How Circular Economies Fight Poverty


SEATTLE — Ecosystems, like our modern economies, are webs of transactions that depend on natural resources and a balance between supply and demand. Plants and animals, however, do not over extract, over-consume and waste resources. They take what they need and eventually recycle nutrients and energy back into the environment. Modern circular economies are designed to mimic these natural cycles. Through circular design, resources are recycled and used more efficiently, leading to dramatic reductions in waste and energy loss. Circular economies fight poverty by cleaning up the environment and creating more economic opportunities in developing countries. They also make businesses more sustainable and profitable.

From Linear to Circular

Most of the world today operates within a linear economy, or a “take, make, throw away” model. Consequently, two billion tons of solid waste are created every year, which is equivalent to five times the weight of all people on Earth. But, while we continue to extract more and more limited resources from the planet, we are ignoring the resources circulating right in front of us.

Take the U.K.’s National Industrial Symbiosis Programme, for example. It connects seemingly dissimilar industries and uses one industry’s byproducts to support another industry. Over the last several years, companies that have participated in the program have saved more than $1.9 billion in production costs while also cutting carbon emissions by over 30 million tons.

Circular economies are not designed to conflict with economic interests; if anything, circular design allows companies to maximize their profits while simultaneously conserving resources and creating more jobs. As a circular approach expands across the European Union, an estimated three million new jobs will be created by 2030. Climate action objectives and circular economies go hand in hand, and they are leading the fastest growing markets for renewable energy and sustainable production. Reaching the Paris Agreement targets would boost the global economy with an investment of $90 trillion.

A Solution to Poverty

In the last decade, countries such as Finland, Germany and Japan have taken a lead in circular economy investments. The same needs to be done in the developing world. If the U.N. is committed to ending extreme poverty by 2030, then its Sustainable Development Goals (SDGs) must focus on circular economies. Timo Mäkelä, the Senior Advisor of Sitra, the Finnish Innovation Fund, is certain that circular economies fight poverty. “Efficient recycling of materials generates new jobs,” Mäkelä explains. “It also creates economic growth, which is needed especially in poor countries.” Thus, circular economies fight poverty and create a better world.

A joint report by the U.N. and the Ellen MacArthur Foundation estimates that, by adopting circular principles in the agriculture and vehicle manufacturing industries, India could create $218 billion in additional profits by 2030 and reduce greenhouse gas emissions by 23 percent. Developing countries are beginning to take steps towards a circular economy. Here are a few examples:

  • Remanufacturing in Ghana: Microenterprises in Suame, Ghana recycle, remanufacture and repair cars. After being in operation for 30 years, 200,000 people are employed and 12,000 small businesses are in operation.
  • Circular Policy in China: In 2009, China passed the Circular Economy Promotion Law, which called for more investment in the circular economy, increased resource efficiency, protection of the environment and promotion of sustainable development.
  • Composting in Brazil: Procomposto is a Brazilian business that collects and composts food waste that would otherwise be destined for a landfill. In Brazil, half of the waste coming from restaurants, supermarkets and apartment blocks is organic, meaning the compost can be utilized for organic farming. 
  • Industrial Recycling in Nigeria: African Foundries is leading Nigeria’s steel market and taking a circular economy approach. The company powers its factories with natural gas, a byproduct of oil drilling that would normally be discarded and released into the atmosphere.

A Quadruple Win

Circular economies fight poverty in multiple ways. They create more jobs, new industries and economic stability despite limited natural resources. They also curb pollution and mitigate global warming. Instead of burying waste or releasing it into the atmosphere, industries collaborate to reuse and regenerate it. With nine million people dying every year due to pollution, a circular economy could also save lives.

In many ways, our current linear economy is simply unsustainable. With people in poverty bearing the highest costs of over-extraction and pollution, we need an economic model that addresses poverty not just now but in the future as well. Circular economies are designed to last and evolve with a changing planet, and they may be one of our best chances to end poverty.

Kate McIntosh

Photo: Flickr


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