Economic Resilience and the Circular Economy

Any discussion of climate change solutions must include with it a discussion of money. The world runs on money and providing expensive, unprofitable solutions will not convince the business owners or the governments to adopt the solutions no matter how dire the situation is. It's shameful that this is the situation we find ourselves in but we nonetheless need to find ways to save the planet.

Economic resilience is the seen as something attractive as it allows productivity to remain high in the face of disasters. The circular economy is also an economically attractive idea as it extracts more value from goods than the traditional linear economic system that is prevalent across the globe.

Economic Resilience

The ability of the economy to deal with disaster either by mitigating hazards or by being able to return to economic capacity post disaster [1][2][3]. This can either be natural disasters or economic disasters (like the 2008 market crash).

Resilient firms operating in the city means that the economy will be resilient [4]. Perhaps if the idea of highly reliable organisations (HRO) is implemented as an achievable status which has benefits attached to it can incentivise firms to consciously increase their resilience [5].

HROs are meant to be able to face disaster and still continue with more or less their normal mode of operation [5].

Four organizational characteristics have been identified for HROs that limit accidents or failures [4]:

1. Prioritization of both safety and performance are shared goals across the organization

2. A “culture” of reliability

3. A learning organization that uses “trail-and-error” to change for the better

4. A strategy of redundancy beyond technology

Circular Economy

Most economies are based on a linear approach where a cradle to grave lifecycle is what is expected [6]. A cradle to grave lifecycle is where materials are extracted, manufactured and turned into goods which are discarded upon use. The linear economy has resulted in many problems, most of which are linked to inefficiency whether that inefficiency is to do with product design or the product lifecycle.

Currently the developing world will increasingly face the issues that arise from adopting a linear economy since large quantities of the populous are moving up to the middle class meaning that they can afford many more goods. A higher demand for goods will lead to an increase in the amount of supply being produced thus an increased amount of waste will be produced.

The issue with the linear economy is that it assumes that the resources available for use are infinite. The linear economy also assumes that the waste storage capacity is infinite, however neither assumptions is true [7].

This theory may have been acceptable in the past when the global population was much smaller where resources and space for waste were seemingly infinite however with the burgeoning global population changes need to be made.

Moreover, with the advent of the industrial revolution, more manufacturing took place resulting in a rapid acceleration of raw material extraction as well as waste disposal.

In addition to all of the aforementioned points, the economic system which most of the world currently subscribes to, capitalism, rewards the cheapest production, consumption and disposal methods. This often means that if it is cheaper to use a product once and throw it away rather than recycling it or repurposing it then this environmentally damaging practice will be preferred.

This entire process (of a linear economy) has had detrimental effects to the environment (deforestation, over mining, climate change, plastic in the oceans among many other issues). These negative effects will soon impact humankind in a devastating manner if left unchecked.

Of course government intervention stifles extreme free market movements by applying both carrot (subsidies and tax rebates) and stick (regulations and fines) approaches. But let's not get too far into economic theory in this article (we'll look into the different economic systems ability to influence climate conscious behavior in a future post).

The circular economy is an economic system that has been described as a concept that sheds the idea of waste and instead exchanges it for the green hierarchy [8]. The green hierarchy, also known as the waste hierarchy, is as follows (extended version shown in figure 1 [9]:

1. Reduce

a. Material use

b. Energy use (during production and operation)

2. Reuse

a. Buildings

b. Components

3. Recycle

a. Materials; if they cannot be reused

4. Recover

a. Energy (e.g. through burning)

Take a look at an expanded form of the green hierarchy in the image below for a more robust circular economy system.

The circular economy aims to provide a cradle-cradle lifecycle [6] for the majority of the goods. This should provide a more sustainable method of living thus increasing the efficiency of resource use (important since there are dwindling resources such as precious metals and water), improving production methods and lowering carbon emissions which will in turn lengthen the amount of time humans can continue inhabiting the earth.

Cities should push for the consumers to become prosumers through government policy (whether it be through the encouragement of private enterprise or through educational reforms). A prosumer is essentially a consumer produces some of the goods that they use [10]. This idea is especially applicable when it comes to energy in sunny regions due to the ease of installation of photovoltaic panels. The prosumers in this case would reduce the load on the main grid as they are satisfying some or all of their energy demand.

However, to be a prosumer doesn't necessarily mean only contributing to essential for life processes but it could also be for consumable goods. During my time on Instagram I came across a brand called @bideplanet which sells eco cleaning boxes. The boxes are produced by their home manufacturing network thus turning their workers into prosumers.

Some changes that could be done in order for the economy type to change from linear to a circular economy include but are not limited to [10]:

• car sharing

• feed in tariffs for solar panels to incentivise solar panel installation

• waste reduction

• Increased recyclable material use

Another possible method, although it will be more problematic to implement, is to reduce the need to construct new residential buildings. This will be useful due to the reduced demand on construction material.

Lower demand will result in environmental benefits for instance less mining, quarrying, transporting and manufacturing of construction material will need to occur.

Since buildings and construction account for 36% of the greenhouse gas emissions as well as consuming 39% of the global energy supply [11], a reduction of construction will result in big improvements to the environment thus helping achieve better standards of living.

The end goal for the humanity is to be able to self-regulate in the environment it is living in. There are examples of other species being unable to self-regulate thus expending their environments resources leading to their extinction [7].

The most effective method of reducing energy expenditure is through the reduction materials required per person. This reduction can take shape in various ways. Reducing the amount of manufacturing can arise from the intensification of the use of the goods already manufactured [7]. A prime example of this is car sharing.

A reduction in the demand for the replacement of items is also another method of reduction [7]. Creating goods that have a longer life span and are more durable will lead to the reduction in demand to replace said items (I'm looking at you Apple!!). This will reduce the demand on the limited primary resources. This also goes for construction and construction material.

A lightweight design also leads to a reduction in the use of primary or recycled resources. If the product can be designed in such a way as to remove any excess material use then that would clearly be beneficial. This has been evident in the construction industry where steel sections are produced with a hollow core in order to reduce cost and weight (see the figure below).

Summary

Initiatives like economic resilience and the circular economy can be sold to the change makers as ideas that are economically attractive. By reducing waste through reuse of materials, companies can continue extracting value off of goods which would otherwise have been thrown away for good. A diversified economy is a healthy economy. These types of economies would be able to brush off disasters and return to near capacity levels of productivity

---

References:

[1] Rose, A. (2004) ‘Defining and measuring economic resilience to disasters’, Disaster Prevention and Management. doi: 10.1108/09653560410556528.

[2] Rose, A. (2007) ‘Economic resilience to natural and man-made disasters: Multidisciplinary origins and contextual dimensions’, Environmental Hazards. doi: 10.1016/j.envhaz.2007.10.001.

[3] Martin, R. (2012) ‘Regional economic resilience, hysteresis and recessionary shocks’, Journal of Economic Geography. doi: 10.1093/jeg/lbr019.

[4] Vanstralen, D. (2017) HRO Models High Reliability Organizations. Available at: http://high-reliability.org/High-Reliability-Organizations.

[5] Dolan, T. (2017) Digitally Connected Infrastructure System Resilience - Literature Review (UCL). London. Available at: https://www.nic.org.uk/wp-content/uploads/CCCC17A21-Project-Literature-Review.pdf.

[6] Palafox, G. et al. (2017) The Little Book of Circular Economy in cities.

[7] Allwood, J. M. (2014) ‘Squaring the Circular Economy: The Role of Recycling within a Hierarchy of Material Management Strategies’, in Handbook of Recycling: State-of-the-art for Practitioners, Analysts, and Scientists. doi: 10.1016/B978-0-12-396459-5.00030-1.

[8] Kirchherr, J., Reike, D. and Hekkert, M. (2017) ‘Conceptualizing the circular economy: An analysis of 114 definitions’, Resources, Conservation and Recycling. doi: 10.1016/j.resconrec.2017.09.005.

[9] DEFRA (2011) ‘Guidance on applying the Waste Hierarchy’, Department for Environment Food and Rrual Affairs, (June), pp. 1–14. doi: 10.1007/s13398-014-0173-7.2.

[10] McLean, L. (2018) ‘Getting smarter about infrastructure delivery will mean better cities for all’, The Fifth State. Available at: https://www.thefifthestate.com.au/columns/spinifex/getting-smarter-about-infrastructure-delivery-will-mean-better-cities-for-all.

[11] Abergel, T., Dean, B. and Dulac, J. (2017) Towards a zero-emission, efficient, and resilient buildings and construction sector, Global Status Report 2017. Available at: http://www.worldgbc.org/sites/default/files/UNEP 188_GABC_en %28web%29.pdf.