Circular economy is an innovative economic model designed to decouple global economic development from finite resources. It strives to maintain products, materials and components at their highest value and utility at all times by distinguishing between technical cycles (made by humans) and biological cycles (created by nature).
The circular economy concept is gaining ground in businesses and society, due to its potential to reduce waste while improving resource efficiency. A circular economy can reduce environmental impacts, save money, create jobs, and even improve human health.
How does the circular economy work?
Designing, producing and selling a product in an eco-friendly manner begins with collecting raw materials. After going through various stages of manufacturing – physical and chemical processing – they become finished goods that consumers use. After this stage is completed, any leftover materials either end up as landfill fill or are reused to make new items.
Utilizing renewable materials to manufacture these products is one of the cornerstones of a circular economy, as it reduces dependence on non-renewable resources like fossil fuels and helps protect essential ecosystem services such as fertile farmland, pollination services and clean drinking water.
Reclaimed resources such as compost, fertilizers and biofuels are an integral component of a circular economy. They can be utilized to offset costs associated with operating wastewater treatment plants, reduce landfill sludge accumulation and replace chemical fertilizers.
According to some estimates, implementing a circular economy could save the world up to USD 700 billion annually in material cost savings and production expenses by 2050.
Achieving a circular economy is not without its challenges. It requires unique skills and abilities as well as the development and implementation of new business models and practices. Nonetheless, its potential advantages are numerous and can be felt by all participants involved in it.
Circular business models emphasize sharing, maintenance, redistribution and remanufacturing as key components of product design for durability, upgradeability and repairability. Reusing materials is another essential aspect of the circular economy as it keeps them in circulation longer while making them more resilient against external shocks.
In the long term, circular economy is expected to create a new sector of business that can be profitable and beneficial to societies. It has been estimated that expanding reuse, repair and recycling sectors alone in Europe could result in over 200,000 additional jobs.
Furthermore, it will reduce greenhouse gas emissions by eliminating waste that contributes to climate change. Furthermore, it can reduce traffic congestion and pollution levels, improving air quality in the process.
The circular economy can help address the waste crisis in some countries by making it simpler for consumers and businesses to repurpose materials that would otherwise go to waste. This includes repurposing plastics that would otherwise be burned or buried in landfills.