Brief Introduction: Circular Economy

Summary: We need to redesign our economy from a linear to a circular one. A circular economy can grow without destroying its environment.
Estimated time to read: 10 mins


Our current economic model has a fundamental design problem. There’s absolutely no going around it. Our economies and industries are designed to grow by consuming materials, which in a finite world simply cannot work in the long run. Unsustainable growth has resulted in degradation of natural habitat, global climate change, acidification of the oceans and depletion of natural resources. The results of depleting natural resources can be seen clearly when looking at developments in commodity prices (click to enlarge):

Commodity prices 1

Source: McKinsey Global Institute

De-growth is not an option either. It is unrealistic to think that we could ever commit all nations and all people to a goal of stagnation or decreasing wealth and material well-being. But even more importantly, we live in a world of abundance where growth is natural: just look at nature, which is constantly growing without any sign of problems. The reason why we are having issues is not growth. It is the blueprint for growth we are using that’s causing us problems.

Here is our blueprint:

Take, make, waste

Our economy is based on a linear model of digging resources up, using them to make products, and finally throwing those products into a landfill. The problem is that we are consuming and destroying resources at such a rate that nature doesn’t have time to replenish itself. We have reached our limits to growth.

However, there is an alternative blueprint for growth – one that is not reliant on consuming resources.


Circular Economy

“A circular economy is one that is restorative by design, and which aims to keep products, components and materials at their highest utility and value, at all times.”

– Ellen MacArthur Foundation


The concept of a circular economy has its roots in the 1970s, but it has received increasing attention during the past few years. A circular economy is the opposite of our linear economic model: materials don’t flow one-way, but circle within the economy. Just like in nature, there is no waste – only materials in different forms.

The central idea of a circular economy is that there are two different flows of material – technical and biological – which need to be kept separate. The technical flow of materials, also known as technical nutrients, circle within economy and industry without ever returning to nature. The biological flow of materials, or biological nutrients, are maintained in their pure form and can therefore be returned to nature after use.

Here is a blueprint of a circular economy (click to enlarge):

Cradle to CradleSource: McDonough, W. & Braungart, M. (2008). Cradle to Cradle: Remaking the Way We Make Things.

A good example of the technical nutrient flow is a company called Desso, which leases carpets to consumers. Desso has evolved from a carpet-selling company to a service company: the company’s customers don’t pay for owning a carpet, but for using one. Desso takes back the used carpets from their customers and upcylces them into new products, therefore eliminating waste.

For a biological nutrient flow example, take Ecovative. Ecovative produces mushroom-based materials that can be used for a wide variety of purposes, such as packaging products. The materials are totally compostable, yet durable and easy to shape.

In both Desso and Ecovative the products are designed with end use in mind: the product either returns to nature or circles within the economy perpetually. This also means that products cannot contain harmful toxins or materials that deteriorate the product’s performance. When technical nutrients and biological nutrients are kept separate and at their pure form, companies can recycle materials in a never ending cycle. The end product of one process within the economy becomes the input for another.

In essence, waste is ‘designed out’ in a circular economy.

Desso and Ecovative are just the tip of the iceberg, and thousands of others have pledged to advance the development towards a circular economy, including Coca Cola Enterprises, Caterpillar, Maersk Line, Lassila & Tikanoja and Ponsse.

Here is a more detailed description of a circular economy by Ellen MacArthur Foundation:

  1. Circular economy is a global economic model that decouples economic growth and development from the consumption of finite resources;
  2. Circular economy distinguishes between and separates technical and biological materials, keeping them at their highest value at all times.
  3. Circular economy focuses on effective design and use of materials to optimise their flow and maintain or increase technical and natural resource stocks;
  4. Circular economy provides new opportunities for innovation across fields such as product design, service and business models, food, farming, biological feedstocks and products;
  5. Circular economy establishes a framework and building blocks for a resilient system able to work in the longer term.

PS. Take a look at this intro video to Circular Economy:

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