Circular Economy: From Theory To Action

By Nick Jeffries 17 August, 2017

Ellen MacArthur Foundation's Jeffries unpacks the principles of circular economy & applies them to water

A circular economy aims to add value by using resources more effectively, rebuild natural capital & eliminate waste
By changing the way we use products & resources, the economic benefits in Europe could reach almost USD1trn
The application of circular economy thinking has potential to help solve many of our current critical water challenges

The scientific and social developments of the last 200 years have brought innumerable benefits to the human race. Of course there are many regions of the world that still lack even basic services, but in most places the evidence of improved lives is clear – a doubling of life expectancy, a thriving global marketplace for services and goods, utility and road networks that serve even the remotest of communities, the information superhighway, the blossoming of great cities; all testimony to the virtues of our modern industrialised economies. However, along with this ‘progress’ has been a seven fold multiplying of global population and a huge increase in per capita consumption of goods, materials and resources. This has put a big strain on natural systems, leading to numerous ‘hockey stick graphs’, which taken together indicate we have entered a period of economic growth that puts us in danger of, to quote Johan Rockstrom: “moving outside of the safe operating space of our planetary boundaries”.
Trend charts (4)
Key shortcomings of our current ‘linear’ economic system are: it is fuelled by the consumption of finite resources, it generates huge amounts of waste, and it often leads to severe degradation of our natural environment.

The key aims of the circular economy are to eliminate waste, rebuild natural capital & create additional value by using resources more effectively

Since 2010, the Ellen MacArthur Foundation has been promoting the benefits of a ‘circular economy’ that addresses these shortcomings and is more suited to the realities of the modern world. The key aims of the circular economy are to eliminate waste, rebuild natural capital and create additional value by using resources more effectively. The Foundation did not invent the concept, rather it aggregated a number of overlapping ‘schools of thought’ such as Cradle-to-Cradle, the Performance Economy, Industrial Ecology, Natural Capitalism and Biomimicry, synthesising these ideas into one coherent model represented by the circular economy diagram below.

Changing the way we use products & resources could mean USD1trn in economic benefits in Europe

Having developed the framework, the Foundation with its knowledge partner McKinsey & Company, explored the potential that exists in different product types such as fast moving consumer goods (FMCG) and medium life complex goods; material flows such as plastic packaging; and regions such as Denmark, Europe and India. The results of the analyses revealed vast amounts of material and structural waste associated with the current linear model. For example, each year the fast moving consumer good sector globally landfills USD2.7 trillion of materials; cars in London sit idle for 92% of the time and only 5% of our expensive fertilisers are used to the grow the parts of plants that we eat. By changing the way we use products and resources, the overall economic benefits in Europe alone could add up to almost USD1 trillion. Household expenditure for food and mobility could be lowered, and rather than merely reducing the harm on the natural environment we could actually improve it. One question now being explored by the Foundation is whether the circular economy framework could be applied to the water sector.  Before elaborating on this, it is worth looking at the circular economy diagram in closer detail.
The model shows that there are two types of material flows  in the economy – things that are ‘used’ called technical nutrients and things that are ‘consumed’ called biological nutrients.

There are two types of material flows  in the economy…
…things that are ‘used’ called technical nutrients & things that are ‘consumed’ called biological nutrients

(click to enlarge)

Circular econ chart (1)
The overarching strategy for technical nutrients is to keep them in use so that their embedded value can be conserved. Ideally this is achieved by following inner loop strategies such as sharing, maintaining and repairing, thus preserving the integrity of the product and maximising value conservation. If this is not possible, then outer loops strategies such as remanufacturing, refurbishing and recycling can be considered that preserve the integrity of components and materials. Good design is critical, as it embraces these closed loop strategies, considering the whole life of the product. Circular design strategies might include qualities such as durability, disassembly, adaptability, embedded intelligence and shareability.  A key enabler of the technical cycle is digital technology, that can facilitate new business models. Examples include – sharing platforms like BlaBlaCar, online marketplaces such as Alibaba and IoT optimised product service models such as Bundles.

In the biological cycle, the principal aim is for nutrients to be safely returned to the environment, if possible extracting additional value such as medicines, animal feed, energy and nutrients along the way. Key to achieving this is the avoidance of contamination by technical nutrients or toxic materials, which lead to degradation of air, soil and water. The biological side of the diagram shows how our economy connects with earth’s natural ecosystems, where waste from one stage feeds the next, and the overall effect is that the system regenerates as it matures. The potential benefits of a circular approach in the biological cycle can be illustrated in numerous ways – from regenerative agriculture approaches practised by Leontino Balbo, bio-degradable packaging materials developed by Ecovative or integrated multi-species seawater farm piloted in Eritrea.

Is water a technical or biological nutrient? The answer might be – both and more still
The circular economy “regenerates natural capital, keeps resources in use & designs out waste”

Applying this framework to water might provoke the question – is water a technical or biological nutrient? The answer might be – both and more still. To allow us to make the link with the circular economy, we could consider it as a resource (biological), a product (technical) as well a manifestation of the natural environment.
Using this typology, we can start making connections between water and the core principles of the circular economy, which in simple terms is an economic system that – regenerates natural capital, keeps resources in use and designs out waste. 

Applying these principles to water:
1) Regeneration of natural capital – crucial to this is the need for systems thinking which recognises the ‘nexus’ between water, energy, food, and nature, considering all these systems as connected parts of a unified whole. This way of thinking could lead, for example, to a reduction in costs for urban water treatment through the improvement of rural water catchments as exemplified in the Paddy Land-to-Dry Land program. In this program, farmers in Beijing’s water supply catchment have been encouraged to convert their croplands from rice to corn, thereby improving water volume and quality flowing into the city’s most important water supply reservoir.  Another example lies in the adoption of regenerative farming practices, that encourages the sequestration of carbon, leading to an improved soil structure and therefore an increase in water retention. It has been demonstrated in many parts of the world that such an approach can eliminate the need for mechanical irrigation and artificial fertilisers, while at the same time increasing crop yields and profits.

2) Keep resources in use – for water this could mean applying the design philosophy of fully or partially closed loops systems. Water is by nature a cyclical resource and where possible human activities should work with these natural cycles, such as in the ‘sponge city’ concept practised by city planners in Shenzhen, that encourages more permeable city landscapes, allowing water to infiltrate into the ground. However, it is also clear that the demands of modern industry and agriculture can sometimes exceed the capacity of nature to renew, so ‘shortcuts’ are required. Closed loop design seeks opportunities for effective reuse and recycling, creating virtuous mini-cycles that can be applied at all scales. For example at the building scale, the Solaire apartment block in New York reuses greywater for irrigation and toilet flushing, reducing water and energy bills; or at the individual equipment scale such as in Aquafresco washing machines, where 95% of water is treated and recirculated while at the same time conserving heat and detergents from the previous wash cycle; or at the industrial scale such as the Pearl GTL facility in Qatar, where 45, 000 cubic metres of water is treated and recirculated every day, thus protecting local water bodies and guaranteeing resilience against fluctuations in external supplies.

3) Designing out waste – the perception of wastewater as an expensive liability, could be shifted to a conveyor of value, from which useful products and resources can be extracted, restoring the water to a quality that can be safely returned to the biosphere. Energy positive treatment plants, where electricity produced through bio-digestion of wastewater exceeds that which is required for treatment is a manifestation of this shift in perception. This ambition has been successfully realised in the Danish cities of Aarhus and Odense. Another example lies in the recovery of biosolids to return to the soil, helping close nutrient loops in the global food system. As with many other parts of the circular economy, better design of upstream processes and systems, that prevent toxic materials or micropollutants entering the water cycle, will greatly improve this value recovery and importantly, reduce risks related to contamination of the human food chain.

“…the application of circular economy thinking has the potential to help solve many of our current critical water challenges”

As a final word – it is evident that the application of circular economy thinking has the potential to help solve many of our current critical water challenges, and go even further by unlocking economic value in the water, energy, food and many other sectors. However for this to succeed the system conditions also need to be right. As Martin Stuchtey noted in his book a Good Disruption’: “much of the current water predicament is due to dysfunctional and ill-defined markets”. In other words, at the same time we strive for more circularity, we cannot ignore the important parallel work that needs to be done to improve governance, institutions and pricing structures associated with global water resources.
The Foundation is currently undertaking research on the potential for the circular economy in Chinese cities, including a detailed study of opportunities in the Textile sector. The findings will be presented in a bilingual report to be published at the end of 2017. For more information please contact: [email protected]

Further Reading

  • A Decade Of Dedication – As Redress turns 10 years old, its founder Dr Christina Dean reflects on the victories achieved in driving circular thinking in fashion including the EcoChic Design Award and TV show Frontline Fashion. Plus, check out their initiatives going forward
  • The Status Of Fashion’s Redesign – Fashion, an industry not often associated with climate change & technological innovation has been redesigning itself to change just that. With growing global focus on the environment China Water Risk’s Dawn McGregor takes a look at the status of this redesign
  • 85 Voices: Insights From Chinese Textile Manufacturers – Hear from China’s textile manufacturers on their challenges and what help they need to transition to a clean and circular model. This is an opportunity for the global fashion industry. China Water Risk’s Dawn McGregor shares key takeaways from our new survey report
  • Toward Better Industrial Water Management – The HSBC Water Programme for Industrial Water Management is now complete. We sat down again with Hong Kong Productivity Council’s Dr Anthony Ma to get key takeaways from the programme and find out what textile factories in China can do to reduce their water exposure
  • Fashion’s New Cycle – With 12,000 garments entering landfills every hour, the USD3 trillion fashion industry is ripe for a disruptive overhaul. FINCH Designs’s co-founder Heather Kaye shares how this Chinese brand is doing this through their swimwear made from recycled PET
  • China’s Economy: Linear to Circular – China is the 3rd country globally to enact polices to move towards a circular economy. See how & why China needs to make this transition; which industries are affected, what is the role of industrial parks?
  • Made in China 2025: Are You On The List? – How does the new Made in China 2025 Action Plan fit with other ‘Future China’ plans? Are the ten industries in Made in China 2025 the same as the Circular Economy Ten? Find out why which list matters
  • Circular Fashion Today – Closing the loop in the fashion is not new. But perhaps now that China,  the world’s largest manufacturer of garments, wants to go circular, it might become a reality. Get on top of the latest trends with leading circular fashion innovators
  • Plastic, China & The Circular Economy – Can we avoid more plastics than fish by 2050? Only around 10% of plastics gets recycled, but this is where opportunities lie. Woodring, founder of Plasticity Forum, shares key points from the 5th annual forum on the circular future of plastic
Nick Jeffries
Author: Nick Jeffries
Nick is a chartered civil and environmental engineer who has been developing research projects for the Insights and Analysis team at the Ellen MacArthur Foundation since joining in early 2016. Nick has been responsible for developing the Foundation’s thinking on the circular economy and water, incorporating his findings and insights into some of the Foundation's current big themes such as Chinese cities and the Urban Biocycle. Nick is also responsible for managing the Foundation's case study library, thus helping answer the question: "I get the theory and the opportunities, but what does circular economy look like in reality?". Before getting involved with circular economy, Nick worked for 15 years as an engineering consultant, both in the commercial sector in London, as well as being involved in a number of water and sanitation programs in Africa and Asia.
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