Updated: Dec 17, 2021
Circular Economy: What is it and why is it important?
Before we can understand the circular economy, it helps to define the linear economy. The current economy we live in today operates in the linear economy model: we take from earth, we make products, and then we throw them away.1 For instance, a lightbulb company takes resources, such as glass or metal, to manufacture its products. After the company makes the bulb, they sell it to a customer who uses it. Once the lightbulb burns out, it will be disposed of. It’s likely neither the company nor the consumer will ever see or use that lightbulb again.
The main issue of this model is that it is unsustainable because it operates as if there are infinite resources in the world. Our goods are produced at the expense of our ecosystems. Putting excessive pressure on these ecosystems can jeopardise and destroy essential living systems we depend on, such as water, air and soil cleaning.
To solve this problem, we need to depart from the linear economic model and shift to a circular economy. The circular economy may be defined as “an economic system that targets zero waste and pollution throughout materials lifecycles, from environment extraction to industrial transformation, and to final consumers, applying to all involved ecosystems”. The general idea here is to reduce waste to a minimum by sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products to extend the life cycle of products.
When products reach their lifetime end, its materials are either returned back to the industrial process or, in a case of biodegradable and treated organic residual, are safely put back in the environment to be part of the natural regenerating cycle3. This way we can create further value out of our resources.
How does the Circular Economy Contribute to Sustainability?
According to the Oxford English Dictionary, sustainability may be defined as “the degree to which a process or enterprise is able to be maintained or continued while avoiding the long-term depletion of natural resources.” Essentially, it refers to the extent to which we are able to meet our needs without compromising the availability of ecological resources. The fact that the circular economy allows us to decrease our dependence on importation of resources (raw materials, water, energy) suggests that they indeed, can contribute greatly towards sustainable development.
The adoption of a circular economy increases sustainability in various sectors of society. One of which is food. The current food system we have is unsustainable. We waste almost a third of the foods we produce while nearly 10% of the world’s population go hungry. But transitioning to a circular economy could solve this problem. According to the Ellen MacArthur Foundation, a circular economy for food systems produces organic and healthy food using natural, regenerative, and solid-supporting growing practices.
Circular economy prevents food waste and redistributes any surplus edible food to people who need it. Additionally, inedible food by-products and human waste are not neglected as they become inputs for new products. For instance, they can be utilized to produce bioenergy, other biomaterials, and high value products. The fact that a circular food economy can reduce waste streams is already, in itself, sustainable. In the long run, this could help farmers and food producers increase their profit margins, as well as permits them to be eligible for sustainable remuneration initiatives, such as the EU Common Agricultural Policy.
Challenges of Transitioning to a Circular Food Economy
However, it is important to acknowledge that adapting to a circular food economy wields new challenges and complications.
Knowledge and skill barriers
The implementation of circular economy initiatives requires technical knowledge and skills. However, there is still a lack of awareness and understanding about it. Many stakeholders who are involved in the agriculture sector (governmental entities, farmers, communities, business owners, etc) are familiar with the term “circular economy”, but do not fully understand the concept. Aside from knowledge, skills are also needed for enterprises to design their products based on circular economy principles.
Financial and economic barriers
There is already a widespread impression among stakeholders in the agriculture sector that they have to bear high costs at the initial stage of circular economy implementation. The agri-food supply chain is already facing various financial and economic risks due to the seasonality of the production cycle. These unprecedented risks can add extra costs to their operation system and pose significant obstacles in the effective adoption of circular economy initiatives.
Public policy and institutional barriers
Current laws on circular economy are not very strong. There is a lack of legal regulations on collecting and treating waste, which could impede the transition of the agri-food supply chain from linear to circular. Additionally, there is still inadequate support and encouragement from government agencies to enforce the shift towards a circular economy. Lack of financial incentive from governments also poses a new obstacle. Without sufficient capital investment, the transition to a circular economy could not be materialised. Furthermore, the government plays a crucial role in this transition.
The Future of Circular Food Economy
There are several ways in which we transform the traditional linear economic business model to a circular economy.
1) Regenerative Agriculture
To increase educational opportunities for those in agriculture.
To expose and introduce farmers and food producers to sustainable training and practices.
To improve technology to establish a resilient market for regeneratively grown foods.
2) Addressing Food Waste
Upgrading infrastructure to recollect and redistribute food.
Transforming wasted food byproducts to bioenergy materials.
Improving storage and processing facilities in low-income countries and redistributing edible food in high-income countries.
A recent initiative that supports the transition to a circular economy is The Raw Materials Scoreboard 2016 of the European Innovation Partnership (EIP). This scoreboard will be used to monitor and evaluate progress towards a circular economy. All in all, the circular food economy will continue to gain momentum as a new economic paradigm. However, there are several socio-economic and environmental challenges that need to be addressed to enforce the effective shift towards a circular economy.
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