Prof Mithilesh Kumar Sinha
Department of Economics, NU
A major cause of the continued deterioration of the global environment is the current pattern of production and consumption – often referred to as the linear economy. Humanity is facing big challenges: climate crises, financial crises, global poverty, ozone depletion, extinction of species, epidemics, deforestation, armed conflicts, fresh water shortage, social anxiety, natural disasters and so on. We are daily faced by alarming reports about the state of nature and humanity. That is why circular economy seems to be on everybody's lips these days. It is a concept put forward as a sustainability solution for continued human and environmental prosperity.This is the future for business… The circular economy will not only enable businesses to tap into new sources of value, but help forge resilient markets and supply chains capable of delivering long-term sustainable prosperity.
Since industrialization, human activities have destabilized the Earth systems and natural cycles and forced the environment into a state out of balance. The earlier environmental changes were moving slower and mostly occurring locally whereas current changes are dramatic in geological speed and are of a global nature. The result could be irreversible when reaching tipping points with abrupt environmental changes and with catastrophic consequences for human development.
The starting point for the ideas on circular economy (CE) circular economy has been to change the linear economic system of “take-make-waste” in order to lower resource use and waste of natural capital. It builds on the notion of cycles in nature fuelled by solar energy, where nothing is wasted but just goes around in loops.
The Circular Economy is a new way of creating value, and ultimately prosperity. It works by extending product lifespan through improved design and servicing, and relocating waste from the end of the supply chain to the beginning-in effect, using resources more efficiently by using them over and over and only once.
In the circular economy, consumption patterns are designed to mirror the cyclical approach of natural ecosystems. Once used, all goods provide by-products that can be reused in other manufacturing processes, creating a virtuous cycle more in tune with the environment.
Indian businesses are well placed to lead the way in the transition. Businesses stand to realise substantial profit from the circular economy opportunities.
Profit opportunities for businesses through increasing innovation and demand for new business services: By applying circular economy principles, businesses could generate new ideas and explore new ways of working, especially in digital technology. Indian innovation hubs could help businesses implement new approaches and capture new profit opportunities.
Material cost savings and reduced exposure to resource price volatility. A circular economy would significantly lower costs for businesses related to the use of virgin materials. Less material use would also reduce their exposure to volatile raw materials prices and strengthen resilience.
Economic growth: As mentioned above, circular economy practices are making more productive use of material inputs (including looping of products, components, and materials) and increasing revenue from emerging circular activities. While some sectors (e.g. the material extraction industry) would expect reduced activities, overall more activity would happen across the economy, boosting economic growth.
As India invests in long-term infrastructure to improve citizens’ quality of life, for example through the Smart Cities Mission, it could incorporate circular economy principles into the design of the infrastructure needed to provide water, sanitation, and waste services at scale, creating effective urban nutrient and material cycles. Circular economy principles can contribute to this construction activity in ways that create economic value and decouple development from the use of virgin, non-renewable resources.
Leveraging the current small-farm structure, India could create large-scale networks of farmers, interconnected and symbiotic in their practices and committed to regenerative approaches. Combining local knowledge and traditional methods (like working with a large variety of species) with modern technology (like precision farming, and digitally enabled asset and knowledge-sharing systems) could increase yield while significantly decreasing requirements for resources such as water, synthetic fertilizers and pesticides.Reducing food waste across the supply chain could make the Indian food system even more effective. This would require optimizing production and digitising food supply chains to match supply and demand more easily.
Circular economy principles can contribute to a mobility system that would meet the growing needs of the Indian population, especially in cities, while limiting negative externalities, such as GHG emissions, congestion, and pollution. Taking reparability, remanufacturing, and recycling into account in vehicle design and creating the appropriate reverse cycle infrastructure can reduce the need for virgin, non-renewable resources and energy.
Some actions are required to lead the way to transition to Circular Economy. Direction needs to be set and commitment should be shown; enabling regulatory framework must be created and policy barriers removed; and circular models needs to be supported through public procurement and infrastructure.
