A linear “take-make-dispose” economy, which is the most popular economic models around the world, is largely wasteful because up to 90% of the raw materials used in the manufacturing process end up as waste even before the leaving the production line. In addition, 80% of goods manufactured are eventually thrown away within the first six months, which translates to an unsustainable rate of wasting fast-diminishing natural resources. Fortunately, a circular economy that is based on regeneration and restoration can help solve almost all the problems associated with a linear economy. More specifically, a circular economy aims to keep raw materials, goods, and product parts at their highest value and utility levels all the time. This is in addition to differentiating between biological and technical cycles.
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An Overview of Global Resources
By 2030, the global population is projected to hit eight billion people and consequently lead to fierce competition for the few resources available. For example, data from a Living Planet report shows that the annual rate of natural resource usage is 30% more than the earth can replenish. Some of the resources that will be in short supply in the near future include food and water. In fact, British economist Thomas Malthus predicted more than 200 years ago that overpopulation would create catastrophic famines around the world. What’s more, the United Nation’s Food and Agriculture Organization (FAO) says that 1.8 billion people will live in water scarce regions by 2025. As such, they will face difficulties planting food or accessing water for drinking and using at home.
Besides food and water, global energy reserves are being depleted at an alarming rate. For instance, all known global oil reserves will only last 46.2 years if the current rate of production is maintained. In addition, natural gas resources will last about 55 years at the current rate of extraction. Coal is the only energy resource expected to last for more than a century because the available reserves are projected to last for 188 years at the current rate of production. These statistics show that the current rate of extracting and using natural resources is unsustainable in the near and long-term future.
Opportunities for Circular Economy Resource-Conservation
Unlike a linear economy, a circular economy places great emphasis on recycling. Fortunately, some big economies have already adopted this economic model. For instance, the European Union recovers and reuses two times more plastic than the US. The US also lags in recovery of textile materials with the United Kingdom (UK) recovering 60% of textiles compared to 15% for the US. Japan has an even more advanced recycling program that recovers 98% of aluminum, whereas the US only manages to recycle 20% of the same material. These figures are troubling considering the US has one of the biggest consumer markets in the world. Overall, the US should aim to increase its recycling rates.
Besides preserving natural resources, recycling can have a positive impact on the economy. For instance, about 200,000 people in the US work in plants that dismantle and disassemble parts found in cars, medical equipment and IT devices. This activity alone generates $43 billion dollars in revenues, making it a major contributor to the US’s GDP. Luckily, these economic benefits are not unique to the US as data from McKinsey shows that circular-based economies could add as much as $1 trillion to the global economy by 2025. This is in addition to creating 100,000 new jobs within the next five years alone meaning that the circular economy approach is financially feasible and sustainable over time.
The European Union’s Circular Economy Leadership
The EU is one of the regions that has excelled in implementing circular economy-based sustainable development practices. To start with, EU countries recycle at least 65% of all municipal waste. At the same time, the EU recycles 75% of packaging waste. These actions are already bearing fruit by reducing municipal and packaging waste to a maximum of just 10% of all waste that ends up in landfills. The EU has also developed measures to promote the re-use of waste generated from production-cycle processes. This means turning one industry’s waste or by-products into another industry’s raw material inputs thereby cutting wastage of increasingly rare resources. Another strategy the EU is using is developing economic incentives that encourage manufacturers to adopt green production and recycling strategies. Doing so also leads to the distribution and sale of “green” products.
Ways to Develop a Circular Economy
For countries willing to put in the hard work, there are several ways of developing a circular economy. The first strategy is setting goals and creating an action plan. This means determining the goals a country wants to achieve and creating a road map that defines in detail how to accomplish them. After this, it is important to educate members of your organization to support the goals already set. More precisely, organization members will be more attuned to supporting and contributing to organization-wide goals if they understand how they work as well as circular economy principles.
The third strategy in developing a circular economy is innovation and optimization, which refers to assessing materials that should be recycled and those that must be phased away. This also involves encouraging manufacturers to design and produce products that are easy to disassemble, recycle, and reuse. This approach can help manufacturers cut production costs, preserve resources, reduce environmental pollution and increase their revenues at the same time. The final strategy in developing a circular economy is cultivating an engaging rapport with business partners.
Over the last century, most developed countries prospered by basing their economies on a linear design. Sadly, this approach leads to wastage of natural resources and it is not sustainable given the growing global population. Luckily, recycling can remedy this situation and countries that lead on this front include Japan, UK, and those in the EU. In particular, Japan boasts of an aluminum-recycling rate of 98%, which is impressive considering the US only recycles a paltry 20% of the same material. European Union countries have also benefited greatly from implementing circular economy practices. Some of the strategies that decision makers can use to develop circular economies include setting and creating an action plan, innovation and optimization, educating and activating organization members, as well as engaging business partners.