Circular economy versus traditional business models in international development | Experts’ Opinions

Considering the rapidly depleting natural resources and the challenges provoked by climate change, the subject of a more environmentally friendly and sustainable economic model is increasingly present on the agenda of policymakers, research, and academia, as well as think-tanks and NGOs, and donors. Often associated with sustainable development, the concept of the circular economy is increasingly being interpreted as a lever for the sustainable progress of businesses, with an influence on consumer preferences. However, despite its significant sustainability and efficiency, it also carries challenges related to infrastructure and regulatory changes. Which type of economy currently prevails in aid initiatives – the circular or the traditional linear model? Let’s find more on this topic from international experts.

DevelopmentAid: What are the potential benefits and drawbacks of adopting circular economy principles in international development aid initiatives, and how can developing countries address the primary challenges in transitioning to circular economy models from traditional business models within these initiatives?

“Benefits:

• There are clear long-term benefits in sustainability, resource efficiency, and economic resilience that the circular economy can enhance.
• Creating jobs at all levels of the economy, in particular manual work on repairing products. Creating jobs on a countrywide level, not just in cities, thus reducing inequality.
• Cleaning up the environment and reducing pollution and waste, reducing carbon emissions, energy consumption. Example: reusing waste heat from factory machinery, office buildings and data centers for power generation as well as turning agricultural waste into energy through biomass power generation.
  Repair, recycle, and upcycle, keep products and materials in use for a longer period, reducing the need for raw material extraction. Example: modern phones should last for 10 years instead of the current two or three with refurbished items being distributed at affordable prices in developing countries.
• Repurposing products. Example: EV car batteries could, after eight years, be collected, repacked, and then used for solar power storage in developing rural areas.
• Assisting towards the achievement of SDGs, in particular of the SDG(6) Clean Water and Sanitation, (7) Affordable and Clean Energy, (8) Decent Work and Economic Growth, (9) Industry, Innovation and Infrastructure, (11) Sustainable Cities and Communities, (12) Responsible Consumption and Production, (13) Climate Action.

Drawbacks (Challenges):

• Ensuring awareness that a circular economy benefits everyone and convincing that the initial investment is needed to ensure physical products can be serviced/repaired.
• The need to balance products’ life extension with the introduction of more efficient or environmentally friendly products. Example: transiting from an internal combustion engine to hybrid/EV for vehicles in the full lifecycle of materials used from extraction, transportation, processing use and disposal/recovery.
• Education to nudge a shift in personal consumer behaviour.”

“Benefits:

Resource efficiency and waste reduction:

• Circular economy principles emphasize the reuse, recycling, and regeneration of products and materials, reducing waste and the demand for raw materials.
• This can lead to significant cost savings and environmental benefits, which are crucial in resource-scarce developing regions.

Sustainable development:

• Circular economy models promote long-term sustainability by reducing environmental impact and fostering resilience against resource depletion and climate change.
• This aligns well with the Sustainable Development Goals, particularly those related to responsible consumption and production, climate action, and economic growth.

Community empowerment:

• Communities can become more self-reliant by developing local solutions for waste management and resource use.
• This empowerment can enhance social cohesion and improve overall quality of life.

Drawbacks

Initial investment and transition costs:

• Transitioning to a circular economy can require significant upfront investment in infrastructure, technology, and capacity building.
• Developing countries might struggle to mobilize the necessary financial resources without substantial external support.

Capacity and knowledge gaps:

• Implementing circular economy practices requires specialized knowledge and skills, which may be lacking in many developing regions.
• Capacity building and education programs are essential but can be time-consuming and costly.

Regulatory and policy barriers:

• Inadequate or inconsistent regulatory frameworks can hinder the adoption of circular economy principles.
• Strong governance and policy support are necessary to create an enabling environment for circular practices.

Cultural and behavioral changes:

• Achieving a circular economy requires significant changes in consumer behavior and cultural attitudes towards consumption and waste.

These changes can be slow and require sustained effort through education and awareness campaigns.”

See also: The advantages and disadvantages of the circular economy in international development | Experts’ Opinions

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