The better-than-Circular Economy: The Spiraling Economy

The circular economy is all the rage. It’s a great concept that’s been evolving for years. It even got a shout-out last week in the Pope’s encyclical letter on climate change and the environment, which noted the need for “a circular model of production capable of preserving resources for present and future generations.”

Ironically, the powerful “circular economy” label obscures one of the most crucial potential benefits of the concept: you don’t have to end up back where you started.

From an environmental perspective, a circle is a powerful metaphor: a closed loop, in which resources are not spewed out as waste or pollution, and new resources don’t need to be dragged in. The notion that one company’s waste can be another’s feedstock is hard to argue with. It’s a great way to reduce waste, and hopefully energy, toxics and water use as well.

From an economic perspective, though, a closed loop is a stagnant mess, unlikely to survive for long. And from a social perspective, a closed loop is a disaster, a fixed-sum game which creates only the dismal choices of either retaining locked-in inequities between the rich and poor, or seeing disruptive redistribution of that fixed sum.

Fortunately, the circular economy is really a misnomer – a great concept “brand” but inaccurate. Much of the work on circular economy shows the potential to generate more economic value and growth without increasing environmental burden (hopefully even reducing environmental burden). Reuse is spawning innovation in both materials and design. More value is generated from a given unit of mass.

From an environmental perspective, the flow is circular. From an economic and potentially social perspective, the flow is upward. The result? You have a spiral, not a circle. Each time you close the loop, the accumulated net value has gone up.

That’s what we really want: an upward spiral, where each environmental cycle creates more value.

How do you create a spiraling economy? By encouraging:

  • Efficient markets that can quickly match generators of “available materials” (formerly known as waste) and potential productive users of those materials
  • Broader markets that can draw in a much wider range of both generators and users, creating more opportunities for higher-value reuse, even when partners are physically distant
  • Colocation of generators and users, creating both environmental and economic leverage through reduced transportation and increased local economic multiplier effects

That all takes hard work. Fortunately, a lot of people are doing that hard work. It’s happening at the local level, in projects like the Austin Materials Marketplace and ROC Detroit. It’s being scaled up to the national level through the National Materials Marketplace jointly sponsored by the US Business Council for Sustainable Development (US BCSD), the World Business Council for Sustainable Development (WBCSD) and the Corporate Eco Forum.

Want to know more, share what you know, catch up with latest and help figure out next steps? Join the US BCSD, WBCSD and the Yale Center for Business and the Environment for a unique working meeting in New Haven July 16-17.

[Scott Nadler is a Senior Partner at ERM and Program Director at US BCSD. To share this post, see additional posts on Scott’s blog or subscribe please go to snadler.com. Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of those quoted or cited, ERM or its partners or clients, or US BCSD, its members or partners.]