Circular economy a viable solution for developing economies

Hassnain Javed

OCTOBER 17, 2019

To meet the needs of future generations, fundamental change in the way we use natural resources is necessary. Current global resource extraction patterns are inconsistent with internationally agreed goals to limit global average temperature increases to below 1.5 ° C above pre-industrial levels. Redirecting to a sustainable growth direction would require significant changes in both the productive use of primary resources and a significant degree of primary resource replacement with secondary materials – those obtained from waste streams and reused or reconditioned for further use.

The definition of ‘ circular economy ‘ is increasingly becoming a new robust growth model. A circular economy is one where goods and services are recycled, repaired and reused instead of disposed, and waste from one industrial process becomes a prized input into another. The design and optimization of resource ‘ loops ‘ across value chains can help meet the material needs of growing populations by drastically lower levels of primary resource use per capita. The concept of circular economy is now a fundamental component of both the 2050 Long-Term Strategy for the EU to reach a climate-neutral Europe and the five-year plans for China. Japan placed the circular economy as a priority for the G20 Summit in 2019.

In contrast in our country Pakistan, given significant development and political progress, inadequate attention has been paid to circular economy pathways and the same situation prevails in other developing countries. Structural and political conditions, as well as the faster pace of growth and industrial development, would demand different strategies to those implemented in developed countries; for example, the agricultural sector has so far received minimal attention in global circular economy discussions, but will need to play a central role in the circular economy pathways of developing countries. Innovation is already occurring in developing countries, in the agricultural sector and well beyond, and policymakers in developing countries are starting to implement aggressive policies for more resource-efficient and circular industrial growth patterns. The circular economy presents the conventional manufacturing-led growth model with a compelling alternative strategy for industrial development and job creation. The circular economy remains mainly recognized as a tool for waste management and recycling, but the economic opportunities are much wider and more complex. The adoption of this model could provide new business opportunities for economic differentiation, value creation and skill development with the right supporting conditions. Developing countries like Pakistan should take advantage of the new economic opportunities in a strong position. A wide informal industries are already involved in’ circular’ practices-for example in areas such as electronic waste (e-waste) and telephone repairs -and could engage in supply chains with higher-value circular economy. Therefore, with appropriate investment, developing countries can’ leapfrog’ developed countries to incorporate sustainable production and consumption at the core of their economies in digital and material innovation.

A transition to a circular economy carries with it some trade-offs that need constant monitoring. In the absence of a systematic and strategic approach to the circular economy at national or international level, there is a danger that under the circular economy umbrella companies will pursue perfunctory-or, at worst, negative-practices that discourage more efficient and higher-value use of content. For example, waste-to-energy projects using under-standard waste disposal methods may carry environmental and human health risks and may also rely on more suitable waste sources for previous-life goods. Exchange-offs may also occur where circular proposals suggest major industrial policy shifts: in mineral-intensive economies, for instance, circular strategies may promote value-added, but may also threaten job losses among those working in resource extraction and basic processing.

National governments in developing countries must recognize synergies between the circular economy and existing national plans and conduct an analysis of the scope of opportunities for transition to a circular economy through key economic sectors

Circular economy’s progress in developing countries will be important in ensuring sustainable growth for global efforts. Developing countries will already be global production centers and are expected to become major market drivers. Progress now in incorporating circular concepts in industrial growth and strategies for infrastructural development will help meet the needs of rising and rapidly expanding populations while balancing against a continuing increase in primary resource usage, related emissions, and pollution. For instance, the CE can help deliver quality housing and infrastructure at low economic and environmental costs by following flexible, responsive and resilient design principles. Circularity in international value chains and the governance and investment structures needed to enable a global circular economy need to be given greater attention. In 2015, East African countries imposed a ban on secondary textile imports to protect their domestic industries, worried about China’s entry into the market of large volumes of cheap second-hand clothes. The ban was replaced by an import tax after the US threatened retaliation, but the episode demonstrated how, if not carefully managed, trade in secondary materials could lead to conflicts with conventional sectors and between countries. And the implementation of a complete ban on solid waste by China in 2018 brought to light the importance of creating integrated, open supply chains in waste and secondary materials if hazardous waste disposal activities are to be avoided and circular economy value chains are to emerge on a scale. In order to agree on common rules and standards for international circular value, greater cooperation is needed at global level.

There is an immediate need to extend the global circular economy conversation to include developing countries and to invest political and financial capital in promoting an inclusive, global circular economy growth. Governments in developed countries have an important role to play in fostering meaningful dialog on how best to manage the global complexities of circular economy policies. Support from international agencies such as the UN Industrial Development Organization (UNIDO) and the UN Environment Programme (UNEP) will be critical to facilitating the piloting of circular economy solutions among small and medium-sized enterprises (SMEs) in developing countries and along international value chains to demonstrate the viability of cross-border circular value chains at scale. And proactive engagement by multinational companies with suppliers in developing countries – including SMEs and those operating in the informal sector – will be necessary for circular activities to be scaled up in a manner that is inclusive and avoids the displacement of vulnerable workers.

Therefore, in order to conclude I believe action is required on three fronts firstly by aligning the circular economy with current technology policy priorities. To incorporate the circular economy into high-level business policies and policy planning, decision-makers need trust that circular economy solutions are aligned with sustainable development priorities, including promoting stable economic growth and providing the most vulnerable people with opportunities. National governments in developing countries must recognize synergies between the circular economy and existing national plans and conduct an analysis of the scope of opportunities for transition to a circular economy through key economic sectors. Governments of donors must embrace the circular economy as an industrial development tool in developing countries and raise funds to support the innovation and expansion of circular economy. Secondly, there is need for continuity to invest in the basics in developed countries to support the transition to the circular economy. There will be a need for effective governance mechanisms, inclusive policies and collaborations at national, regional and international level to create an enabling environment for testing and rolling out circular economy activities. Thirdly, there should be support for an inclusive international circular economy strategy that encourages cooperation and partnership. Trade and cooperation are key ingredients in speeding up the circular economy in developing economies, and leveraging foreign investment will rely on harnessing opportunities for innovation.

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