Circular Economy: A Compelling and Inevitable Economic Paradigm

A circular economy is a closed-loop economy that keeps resources and materials within a closed loop of use and reuse, minimising waste and the need for new resources.

 United Nationals Environment Programme (UNEP): “A circular economy is an alternative to a traditional linear economy in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life.”

First, let us understand the concept of traditional linear economy:

A linear economy is an economic model that follows a linear flow of resources through various stages of production, consumption, and disposal.

 In a linear economy, the predominant approach is “take, make, and dispose.” This approach results in resource depletion, waste generation, high costs in disposing of wastes, and environmental damage. Further, the world population is increasing annually, leading to increased consumption and demand for resources. These resources will be depleted over the years. In such a situation, meeting the needs of future generations with limited resources will be a matter of concern. The increased consumption over the years is also affecting the environment due to waste generation and pollution. Hence, collective efforts are needed to deal with these issues. All these challenges make the circular economy an inevitable economic model. The argument for a circular economy has now moved beyond environmental concerns and good corporate citizenship. It is seen as an emerging opportunity and a profitable way of doing business.

The core principle of the circular economy centres around waste reduction, encompassing various forms such as physical waste (such as construction materials, plastics, and metals), organic waste (agricultural residues), and informational waste (stemming from insufficient information causing supply-demand imbalances).

 The circular economy disrupts traditional linear economics by promoting resource efficiency, waste reduction, and innovative practices. It creates novel revenue streams, enhances resilience to resource scarcity, and aligns with eco-conscious consumer preferences. This shift spurs innovations, yields long-term cost savings, and cultivates positive brand images while addressing environmental challenges. The circular economy concept is projected to yield substantial macro effects in the medium run. Its gradual adoption will usher in transformative shifts in investment, employment, and sectoral growth, with a renewed focus on end-of-life resource management, durability-centric design, and services’ elevated role. This model is also anticipated to bridge production and consumption locations, as material cycles become more manageable at national and regional scales. A circular economy can steer supply chains towards greater regional integration by curbing reliance on imported inputs. Policies endorsing the circular economy can recalibrate price dynamics between imported and recycled resources, encouraging the development of circular economy-oriented industries until economies of scale are achieved. As circular economy adoption aligns with sustainability goals, these endeavours should yield long-term economic benefits.

However, the effectiveness of a functional circular economy isn’t solely reliant on governmental and industrial efforts. Consumers also wield influence by making sustainable product choices, which should become the norm. Their role extends to prolonging product lifespans, facilitating repairs, and utilising recycling facilities.

Example 1: In a circular economy, the fashion industry designs durable clothing using high-quality materials for extended use. Customised designs enable easy component replacement. Consumers return old items for repairs, refurbishment, or recycling. This approach reduces waste, conserves resources, and promotes sustainable consumption patterns.

Example 2: The food industry can repurpose “ugly” fruits and vegetables that might be rejected by supermarkets due to their appearance, create products from byproducts, and establish closed-loop systems. Companies can compost food waste, use it for soil, and adopt biodegradable packaging. Companies can collaborate with food banks and NGOs to redistribute excess food to those in need.

The Indian government has taken significant steps to foster a circular economy.

Under the Plastic Waste Management Rules, producers are mandated to manage post-consumer plastic waste, embracing Extended Producer Responsibility (EPR). The EPR framework encourages producers to adopt sustainable product design practices, increase the use of recycled materials, and support waste management and recycling initiatives.

The nationwide Swachh Bharat Abhiyan emphasises responsible waste management and cleanliness, indirectly encouraging circular practices.

The Make in India initiative promotes domestic manufacturing, aligning with circular principles of local production and reducing environmental impact.

E-waste Management Rules address proper disposal of electronic waste, contributing to a circular approach.

The National Institution for Transforming India (NITI Aayog) plays a pivotal role in researching and advocating circular economy strategies, focusing on resource efficiency and sustainability.

These measures collectively reflect India’s commitment to shaping a sustainable future through circular economy principles.

Indian industries aiming to adopt a circular economy encounter distinct challenges.

Limited awareness of circular principles inhibits progress, while inadequate recycling infrastructure hampers effective material recovery. In India, companies often prioritise short-term gains over sustainability. While EPR policies boost recycling, emphasis should shift to waste reduction through innovative strategies. Consumer awareness must grow to drive circular product demand and businesses should educate on circular practices.

Another issue is the inefficiency in the waste management sector. India has a vast informal sector involved in waste collection and disposal, and many are unaware of circular economy principles. As a result, many waste collectors and recyclers resort to the most straightforward and often polluting methods of waste disposal, such as burning or dumping in landfills. Integrating circular principles and educating collectors and recyclers can mitigate pollution by promoting sustainable practices and aligning with circular economy goals.

Policies emphasise end-of-life management, not value preservation through close loops. To advance, businesses, policymakers, and strategies must prioritise reuse, repair, refurbishment, and remanufacturing alongside recycling, as their absence hinders circular economy progress.

Down cycling challenges the circular economy goal by recycling materials into lower-quality products. While it reduces waste, it diminishes value and reusability. Down cycling is still a common practice in plastic industries due to the lack of proper infrastructure and technology for recycling high-quality plastic products.

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Mohua Singh