Planetary challenges such as climate change, ecosystem decline and biodiversity loss have made it clear that the economic model guiding us needs to be reconsidered to include nature as a key value. This is necessary to avoid both a climate catastrophe and ecological breakdown. A move from linear to circular economy thinking stands out as a major precondition to stay within the scientifically-identified “planetary boundaries.”
Change is urgent according to Anders Wijkman, expert contributor to the Climate Governance Commission, former Chair of the Swedish Cross-Party Committee on Environmental Objectives and honorary president of the Club of Rome.
“History shows that major transformations and paradigm shifts most often have been linked to wars and crises such as the pandemic. But we cannot afford to wait for a full-blown climate crisis. A climate crisis would be different in so far as the consequences would be irreversible in nature.
Ahead of his upcoming report for the Commission, “Reflections on Governance for a Circular Economy” Anders Wijkman shares some of his thoughts.
Count nature as a value
“The economic system is extremely short-term in nature. Business models give priority to profit maximization in the short-term. Economic models give prominence to relations between producers and consumers and the factors of production are limited to labor, finance and innovation. Strangely enough nature is not included. Instead it seems as if nature is looked upon as a constant – but of course it is not. The data presented about wealth and value-creation are not the real ones. Losses of natural capital – i e ecosystem decline, biodiversity loss as well as an increasingly destabilised climate – are not accounted for.”
To maximise short term profits is simply not reasonable in a system where the full costs of production are not included. It costs little or nothing to extract virgin materials from nature, meaning that reused materials most often are more expensive. Furthermore, another anomaly is that labour is taxed heavily. Why not tax natural resources use and correct the cost structure so as to incentivise circular material flows.”
Anders Wijkman shares two simple examples. “The price for a new single brick is just under one US dollar, whilst a recycled one almost costs double as a result of transport, reconditioning and so on. Or take the mobile phone I have in front of me; repairing one is more often than not pricier than buying a new one, the result of high labour costs and the fact that the different components within a mobile phone are very hard – almost impossible – to disassemble and recycle. Design for reuse and recycling must be a priority!”
Use, re-use, extend
A circular economy is an industrial system that is restorative by intention and design. At present globally only a few percentage points of original product values are recovered after use.
“Rather than discarding products before the value is fully utilised, we should use and re-use them, extending product life.” Products designed to be recycled, reused, disassembled and remanufactured should replace the traditional, linear “take, make and dispose” model that has dominated so far. This is resource-efficient, less polluting and would certainly offer more jobs than today’s linear economy.
“Moving from owning to renting is another important part of the solution in transforming the economy. Take cars. Around the world there is a fleet of around one billion cars. Overall, at least in cities, they stand still, i e are not in use 95 percent of the time. If we had a system of pooling and renting we would merely need, maybe only 20 percent of the vehicles in use today. .”
New business models
Many agree that one of the most important objectives in the promotion of a circular business model would be a strengthened and harmonized system of producer responsibility. Already major global companies such as Ikea, Caterpillar, Rolls Royce and Renault have started to work in this direction.
According to Anders Wijkman, specific policy interventions are required to move towards a circular economy. Policies should include everything from principles for product design, the greening of public procurement to the introduction of economic incentives to help enhance resource efficiency – basically to change the cost structure of the economy.
“New business models must be stimulated and brought forward. Instead of selling products, one attractive alternative would be to sell performance.”
“The changes needed are difficult to undertake by a single player. Individual companies or countries would be knocked out of the global markets if they tried to implement circular thinking by themselves: this is why global governance is so central. The EU is actively pursuing this agenda, which is positive. But ultimately, the power-brokers of the world – China, Europe, Russia and the USA – have to put aside common disputes and cooperate.”
Reform economists’ education
Anders Wijkman says that the global economic model has to transform profoundly. But where to start?
“If it is one professional group, the economists are the target. They talk about producers, customers and rationality, and everything else is “externalities,” including nature. It seems they have a hard time understanding biodiversity and the ecosystem problems and the strong link to resource extraction. The International Resource Panel has shown that half of carbon emissions and 90% of biodiversity loss is directly linked to the extraction and processing of materials”
A very first step in changing economists’ thinking is through their schooling and curricula. “They don’t learn much about nature in their education. That is, we need to include the way nature functions in the curricula to make them understand that the natural systems sustain life on earth. There is no more room for degrading and destroying.” “Though on the bright side we see students in economics pushing for change, pointing out that current models are no longer relevant.”
Build competence, invest globally
Anders Wijkman says that the Global North has a moral responsibility when it comes to implementing a circular economic/business model.
“It is our thinking and the way our businesses are organised that have created the problems: we cannot leave the responsibility to transform the system to low-income countries. Besides our historical debt, we have to start in our part of the world, as we have more advanced sciences, technology and resources.”
In practical terms, this also means support in knowledge-building and investments to get the new model of businesses started, also in the Global South.
“I would like to see regional and global development banks help to build skills. One reason why it is so slow to get solar and wind energy facilities up and running in many countries abundant with sun and wind is that there are limited competences in government offices and institutions.”
