Regenerate natural systems

2. Technical and Biological Cycles

The model distinguishes between technical and biological cycles.

Consumption happens only in biological cycles, where food and biologically-based materials (such as cotton or wood) are designed to feed back into the system through processes like composting and anaerobic digestion. These cycles regenerate living systems, such as soil, which provide renewable resources for the economy.

Technical cycles recover and restore products, components, and materials through strategies like reuse, repair, remanufacture or (in the last resort) recycling.

3. Origins

The circular economy model originates in the work of a number of thinkers, ecologists and economists, including Walter Stahel, William McDonough and Michael Braungart; Janine Benyus; Reid Lifset and Thomas Graedel; Amory and Hunter Lovins and Paul Hawken; and Gunter Pauli.

Walter R. Stahel is a Swiss architect who advocates the adoption of an approach to economics based on the “service-life extension of goods” through reuse, repair, remanufacture, and technological upgrade. In the 1990s, Stahel propose the idea of selling goods as services as a core aspect of the circular economy. He described this approach in his 2006 book The Performance Economy. [1]

Architect William McDonough and chemist Michael Braungart coined the term ‘cradle to cradle’ to put forward a design framework characterized by three principles derived from nature:

  1. Everything is a resource for something else. In nature, the “waste” of one system becomes food for another.
  2. Everything can be designed to be disassembled and safely returned to the soil as biological nutrients, or
  3. re-utilized as high quality materials for new products as technical nutrients without contamination. [3]

Janine Benyus is a biologist, innovation consultant, and author of six books, including Biomimicry: Innovation Inspired by Nature. Since the book’s 1997 release, Janine’s work has inspired business leaders around the world to learn from nature. Benyus applies biological concepts to design, providing biomimicry consulting services to clients such as Boeing, Colgate-Palmolive, Nike, General Electric, Herman Miller, HOK architects, IDEO, Natura, Procter and Gamble, Levi’s, Kohler, and General Mills. [4]

Reid Lifset and Thomas Graedel are prominent thinkers in the field of industrial economy. This has been defined this as “the means by which humanity can deliberately and rationally approach and maintain sustainability, given continued economic, economic, cultural, and technological evolution. The concept requires that an industrial ecosystem be viewed not in isolation from its surrounding system, but in concert with them. It is a systems view in which one seeks to optimize the total materials cycle from virgin material, to finished material, to component, to product, to obsolete product, and to ultimate disposal. Factors to be optimized are resources, energy and capital.” [5]

Amory and Hunter Lovins and Paul Hawken are the authors of ‘Natural Capitalism’, an influential 1999 book on environmental economics. In it, they set out a new approach to protecting the biosphere while also improving profits and competitiveness. [6] The journey to natural capitalism involves four major shifts in business practices:

  • Dramatically increase the productivity of natural resources. Reducing the wasteful depletion of resources, while making them stretch up to 100 times further than they do today. These savings are said yield higher profits, pay for themselves over time and reduce initial capital investments.
  • Shift to biologically inspired production models. Natural capitalism seeks to eliminate waste by either returning every output to the ecosystem as a nutrient, like compost, or transforming it into an input for manufacturing another product.
  • Move to a solutions-based business model. In the new model, value is delivered as a flow of services. Providers and customers are rewarded for implementing resource productivity and closed-loop manufacturing.
  • Reinvest in natural capital. Ultimately, business must restore, sustain, and expand the planet’s ecosystems

Gunter Pauli is the brains behind the ‘blue economy’ systems approach. This is a model of business that allows producers to offer the best at the lowest prices by introducing innovations that generate multiple benefits, not just increased profits. [7] The key to this is a shift from a core business based on a core competence to a portfolio of businesses that generate multiple benefits for business, society and puts nature back on its evolutionary and symbiotic path. The blue economy stand in contrast to the corporate mode of the pursuit of economies of scale, based on standardized products, secured worldwide through just-in-time deliveries and outsourcing where labor productivity is the key to success. It proposes instead the full use of all available resources, clusters activities and cascades to higher levels of efficiency. A coffee company can generate income from the coffee, its core business, and now can also generate revenue from the mushrooms farmed on the waste, and whatever is left over after harvesting the protein rich fungi is excellent animal feed. One revenue model is transformed in a three revenue model. Globalisation, argues Pauli, has resulted in an increased deprivation of cash in local economies which have less employment but also less purchasing power, thus leading to less money circulating in the communities. The Blue Economy injects money back into the local economy, and offers high quality products at a lower cost price.

4. Popularisation of the concept

Ellen Macarthur is a major figure in publicization of the concept of the circular economy. In 2005, she became the fastest solo sailor to circumnavigate the globe and remains the UK’s most successful offshore racer ever. Having become acutely aware of the finite nature of the resources used by the linear economy, she launched the Ellen MacArthur Foundation in 2009.

 5. References

[1] https://www.gcint.org/walter-stahel/

[2] https://www.ellenmacarthurfoundation.org/circular-economy/concept

[3] https://mcdonough.com/cradle-to-cradle/

[4] https://biomimicry.net/bios/janine-benyus/

[5] https://www.sciencedirect.com/topics/earth-and-planetary-sciences/industrial-ecology

[6] https://hbr.org/2007/07/a-road-map-for-natural-capitalism

[7] https://www.gunterpauli.com/the-blue-economy.html