Van Ewijk, S; (2018) Resource efficiency and the circular economy: concepts, economic benefits, barriers, and policies. UCL Institute for Sustainable Resources: London, UK.

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Abstract

Resource efficiency and the circular economy play an important role in environmental and economic policy. This paper defines these concepts and discusses potential economic benefits, barriers to achieving a resource efficient circular economy, and public policies for overcoming these barriers. Resource efficiency and the circular economy are normative concepts which suggest the maximization of wealth and wellbeing through increased material circulation and minimization of losses whilst staying within the limits of the natural environment. An efficient use of resources benefits society and the economy in the long term by protecting the world we live in and reduces dependency on natural resources the economy depends on. Ecosystems provide society with food, materials, clean air and water, aesthetic and recreational pleasure and assimilate air emissions and wastes. Resource efficiency helps avoid depletion, degradation, or a collapse of ecosystems. It can also bring immediate economic benefits through reduced input costs and less dependence on volatile commodity prices. Waste and resource management should aim for a sustainable yield of renewable resources, substitution of finite resources by renewable resources, and absolute limits to environmental impacts. A perfectly circular economy cannot exist due to limited availability of materials for circulation, growing or changing material demand, and inherent process losses. Circular use of materials requires energy and causes environmental impacts. A more efficient use of materials can also create a rebound when cost savings on raw material inputs lead to lower prices and increase consumption. Evidence reviewed in this paper suggests increased resource efficiency can lead to private cost-savings and economic growth. However, these potential gains are likely to be unequally distributed across the economy: raw material exporting countries and the extraction industries are likely to suffer unless they adapt. Care should be taken when interpreting this evidence because the size and distribution of economic impacts depend on model design and assumptions. Circular economy jobs should address structural mismatch in order to lower unemployment. Public policies to support a more resource efficient and circular economy should aim to address market, system, and transition failures. This requires strategic leadership, support for technological innovation, and specific measures to improve social outcomes. Public policy could stimulate resource efficiency by shaping waste management, the business environment, and education and training. Policy makers should consider the global impacts of production and consumption and the potential trade-offs between environmental and economic gains.

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