How is a circular economy different from a linear economy?

A circular economy is fundamentally different from a linear economy. To put it simply, in a linear economy we mine raw materials that we process into a product that is thrown away after use. In a circular economy, we close the cycles of all these raw materials. Closing these cycles requires much more than just recycling. It changes the way in which value is created and preserved, how production is made more sustainable and which business models are used. These aspects are explained in more detail below.

1.3.1. From new raw materials to value preservation

The circular system and the linear system differ from each other in the way in which value is created or maintained. A linear economy traditionally follows the “take-make-dispose” step-by-step plan. This means that raw materials are collected, then transformed into products that are used until they are finally discarded as waste. Value is created in this economic system by producing and selling as many products as possible.

Figure 1: the large reuse of raw materials in a circular economy (PBL, 2019a).

What else is there in a circular economy? CE incorporates several actions for waste minimization and reduction of virgin resource consumption, all of which are governed by the three “main actions” within the 3Rs policies/principles: reduce, reuse and recycle. Resource use is minimized (reduce). Reuse of products and parts is maximized (reuse). And last but not least, raw materials are reused (recycled) to a high standard. This can be done by using goods with more people, such as shared cars. Products can also be converted into services, such as Spotify sells listening licences instead of CDs. In this system, value is created by focusing on value preservation.

1.3.2. From eco-efficiency to eco-effectiveness

The perspective on sustainability is different in a circular economy than in a linear economy. When working on sustainability within a linear economy, the focus is on eco-efficiency. This is to minimise the ecological impact for the same output. This will extend the period in which the system becomes overloaded (Di Maio, Rem, Baldï, and Polder, 2017). Within a circular economy, sustainability is sought in increasing the eco-effectiveness of the system. This means that not only the ecological impact is minimized, but that the ecological, economic and social impact is even positive (Kjaer, Pigosso et al. 2019).

Figure 2: the difference between eco-effectiveness and eco-efficiency (EPEA GmbH, 2013).

In order to achieve eco-effectiveness, residual flows must be reused for a function that is the same (functional recycling) or even higher (upcycling) than the original function of the material. As a result, the value is fully retained or even increased. For example: concrete is ground into granules that are used to produce the same or a stronger wall again. This is different in a linear economy. An eco-efficient system typically works on downcycling: a (part of a) product is reused for a low-grade application that reduces the value of the material and makes it difficult to reuse the material flow again. For example: concrete residues are processed in asphalt in the road surface (Bocken, Bakker & De Pauw, 2015; Ellen MacArthur Foundation, 2014).

1.3.3. The difference between a linear and a circular economy



Step plan






System boundaries

Short term, from purchase to sales

Long term, multiple life cycles



Upcycling, cascading and high grade recycling.