Making a Switch to Circular Economy

All forms of wealth and security, including climate stability, biodiversity, resource availability, soil fertility, air and water purity and health, are depleted by the systemic error of running a linear economy. Linear economics consumes the basis for future growth so what is now growing fastest is unproductive activity, inactivity and instabilities. The credit crunch marks the withdrawal of faith in growth-as-usual and any reliable revival of growth and prosperity requires a switch of vision.

Circular Economics

The future for growth is circular economics where more economic activity would mean a faster pace of change away from waste-making and towards looking after the world and all its inhabitants. This would preserve and regenerate material value, co-operation and natural capital instead of losing it, so growth would work to build the basis for more growth.

Today this may appear idealistic. Yet if circular economics was already practiced, and people were accustomed to prosperity based on resource security, then any proposal to adopt an exploitive self-defeating vision would be laughable.

Promise of Precycling

Economic dependence on waste is perpetuated by managing waste primarily as an addiction to disposal, “how can we get rid of all this junk?” The ‘waste hierarchy’ (reduce, reuse, recycle, then dispose) that has been available since 1975 is commonly quoted but in practice the bulk of effort and funding provides for continuing long-term disposal to ecosystems (by landfill, waste-burning and pollution).

The waste hierarchy is being used backwards and no nation has yet attempted to create the incentives for an economy that grows from the work done to end waste dumping and implement circular economics. This is achievable with the concept of ‘precycling’ originally used for public waste education.

Precycling is applicable throughout an economy and may be understood as action taken to prepare for current resources to become future resources. The ‘pre’ prefix emphasises that this cannot be arranged after something becomes waste; it must be done beforehand. The scope of action extends far beyond recycling, to creating the economic, social and ecological conditions for all resources to remain of use to people or nature.

Precycling Insurance

A simple economic tool is available to switch from linear to circular economics and from dumping waste to dumping the habit of wasting. This tool internalises diverse externalities efficiently within markets by paying the price of preventing problems instead of the larger or unaffordable price of not preventing them.

Precycling insurance is an extension of the EU WEEE Directive’s ‘recycling insurance’ from just recycling to all forms of preventing all products becoming waste in any ecosystem. This allows a single economic instrument to work with the issues at every stage of product life-cycles. Significant producers would be obliged to consider the risk of their products ending up as waste in ecosystems and to retain responsibility for insuring against that risk.

Life Insurance for Products and Planet

Precycling insurance is a form of regulation to be set-up in every nation but not centrally planned. The volume of regulation can be cut but its effectiveness drastically boosted. For example, emissions can be cut rapidly with no need for any further ineffectual negotiations about capping. Unlike taxes, the premiums from precycling insurance would not be handled by governments (whose role would be to legislate, monitor and ensure full public transparency).

Unlike conventional insurance, the premiums would not be collected up and then paid out following (potentially irrecoverable) planet crunch shocks. Premiums would be distributed by insurers and invested preventively throughout society, to cut the risk of resources being lost as wastes.

Support would be provided for the dialogue, understanding, participation, capabilities, designs, efficiencies, facilities and ecological productivity needed to return used matter as new resources for people and for nature. Today’s resources would feed tomorrow’s economy.

A Free Market in Harmony with Nature

Precycling insurance would switch the power of markets to reversing the planet crunch. The speed and scale of change would exceed the expectations of all who are accustomed to ineffectual controls designed to make markets less-bad. All market participants (such as buyers, sellers, investors and governments) would adapt their decisions to the new incentives, profiting by addressing actual needs rather than superficial consumerist wants.

Producers would remain free to choose how to meet customers’ needs without waste, and even free to continue making wasteful products, in competition with other producers cutting their costs (including precycling insurance costs) by cutting their product’s waste risk. Economic growth would no longer be a competitive scramble between people rushing to acquire and discard ever more resources from an every-shrinking stock. The economy would prosper in harmony, rather than in conflict, with nature.

Shrinking Material and Energy Demands

The material requirements of today’s linear economy would rapidly shrink since the new incentives would lead to the most needs being met with the least materials moved the least distance and then regenerated rather than dumped. The energy requirements of today’s linear economy would rapidly shrink since a smaller material flow with higher quality materials closer to where they are needed requires less energy to process.

Shrinking energy dependence is the key to energy security, economic recovery, climate restabilisation and prevention of conflict over diminishing non-renewable resources. The resource and energy efficiency of circular economics makes it realistic to plan the necessary reductions in GHG concentrations.