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Summary Final notes for Circular Economy UvA
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Notes for the class Circular Economy at the University of Amsterdam. Part of the minor Sustainability and Economics, interdisciplinary course.
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Circular EconomyFriant et al – a typology of circular economy discourses: navigating the diverse
visions of a contested paradigm
- The CE as a promising idea that addresses the challenges of the Anthropocene
o Proposing a regenerative and restorative system of reduction and
consumption
Closes the input and output cycles of the economy
o Expected to solve the problems of resource scarcity, bio-chemical flow
disruption and climate change
While revitalizing local and regional economies
Challenges and critiques of the circular economy
- Systemic thinking on entropy, growth, capitalism, and decoupling
o CE is not based on any economic of philosophical model
Inconsistencies and limitations in its understanding, application
and systemic validity
o Little clarity regarding entropy and laws of thermodynamics in CE
Materials degrade in quantity and quality each time they are
cycled, they cannot be circulated indefinitely
To establish a perfect CE, reduction in material demand
and throughput is necessary
o Insufficient investigation on if the CE could lead to an absolute
decoupling of economic growth from environmental degradation
If degrowth is needed, the CE is incompatible with the current
capitalist system
- Materials, energy and biodiversity nexus
o Energy is needed to recycle, repair, refurbish or remanufacture any
product or material
o Energy recovery generates GHG emissions
A mismanaged CE transition could lead to an increase in energy
demand and greenhouse gas emissions
o CE could also be an option for energy saving some material resource
flows
Secondary materials can be obtained at much lower energy costs
o Zero carbon CE can lead to increased demand for natural resources
o CE can lead to reduced demand for goods through longer use rates and
simple-living behaviors
- Evaluating and assessing the full impacts of a circular economy
o CE that focuses on eco-efficiency creates a rebound effect (Jevons
paradox) , where reduced costs leads to increased demand
Higher levels of overall resource consumption in the economy
- Governance, social justice, and cultural change
o CE research proposes a technological path to sustainability, criticized for
being overly optimistic
o Social and cultural topics are addressed through commercial approaches
, o CE could become a profitable industry owned by few corporations rather
than a transformative movement
- Alternative visions of circularity
o Degrowth: circularity through sufficiency, conviviality and social justice
Timeline of circularity thinking
- Preamble stage (1945-1980)
o Discussions regarding resource limits and ecological impacts of human
beings became widespread
- Excitement period (1980-2010)
o Diversity of innovative ideas start to see waste as a valuable input for
other processes
o Inspiration from nature
Making industries work like natural ecosystems
o Implemented through market drive approaches and public-private
partnerships
- Circularity 3-0 (1990-present)
o Comprehensive socio-economic approach to waste, resources,
production, and consumption
o Reformist discourses that operate within the boundaries of the capitalist
system and transformational discourses seeking transformation of the
socioeconomic order
Circularity discourse typology
- Reformist circular society
o Assumptions: reformed form of capitalism is compatible with
sustainability and socio-technical innovations can enable economic
decoupling to prevent ecological collapse
o Goal: economic prosperity and human wellbeing within the biophysical
boundaries of the earth
o Means: technological breakthroughs, social innovations, and new
business models
- Transformative circular society
o Assumptions: capitalism is incompatible with sustainability and socio-
technical innovation cannot bring absolute eco-economic decoupling to
prevent ecological collapse
o Goal: a world of conviviality and frugal abundance for all, while fairly
distributing the biophysical resources of the earth
o Means: complete reconfiguration of the current socio-political system
and a shift away from productivist and anthropocentric views
- Technocentric circular economy
o Assumptions: capitalism is compatible with sustainability and
technological innovation can enable eco-economic decoupling to prevent
ecological collapse
o Goal: sustainable human progress and prosperity without negative
environmental externalities
o Mean: economic innovations, new business models and unprecedented
breakthroughs in CE technologies
, - Fortress circular economy
o Assumptions: there is no alternative to capitalism and socio-technical
innovation cannot bring absolute decoupling to prevent ecological
collapse
o Goal: maintain geostrategic resource security and earth system stability
where resource scarcity and human overpopulation cannot provide for all
o Means: innovative technologies and business models combined with
rationalized resource use, imposed frugality and strict migration and
population controls
Steffen et al. – Planetary boundaries: guiding human development on a changing
planet
- The planetary boundary framework provides a science-based analysis of the risk
that human perturbations with destabilize the Earth system
o Defines a safe operating space for humanity based on the intrinsic
biophysical processes that regulate the stability of the earth’s system
- A zone of uncertainty is associated with each of the boundaries
o Gps and weaknesses in the scientific knowledge base and intrinsic
uncertainties in the functioning of the Earth system
o Planetary boundary is set at the safe end of the zone of uncertainty
o The farther the boundaries is transgressed, the higher the risk of
destabilized systems
- Hierarchy of boundaries
o Climate change and biosphere integrity are connected to all the other
PBS
Large changes in these would push the earth system out of the
Holocene state
Should be recognized as core planetary boundaries through which
the other boundaries operate
Lecture 1 (30/10)
A metamorphosis of the linear “caterpillar economy”
- Hotelling’s rule as a benchmark for weak sustainability
- Some shortcomings of neoclassical economics
- Butterfly economics (nutrient flows-side)
Scarcity: relative or absolute?
- Environmental economics
o Relative scarcity
o Substitutability nature
o Cowboy economy
o Caterpillar economy
- Ecological economics
o Absolute scarcity
o Limits to sustainability
o Spaceman economy
o Butterfly economy
, Simon-Ehrlich wager
- Business professor Julian Simon and biology professor Paul Ehrlich bet on
whether the (inflation adjusted) prices for materials would decrease (Simon) or
increase (Ehrlich) in a decade time
- Simon challenged Ehrlich to take any raw material, Ehrlich chose copper,
chromium, nickel, tin, and tungsten in 1980 for 10.000$
- Simon won the bet, on all five accounts
- Relative scarcity works to decrease prices
- Ehrlich offered a counter-bet including: higher temperature, less extant species,
smaller sih stocks, higher atmospheric concentrations of CO2 and NOx in a
decade time
o Simon declined the counter-bet
Weak versus strong sustainability
- Brundtland et al. (1987, p.29)
o “Sustainable development is development that meets the needs of the
present without compromising the ability of future generations to meet
their own needs”
- Costanza en Daly (1992)
o “Weak sustainability is the maintaining intact of the sum of human-made
and total natural capital… Strong sustainability is the maintaining intact
of natural capital and man-made scarcity”
Neoclassical benchmark for weak sustainability
- “the economics of exhaustible assets presents a whole forest of intriguing
problems. The static‐equilibrium type of economic theory which is now so well
developed is plainly inadequate for an industry in which the indefinite
maintenance of a steady rate of production is a physical impossibility, and which
is therefore bound to decline. How much of the proceeds of a mine should be
reckoned as income, and how much as return of capital? What is the value of a
mine when its contents are supposedly fully known, and what is the effect of
uncertainty of estimate?... Suppose the mine is publicly owned. How should
exploitation take place for the greatest general good, and how does a course
having such an objective compare with that of the profit‐seeking
entrepreneur? ... How can the state, by regulation or taxation, induce the mine‐
owner to adopt a schedule of production more in harmony with the public
good?”
Hotelling’s rule
- Net price of non-renewable resources increased equal to the interest rate
- Cairns (2014): “Hotelling’s rule is an arbitrage condition for the use of an asset,
through the allocation of extraction, over different periods of time”
- Krautkramer (1998, p.2065‐6): “A stock of a nonrenewable asset can be viewed
as an asset that generates returns over time. An important opportunity cost of the
current extraction and consumption of a unit of the resource is that there is less
to extract and consume in the future. ... This opportunity cost of depletion is
known by a variety of terms: user cost, to reflect the cost of decreasing the future
availability of the resource; in situ value, to reflect the marginal value of the
resource stock in place; and resource rent, to reflect the difference between price
and marginal extraction cost.
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