Decoupling Economic Development from the Consumption of Finite Resources Using Circular Economy. A Model for Developing Countries

Abstract

Sustainable development is a major concern for developing and developed economies as economic growth has to led to scarcer and more expensive resources. Although countries have established public policies focusing on resource and energy efficiency, there is an increasing need for a coordinated industrial strategy able to create sustainable wealth through a holistic management of natural resources, capable of "decoupling" economic growth from resource extraction and natural deterioration. Consequently, the objective of the present research is to develop a decoupling model able to create increasing economic returns, reducing the social gap and regenerating the natural capital for regions in developing countries. Departing from a literature review on peer reviewed articles on successful industrial cases of decoupling around the world, we contrasted the linear production model with the United Nations Environment Program (UNEP)'s current four decoupling indicators in order to propose a more robust model. The result was an eight-factor decoupling model that used a well-supported framework for sustainable wealth creation named "circular value ecosystem" (CVES). By using system dynamics, we deployed the proposed framework using system dynamics modeling in order to improve the understanding of our proposal. We found that this model, with the proper regional conditions in developing countries, can: (1) reduce, through substitution, the consumption of natural resources; (2) produce alternative economic increasing returns; (3) reduce the negative environmental impacts; and (4) create self-sustainable wealth for the economy, the environment, and the social development of most stakeholders of these regions. Decoupling economic growth represents a complex and challenging task whose successful implementation can only be achieved if managed at a regional level with a systemic approach.

Learning from Failure and Success: The Challenges for Circular Economy Implementation in SMEs in an Emerging Economy

“…Nevertheless, said obstacles could become exacerbated in an emerging economy context, often characterized by the absence of legislation, the irregular or complete lack of infrastructure, and low environmental literacy [6,33,97]. In other words, our results corroborated that CE implementation is challenging, specifically in emerging economies where enabling conditions are still underdeveloped [3]. Thus, although it is not as simple for emerging economies to adopt CE initiatives from developed economies, implementing CE in this region is not an impossible task [3].…”

“…Transitioning to a CE could provide potential benefits to the implementing regions, industries, or companies. Some identified potential benefits linked to CE adoption are decoupling natural resource consumption from economic growth, optimizing resource performance, and generating new jobs [3]. Additionally, by adopting superior design materials and circular business models, firms could finally reach their sustainability goals [2].…”

“…As a result, the demand for adopting sustainable strategies, such as Circular Economy (CE), has increased among firms [2]. CE has been proposed as an alternative capable of decoupling natural resource consumption from economic growth [3]. Under a CE approach, sustainable value creation is promoted through a more balanced, systemic, and holistic perspective, improving a firm's overall economic, environmental, and social performance [4].…”

Circular Economy Concept in the Context of Economic Development in EU Countries

“…Momete developed an index which intends to provide the best/worst performers within the EU area in terms of readiness of EU nations to pass to a sustainable circular economy [56]. Scheel et al developed the linear production model with the United Nations Environment Program current four decoupling indicators in order to propose a more robust model [2].…”

“…Waste has become extremely present across the whole planet, and raw materials are in demand more than ever. It is estimated that around 80% of all materials and consumer goods are disposed of and that upon entering the food supply chain, over 30% of processed food is thrown away [2]. Applying the circular economy concept encourages environmental protection and social prosperity [3], while enabling economic growth in line with sustainable development.…”