What Is Circular Economy and Why Should You Adopt It?

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The “Indigenous Perceptions Of The Human–Nature Relationship” paper describes how indigenous inhabitants believe in having a shared ancestry and origin with nature. For them, life anywhere is only possible when the inhabitants consider the natural constituents of an ecosystem surrounding them as their kin or relatives. In such an environment, the two life forms affect each other, which in turn enhances the ecosystem.

The Maori culture of New Zealand is a contemporary example where humans and nature are profoundly related and are considered equally interdependent. Their way of life is abreast of the modern sustainable life and conservation of natural resources.

Such interdependent habitats in our ecosystem have always fascinated me. It reminds me of my grandmother, whose ancestors belonged to an indigenous community. She cultivated her food in a small garden, prepared cheese and butter at home, and never wasted food. She made sure to fully utilize all her resources to keep products in constant use. I often wonder how great it would be to apply this circular strategy to our economic system.

If we look, today, we have a linear economic system where companies utilize our scarce resources to produce goods that are used by their clients and thrown away. Hence, we also refer to it as a ‘take-make-waste’ economy.

Moreover, an increase of about 3.2 billion middle-class consumers is expected by 2030. It will result in an exponential rise in materials’ demand while their supply remains limited. This calls into question the current economic system’s ability to efficiently meet the demand while conserving future generations’ resources.

Fortunately, as more organizations are innovating, designing new products, and developing processes and sustainable methods to derive raw materials for production, we observe a new model’s emerging adoption –the circular economy. Such new systems possess a high potential for disrupting the existing economic system.

What Is Circular Economy?

The circular economy’s notion is based on the principles of designing out waste and pollution, constantly circulating materials, and regeneration of natural resources.

It urges companies to look beyond the linear economic system and aims at achieving collective societal benefits. It is further supported by the increasing use of renewable natural resources, which proves the circular economic model to be economical, naturally, and socially positive.

“Looking beyond the current take-make-dispose extractive industrial model, a circular economy aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural, and social capital. It is based on three principles: design out waste and pollution; keep products and materials in use; regenerate natural systems.”

Ellen McArthur Foundation’s Definition Of Circular Economy


The Principles Of Circular Economy

According to Ellen McArthur Foundation, the circular economy is based on three fundamental principles design out of waste and pollution, keep products and materials in use, and regenerate the natural systems.

1.     Design out of waste and pollution

The circular economy is founded on the idea that there is no waste. Considering its aim to design out of waste and pollution, businesses with this working model produce quality goods that can last a long time and do not have to be reproduced as frequently.

These goods are easy to disassemble to reuse or transform. Unlike recycling, a circular economy does not involve a massive amount of energy to transform or reuse the goods; instead, these goods are easily put apart and used for different purposes. It helps it reduce unnecessary use of natural capital and, in turn, preserve and enhance it.

2.     Keep products and materials in use

The circular economy model highlights the difference between biological and technical cycles. In the biological cycle, individuals consume biological materials such as linen, food items, etc. for their daily life requirements and return it into the system as compost or anaerobically digested material. Such feedback regenerates natural resources such as soil and oceans for the economy.

On the other hand, technical cycles recoup and reinstitute products -mobile phones, components -chipset and materials -marble, into the system, using strategies such as recycling, repairing, and reusing.

3.     Regenerate Natural Systems

The third principle of the circular economy is to utilize resources to their maximum capacity by circulating them in both biological and technical cycles. This principle focuses on reducing dependence on non-renewable energy sources and increasing the system’s sustainability by mainly depending upon natural renewing processes.

Thus, this principle is directed at making the system more effective by identifying and reducing obstructive externalities.

Source: Ellen McArthur Foundation

Benefits Of The Circular Economy Model

As the linear economy is becoming saturated, the circular economy represents an opportunity worth trillions of dollars. Here are some of the outstanding benefits of a circular economy.

1.     Reduces Green House Gases

The prime purpose of the circular economy is to conserve the ecosystem and combat excessive natural resource exploitation. It can effectively reduce greenhouse gases, excessive consumption of raw materials, enhance agricultural productivity, and mitigate unfavorable externalities. Here’s how

  • Utilizes renewable energy resources -limiting the use of fossil fuels
  • Promotes dematerialization and reuse of materials to reduce the consumption of new materials and involvement of the production process in the reinstitution of goods into the system.
  • Reuses residues to their maximum capacity
  • Promotes energy-efficient production and use of non-toxic materials

The European Commission has already set its targets to foster a circular economic model and is expected to reduce 48% of its total carbon emission by 2030.

2.     Mitigates Land Degradation

Apart from the loss of biodiversity and unique landscapes, around US $40 billion of the global economy is drained due to land degradation.

The circular economy aims to increase land productivity, reduce food waste from farm to table, and improve nutrient-return to the soil to combat such losses. It seeks to enhance the soil quality through biological processes like composting and anaerobic digestion, which reduces the need for fertilizers and other additional nutrients.

3.     Promotes Conservation of Natural Resources

Unlike the linear economy, which is built on constant material extraction, the circular economy has up to 70% potential of saving materials, which can amount to up to a trillion dollars annually.

This makes a circular economic system efficient in dealing with the increasing material needs of the population by extending material cycles, making them last longer, reducing landfills, and energy-based recycling processes. It also cuts down on the pollution caused by material extraction processes.

4.     Makes Businesses More Resilient

Since a circular economic model is based on reusing and recycling materials, it makes the businesses independent of raw materials’ volatile prices. It helps companies sustain their supply chain, which might otherwise be destroyed due to climate changes or other unexpected events. It also prepares them to deal with similar unanticipated changes.

5.     Increases Employment Opportunities

EU recycling industry alone creates around 500 000 job opportunities. As per the World Economic Forum, a circular economic system, along with the unorthodox organization and regulation of the labor market, can create tons of entry-level employment opportunities. It is particularly helpful for governments to fill the estimated job gap of about 600 million.

6.     Improves Economic Growth

It is important to understand that economic growth is not based on resource consumption, and they are two entirely different things. In the current time, Europe has put forth an excellent of this. Following a circular economic system, together with optimized production methods based on dematerialization and making of easy-to-disassemble products, EU households expect an increase of €3000 in their disposable income per annum 2030.

7.     Increases Demand For Services

Ellen McArthur’s Foundation report shows that a circular economic system can create demands for new services and create job openings.

  • Reverse logistics organizations that endeavor to reintroduce products into the system
  • Selling and marketing platforms that aim to provide lasting products
  • Companies specialized in refurbishing products and remanufacturing parts and components

8.     Helps Understanding Clients Better

The circular economy endorses businesses that rent or lease products instead of selling them. Such a system encounters frequent interaction of businesses with the customers, which helps them learn more about their clients’ consumption patterns and preferences.

This can ultimately improve user satisfaction and enhance their loyalty. On the part of the business, it can help it develop products and services that are better suited for its consumers and stick to the circular economy’s notion of providing lasting products according to existing demands.


The current linear economy has exposed our natural resources to severe exploitation to fulfill the increasing population’s requirements over the years. With the circular economy’s evolution, we will be empowered to design models to conserve our environment and natural resources while satisfying the growing population’s needs.

Although the circular economic model has started to pave its way into the linear economic system, we are currently facing the challenge of mainstreaming it and bringing it to scale.

However, considering the current environmental crisis, it is high time to adopt this sustainable economic system -the circular economy. While it is a time-taking process, the positive externalities that it guarantees are far more impactful in the long run.

Start by identifying ways to embrace the basic principles by asking questions like,

  • How to design out of waste?
  • How to reintroduce materials into the system?
  • How to regenerate natural resources?
References and additional resources
Kincentric Ecology: Indigenous Perceptions Of The Human–Nature Relationship
Towards the Circular Economy
Ellen Macarthur Foundation – Circular-economy
Ellen Macarthur – What Is The Circular Economy?
Conceptualizing the circular economy: An analysis of 114 definitions
Barriers to the Circular Economy – Integration of Perspectives and Domains
Toward-the-circular-economy-accelerating-the-scale-up-across-global-supply-chains – World Economic Forum
Towards Circular Economy Report – World Economic Forum
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