Circular economy or vicious circle?

19 May 2019 - 05:00 By STAFF REPORTER

Shortly before her death last year, former environment minister Edna Molewa described the circular economy as a "trillion-dollar opportunity", with huge potential for innovation, job creation and economic growth.
The concept of a circular economy differs from the traditional linear economy, in which virgin resources are extracted, processed and then dumped as waste. By attempting to extend the life of natural resources by recycling, reusing and recirculating them, the aim is to "close the loop" and reduce waste and inefficiency.
As part of the SA-European Union Development and Co-operation Agreement, the government hoped to co-operate more closely with EU members on circular economy initiatives - with an initial focus on tyres, paper and packaging, lighting and electrical and electronic wastes.
But there's a hitch
Noting that nearly 90% of SA's waste was still dumped in landfills, Molewa said the government had identified several sectors where wealth could be extracted from the so-called dead capital of waste products, notably the plastics sector.
However, some resource economists remain dubious about the benefits promised by the circular economy model and suggest that efficiency gains could produce a "rebound effect" in which cheaper production methods spur companies to produce even more products than before.
Writing in the Journal of Industrial Ecology in August 2018, resource management professors Trevor Zink and Roland Geyer said proponents of the circular economy had tended to look at the world purely as an engineering system, overlooking the economic aspects.
"We argue that circular economy activities can increase overall production, which can partially or fully offset their benefits. Circular economy rebound occurs when circular economy activities, which have lower per-unit-production impacts, also cause increased levels of production - reducing their benefit.
"We caution that simply encouraging private firms to find profitable opportunities in the circular economy is likely to cause rebound, and [to] lower or eliminate the potential environmental benefits," they said.

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