A circular economy is one which takes its framework from the living world. In nature there is no waste; every by-product of one process becomes a product in another. The current systems of consumption and disposal include considerable waste in material, energy and efforts. Natural resources, human capital and recycling of used materials are all important components of a circular economy where all outputs become inputs to a new process.
This stands in contrast to the linear economy where a raw resource is processed, sold and used, then disposed of. It is due to the linear economy that economic progress is killing the planet, and it is due to the linear economy that there is scarcity wish reduces the quality of life for many and raises prices through supply and demand.
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"What Is A Circular Economy, Its Principles And What System Shifts Are Needed?".
These ideas of the circular economy come out of many different lines of inquiry. One could see the circular economy coming from applying the concepts of Lean-Six Sigma and its belief in no waste or defect to the broader economy; it can be seen as coming out of environmental studies analysis of the economic causes of ecological damage and degradation; it could also be seen as coming from the field of accounting, and the bottom line of an economy that does consistently and persistently reduce the supplies of what is needed for live.
In what might be called the natural economy, or the living economy, there is no waste. That which decomposes feeds the soil, the soil nourishes the plants, and the plants are eaten by herbivores, which are eaten by carnivores. The waste they make further nourishes the plants. Water is recycled through all of these processes. The end supply of natural resources is the same at the beginning as the end, which is captured by the phrase “Cradle to Cradle”, in marked contrast to “Cradle to Grave.” Some of the key principles of this perspective are using systems theory to look at whole systems and every point of waste, the recycling of ALL energy and matter so as to leave no waste, and strength through diversity. It is not a coincidence that these concepts are those used in nature to ensure its continuance.
The goals of a circular economy in general are the efficient use of resources, raising standards of living without increasing pollution, and the avoidance of mass scale crisis due to running out of non-renewable resources such as fossil fuels. For the circular economy to take root there must also be personally advantageous goals to the various stakeholders. For producers, it must lower costs; for consumers, it must be a better product and at a lower price; for regulators it must reduce harm to the environment and therefore lower costs of environmental remediation or the health costs of pollution.
Enormous shifts in current processes would be necessary to bring about the circular economy. Current business models and the functioning of much of the world’s enterprise do not use concepts of the circular economy, and therefore creates waste. Such waste is also a business problem; unsold products, especially those that expire such as produce, are simply dumped; the energy used in production and manufacturing is not green. There is little attention to whether the product adds value to the world; rather the focus is on profitability for shareholders. A redesign would be required of nearly ever manufacturing process, with further thought required about the very products that we use. Laundry and dish detergent end up in the water ways, causing pollution, for example. A new product would be required. With so many having strong interests in the status quo, the enormous shift which may bring about the large scale needed for a functioning display of the circular economy is likely to come from China.
China is looking closely at the circular economy, with a focus on the rational need to extend environmental management into all aspects and transactions of enterprise in the nation. The environmental dimension of the circular economy resonates with the vision of the 16th Party Congress in 2002 of China as a ‘harmonious society’. This was a response to the social and environmental issues which have arisen as the economic growth policy after 1976 faced only the priority of economic growth without restriction. In 2012 China further refined the vision as one of “Beautiful China”, with an ecological friendly civilization that promotes harmony between humans and nature (Naustdalslid 2014). Clean production and ecologically friendly industry in a circular economy model is believed by China to lead to international competitiveness (Ning 2001). China is also exploring through industrial initiatives how to turn the waste created in a point on a value chain into inputs at another point (Mathews & Tan 2011, 435). If China wishes to raise the standard of all of its population, it cannot use the status quo of industrial and energy production as it would take the current levels of pollution to untenable levels. Through the circular economy China is taking a step beyond the recycling initiatives in industry that Germany and Japan have used to seek a competitive advantage. In fact, the pursuit of a circular economy is now law and a formal national development goal (Mathews & Tan 2011, 435). Still, there continue to be many challenges to be faced before China can meet this laudable goal, particularly the challenge of implementing the circular economy in a top-down way without input and efforts by all of society (Naustdalslid 2014). It is, after all, a social as well as an economic model, and by design it includes everyone. Ordinary people must be involved and see personal benefits from participation.
Another pressure is the regulatory and other demands to conform to environmental regulations. Even for the manufacturing of automobiles, consumer appliances and electronics, the supply chain and product lifecycle can be closed and become more circular. The market for recycled and refurbished products is growing, and efficient use of waste at the end of the product life is economical for manufacturers and consumers, however it requires coordination of the supply chain and the identification of opportunities to turn such products into new resources (Kumar & Putnam 2008, 305). In doing so, there is likely to be a competitive advantage which goes beyond the ability to market the green initiative, as less waste means lowered costs.
The cradle to cradle concept is more than the typical understanding of sustainability. Where sustainability seeks to prevent damage by reducing carbon footprints, the circular economy seeks to make every input more valuable in cycles. Engineering sees sustainability as a simple retrofit of machines to be less damaging to the environment, but the cradle to cradle concept goes much further. Rather than causing less damage, it causes no damage and adds value to the inputs of any process. Reducing resource consumption and pollution is not enough, as it cannot resolve the challenges of modern industry which are fundamentally flawed in terms of value chains and linear model (McDonough et. al. 2003, 434A).
The circular economy strategies is therefore fundamentally different from zero emission and eco-efficiency as a positive agenda for production of goods and services that supply social, economic, and environmental benefits (Braungart et. al. 2007, 1337). Circular economic strategies maintain and enhance productivity and value through many life cycles and ensure an eternal material flow that causes no harm and facilitates true economic growth (Braungart et. al. 2007, 1337).
Braungart and colleagues (2007, 1337-1340) see the transition to the circular economic model as a multiple stepped process. It starts with identifying and eliminating any and all undesirable substances. Where this cannot be accomplished, that product must be rethought and revolutionized to work within the circular economy. If this cannot be accomplished then there must be real attention to whether the product is truly needed by society. There are many examples of such products, including pesticides and other toxins which not only have only one use, after that use they proceed to persist in the wider environment causing a hazard for generations (Braungart et. al. 2007, 1337). Rather than the focus on toxins, the focus is on deleting such materials so that the focus can be on the “nutrient management” (Braungart et. al. 2007, 1337). Material, energy and resource stocks and flows benefit from a circular economy as there are no longer concerns about running out; the circular economy ensures that the resources available today will be available in the future, by design.
The sharing economy would become more important in the circular economy. The sharing economy is another way that waste can be reduced, particularly regarding “extra” capital. Also called the collaborative economy, this form of economic activity was enabled by the technology of peer to peer networks. AirBnB, for example, lets users rent or rent out an extra room as accommodations; Uber and Lyft allow people to give or get rides while their cars would otherwise be idle; Craigslist and EBay allow users to sell the things they do not need to those who seek them. This adds value to the economy by capturing what would otherwise be waste. It also dramatically reduces the need for brokerage in the transaction, as it is done directly between those who wish to transact. Currently a considerable amount of waste is created in business models by overhead and brokering. In a traditional department store model, for example, there is a large headquarters, buyers, salespeople, warehouse personnel etc. A person must take transportation to get there, as must all the workers. This all represents effort that can be redirected to be more valuable in the collaborative economy business model, which is sure to be a feature in the circular economy. In the collaborative economy ordinary people can put their extra time and capital to work in a way that benefits others, and they can access services and products they need by buying from those who have them and do not need them. Brokerage is through technology. It is a win-win situation, and one that can play a large part in converting households to more circular economy friendly existence. Further, it provides an example of how the circular and collaborative economy can together create community level and local processes and supply chains in a way that supports social, economic and environmental ideals.
In the circular economy there is no waste, only nutrients. These nutrients are processed in different ways to become what we need them to be, and at the end of their use they are made ready to become something else. The circular economy requires awareness and belief in the key principles, concepts and building blocks of the philosophy. While thus far there is considerable interest, a large scale and functioning circular economy may provide the final pressure needed for a massive change on a global scale. If the using the concepts of the circular economy makes businesses more competitive, then they will adopt it. If the circular economy provides advantages and benefits to families and households, it will become important to them. If the circular economy saves governments from having to face unnecessary challenges of pollution, environmental degradation and running out of resources, it will become a political as well as an economic philosophy.
Movement towards a circular economy cannot take the form of small changes to current processes; it requires a fundamental shift in the way products are created, but also what products are marketed and consumed. While it would provide the solution to many of the modern day challenges facing the world, to initiate the successful implementation it must be attractive and requested by the people as well as enterprise. The first step towards this is therefore marketing the concept and its benefits to the stakeholders in the linear economy. Ultimately it is the personal advantages which will create the interest and growth of this sustainable cycle of economic growth.
- Braungart, M., McDonough, W., & Bollinger, A., (2007), Cradle-to-cradle design: creating healthy emissions–a strategy for eco-effective product and system design. Journal of cleaner production, 15(13), 1337-1348.
- Kumar, S., & Putnam, V., (2008), Cradle to cradle: Reverse logistics strategies and opportunities across three industry sectors. International Journal of Production Economics, 115(2), 305-315.
- Mathews, J. A., & Tan, H., (2011), Progress toward a circular economy in China. Journal of Industrial Ecology, 15(3), 435-457.
- McDonough, W., Braungart, M., Anastas, P. T., & Zimmerman, J. B., (2003), Peer reviewed: Applying the principles of green engineering to cradle-to-cradle design. Environmental science & technology, 37(23), 434A-441A.
- Naustdalslid, J. (2014). Circular economy in China–the environmental dimension of the harmonious society. International Journal of Sustainable Development & World Ecology, 21(4), 303-313.
- Ning, D.U.A.N., (2001), Cleaner Production, Eco-industry and Circular Economy [J]. Research of Environmental Sciences, 6, 000.
