Bursting the Bubble

The Circular Economy Paradigm

13 September 2016 | by

Improving the efficiency with which the European Union uses resources is a priority in the face of an ever increasing population and corresponding growth of consumption well above the regenerative capacity of nature. In June 2015, MEP Pietikainen said that the current way in which resources are being used is unsustainable and that we need “a true paradigm shift like with Copernicus or Galileo Galilei”. She later added that the circular economy is the paradigm shift we need, as it is a “systemic change” as well as a “huge, hidden, business opportunity”.

Vibrant economies are dependent on contingent conditions which gradually evolve over time, and there is indeed not much sense in trying to replicate the industrial models of the past when confronted with an absolute environmental barrier. Therefore, rather than focusing on an antiquated relationship between companies and consumers, with its train of ancient world views and opinions, the attainment of systemic change requires re-examining that relation before it can ossify any further. Since the industrial revolution, production and consumption patterns have developed according to a linear perspective on growth based on the assumption that resources are abundant and can be easily disposed of. But this way of thinking threatens the sustainability of our economic model as demand and competition for finite and scarce resources put pressure on our industrial global competitiveness through environmental degradation and fragility.

With the aim of facilitating a paradigm shift, the Commission adopted the Circular Economy Package on 2 December 2015, which includes revised legislative proposals on waste to stimulate Europe’s transition towards a circular economy.

Circular Economy

A circular economy seeks to retain the added value of products for as long as possible by productively reusing resources when a product has reached the end of its life. The Circular Economy Package sets out a number of political commitments to contribute to ‘closing the loop’ of products life-cycles by providing strong policy signals. Separate collection at source and methodologies to calculate recycling rates will ensure high quality recycling. Clear recycling targets will be set and materials will re-enter the economy as secondary raw materials. Landfilling will be virtually eliminated. Energy recovery will have a role to play with regard to non-reusable and non-recyclable waste.

Transitioning to a more circular economy ultimately requires changes throughout the entire economy, from designing products for longer use and easy repair or recycling to new business and market models, from new ways of turning waste into a resource to new modes of consumer behaviour.

Consumer behaviour

The attraction of a circular economy mostly lays in the promise of reconciling environmental and economic concerns in an integrated framework. This, in part, translates into the idea that consumers need to be empowered to make informed choices through better information on the environmental credentials of different products.

One way of informing consumers about resource use is by incorporating environmental information into the price of products so that these reflect both the cost of the product as well as any negative externalities associated with the product. In this respect, several MEP’s recently proposed to shift the cost of littering to producers. The logic behind this is perhaps the anticipation that producers will recalculate the product price according to the cost of litter prevention or collection, ultimately causing consumers to bear the burden of their own littering.

But as decisions in the value chain are connected and provide incentives between producers and consumers, a change in one variable may cause a shift in another. An increase in the price of a product could cause a shift in demand towards cheaper products and would not prevent littering per-se. Consumers form attitudes and routines which may keep economies ‘locked-in’ to the linear model as consumption habits hinder the transition towards a more circular economy. Consequently, pure information about the ecological and economic rationality of switching to a circular economy model will not necessarily be sufficient to help provoke a paradigm shift.

As paradigms rely on a critical community for their existence, a paradigm shift requires not only the revaluation of business models and industrial policies, but of established consumer behaviour as well. To attain veritable systemic change, consumers will play an important, if not the most important, role in a mental shift towards a circular economy.

One Comment

  1. Very interesting topic. I believe that the world will eventually change to circular and sharing economy paradigm, and we will look back in wonder at the past, and ask ourselves how was it possible that every day we threw away tons of perfectly good containers and materials.

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