What is the Circular Economy?

July 27, 2015


By the late 1970s, the Western world had come to a crossroads. Already, many countries were consuming natural resources at a rate that was far less than sustainable. It became increasingly clear that new ways of approaching economic, agricultural and industrial systems were desperately needed in order to address the growing number of issues facing the sustainability of our environment.

That had a number of scholars, scientists, researchers and professionals envisioning a vastly different future. Many wanted to change traditionally destructive cycles, which had become a huge burden on the environment and on communities around the world.

It was at this time the idea of a circular economy first began to gain appeal. A circular economy is a synthesis of a number of different concepts that, using nature as a source of inspiration and direction, aim to address overconsumption and reckless waste buildup in the environment. It generally describes systems that value regenerative design and a closed loop approach to industrial processes.

Getting a Visual Understanding of the Circular Economy Model

While the concept of a circular economy may at first seem nebulous - branching from a number of various backgrounds and ideologies - the basics are actually pretty simple. A circular economy thrives on sustainability and focuses mainly on refining design production and recycling to ensure that little to no waste results.

Visual representation of the concept really brings the idea home. This diagram by the Ellen MacArthur Foundation has become the benchmark for circular economy graphics. Another comprehensive infographic from the Oklahoma Horizon site shows how the circular economy includes and benefits consumers.

Addressing the ‘Take-Make-Dispose’ Linear Economy

The generic concept of the circular economy cannot be traced back to one particular author or originator. Rather it is a kaleidoscope of important ideas like cradle to cradle, biomimicry and the blue economy - ideas designed to target the most salient dilemmas surrounding our widespread ‘take-make-dispose’ economy.

One Swiss architect, Walter Stahl, made major contributions to the concept. Credited with first describing the “Cradle to Cradle” ideology, Stahl set out on a mission to create a model that could achieve new levels of efficiency and waste management to squarely address a system dangerously dependent on overconsumption, limited resources and inefficient ways of disposing waste.

This system, the incessant culprit behind many current woes, such as climate change, the energy crisis and even the volatile prices of precious commodities, has become quite a vicious cycle. Record numbers of waste and pollution in every industry, including electronics, textiles, retail and more, have made a new revolution of thought and practice an utmost necessity.

Circular Economy Movers and Shakers

In fact, decision-makers of public and private entities around the globe are rethinking the status quo, “cradle to grave” industrial and economic practices, which leave products in the environment with either no place to go or with the potential to create serious hazards and increase pollution.

Perhaps one of the most vocal proponents of new ways to address old economic and industrial models is the Ellen MacArthur Foundation. The organization has made a huge impact on the way the world looks at the circular economy and has contributed much to the promotion and activity surrounding it.

The Foundation’s 2012 report, Toward the Circular Economy, played a large role in introducing the concept in a comprehensive way and has catalyzed a number of widespread projects and international idea exchanges among governments, companies, universities, designers and policy makers around the world.

Even national governments are eyeing the circular economy as a viable way to usher in a new economic era. The Swiss government, for example, has endeavored to introduce a circular economy vis a vis its Zero Waste Plan (ZWP). First introduced in 2010, the plan has the ambitious goal of a zero waste society. The objective falls right in line with circular economy principles of “waste as food,” emphasizing a built-in, closed biomaterials loop, which stands at the heart of the circular economy concept.

Further, Scotland hopes that objectives like 100-percent renewable energy production by 2020 and a 70 percent recycling rate by 2025, with a maximum of only 5 percent sent to landfills, can be achieved using circular economy mainstays. Already, the ZWP has made a huge impact on the global push for practical application of circular economy principles and goals, and a number of other governments are taking note.

The Dutch government, for instance, decided to implement its Waste to Resource program in 2014. The program, the result of years of initial research, aims to transition the Netherlands into a full-on circular economy with two aims: to ensure the circular design of products and to close local and global cycles.

Understanding the Flow of a Circular Economy

What the visual supports drive home about the concept of a circular economy is that it is unique in its ability to flow a sustainable way. Indeed, some of the main definitions of a circular economy highlight its two material flows: biological nutrients and technical nutrients.

The biological nutrients, things like food and even forests, are designed to flow back into the biosphere after use rather than contribute negatively to the environment. The technical nutrients, which are products and materials like electronics and machinery, are designed to circulate within the system with minimum loss of quality and without burdening the environment. In addition, the end goal for many regenerative circular economic plans is a complete switch to renewable sources of energy to fuel the process.

What’s Next for Circular Economy Goals?

The World Economic Forum has reported on the next steps for scaling up the circular economy model to support the growth of new initiatives in governments, cities, schools and universities across nations. Also, a number of companies have implemented circular economy business strategies and objectives.

This means the circular economy is gearing up to make radical changes in the way we think and participate in society around the globe. As more and more entities begin to make concerted contributions to the circular economy model, get ready for a unique step-change in how we live, grow and coexist with our environment.