What are the benefits of circular economy?
The circular economy is an emerging economic concept that provides new business models and strategies to continuously reuse materials and resources to their fullest potential. At the heart of the circular economy is the idea of moving away from linear economic business practices and directly challenging the ‘take, make, waste’ mentality, aiming to achieve social well-being while operating within the boundaries of our planet.
Economic benefits of the circular economy
The circular economy is an emerging economic concept that provides new business models and strategies to continuously reuse materials and resources to their fullest potential.
Substantial resource savings
While the attention for the circular economy is increasing, the extraction and prices of primary raw materials are still increasing (see figure 1). According to Circle Economy calculations, just 8.6% of all raw materials are cycled back by 2020 (Circle Economy, 2020). In theory, in the circular economy, 100% of all raw materials are fully recycled, and no new virgin raw materials are needed.
Economic growth
An important principle of circular economy is to decouple economic growth from the consumption of raw materials. As a result, the economy is not hampered by the shortage of raw materials to grow. It is assumed that a move towards the circular economy will promote economic growth. The United Nations Environmental Programme (UNEP) calculated that in 2050 the global economy would benefit from more effective resource use by $2 trillion a year (UNEP, 2017). In a circular economy, this gain would certainly be achieved. On the one hand through increased turnover from new circular activities and on the other hand through the creation of more functionality from the same number of materials and means of production. The development, production and maintenance of these circular products requires a specialised workforce, which will increase these jobs. On the other hand, there will be less demand for the extraction and processing of raw materials, which will reduce the number of less specialised jobs. This will increase the value of labour, which is good for employment and GNP (WE Forum, 2017).
Growth of employment
As explained above, in a circular economy, labour is valued more than raw materials. As a result, employment is growing. These jobs will expand for labour-intensive recycling and high-quality repairs; jobs in the logistics sector through local product take-back; new enterprises through innovation, service economy and new business models (WE Forum, 2017).
Innovation stimulus
Circular economics challenges innovative solutions based on a new way of thinking. That means thinking about circular rather than linear value chains and striving for optimizations for the entire system. This results in new insights, interdisciplinary cooperation between designers, producers and recyclers and therefore also in sustainable innovations (Kraaijenhagen, Van Oppen & Bocken, 2016).
Changing demand
A final important factor in the economic benefits of circular economy is the change in and better understanding of the demand side. How companies deal with their customers and the role they play throughout their lives ultimately leads to less use of raw materials, less waste generation and changing production (WE Forum, 2017).
Environmental benefits of the circular economy
The initial goal of the circular economy is to have a positive impact on the ecological systems, which will not deplete or overload them. This is reflected in the ecological benefits of the circular economy. For example, a circular economy emits less greenhouse gases, the soil, air and water remain vital and nature reserves are preserved.
Less greenhouse gases
By following the principles of the circular economy, greenhouse gas emissions are automatically reduced on a global scale. Climate change and the use of materials are closely linked. According to Circle Economy calculations, 62% of global greenhouse gas emissions (excluding those from land use and forestry) come from the extraction, processing and production of goods to meet society’s needs; only 38% are emitted in the supply and use of products and services (Circle Economy, 2019). For example, emissions from industry in the European Union would fall by 56% in 2050 if the circular economy were to become a reality (SITRA, 2018). The reduction in emissions measured on a global scale will be even greater, because the European Union will no longer import primary raw materials from countries outside the Union, which will also reduce greenhouse gas emissions in those countries.
Vital soil, air and water bodies
The application of circularity in the economy creates vital ecosystems such as soil, air and water bodies. These ecosystems provide services such as cleaning, products such as fertile farmland, pollination and clean drinking water. In a linear economy, these services are ultimately depleted by constant withdrawal of products or overburdened by the dumping of toxins. If these products are used in a cycle and the services are not burdened by toxic substances, the soil, air and water bodies remain resilient and productive (SYKE, 2018).
A good illustration of this is the agricultural system, which is highly dependent on ecosystem services such as water cleaning, nutrient recycling and pollination. In Europe, for example, a circular approach to our food systems can lead to an 80% reduction in the use of artificial fertilisers. This restores the natural balance in the soil (Ellen MacArthur Foundation, 2016).
Conservation of nature reserves
The extraction of raw materials and the dumping of waste have a negative impact on nature reserves. These nature areas are important for the preservation of ecosystem services (as explained above), natural and cultural heritage. At the moment, many governments and organisations are mainly involved in protecting nature from extraction and the dumping of raw materials and waste. In order to systematically preserve nature, this extraction and dumping must stop in general. This is achieved within the circular economy (SYKE, 2018).
