Circular logic: why we don’t have to destroy to develop

COLToday’s post is by Jane Cull, Founder and Lead Consultant of Life’s Natural Solutions, member of the Advisory Board of the Barcelona Consensus, and former Associate Editor of the Journal of Applied Systems Studies

We require a different way of seeing and thinking if we as a species are to continue to exist on this planet with a growing population. In fact we need a different kind of economy if we are to do that. Our present linear economy of take, make and dispose will not work in the long run as it is based on depletion and destruction. An economic model of growth and development that is based on the depletion and destruction of life is not only unsustainable, it simply won’t work. It’s illogical and does not make sense.

Obviously, resources will run out or be depleted to such an extent that it will be slow or impossible for them to recover. The result is of course that businesses will fail, there will be a lack of jobs, consumers will cut back on spending, and economic growth will decline. We need to instead start to sustain all life (societies, ecosystems, future generations, circular resource flows) if we are to have economic growth and development with a growing population. If we sustain life, then we can sustain ourselves. We must sustain life to sustain ourselves. This is a “circular” or “systems” view of life.

The systems worldview shows us that the world or life does not revolve around us. We are part of and sustained by the web of life. We are intrinsically interconnected and mutually interdependent with it. We are not separate or removed from the very thing that sustains us. This is the systemic reality that we live and participate in, but we do not see it and we need to see it if we are to live sustainably on this planet. We have to sustain life in order to sustain ourselves. It is a circular or systems view of life. It is a shift in our worldview, a shift in paradigms, our way of seeing and thinking.

Moreover, we need a systems view of the world because that is how the world works and operates. We need to understand and work with natural cycles, interconnections and interdependencies of living systems, understand the interconnections and interdependencies of social and environmental systems. We need to be thinking systemically to drive innovations and solutions. We need to be also critical in our thinking. Will the solution work? If it won’t work, why not, what are we not seeing? What is or are the blind spots? What is missing?

So what kind of economic model fits with what is needed to sustain life and at the same time have economic growth and development with a growing population? The model is circular and it is called “Circular Economy”. Circular Economy is about restoration, regeneration, renewal, refurbishment, remanufacture, reusing, recycling, redesign etc. It is a way to stop the depletion of resources, remove chemicals from products, restore nature, decrease pollution, drive energy through different sources of renewable energies (wind, solar, geothermal, biofuels etc), have zero waste.

In fact, waste is perceived as a valuable resource instead of something to throw away, dispose of, incinerate etc. Waste equals food. Waste either becomes a biological nutrient (materials are safe to return back to the biosphere to regenerate or sustain life again) or a technological nutrient (products and materials go back into the manufacturing stream to become the same or another kind of product).

This is what William McDonough and Michael Braungart call a Cradle to Cradle approach. There is now a certification program where businesses can begin to use this approach to drive innovation and circular business models forward.

Another element of Circular Economy is the Service Economy where the current model of ownership of products changes to leasing, i.e., consumers purchase a service instead of a product. The product is leased out for a particular period of time and is then returned back to the manufacturer for a newer model.

Another is the Bio-based Economy where biomass (natural renewable raw materials) is used to make products (biological nutrients) and provide bio-fuels as an alternative to fossil fuels. There is also industrial ecology, where the waste of one industry becomes the product for another.

There are enormous economic benefits of transitioning to a circular economy. In a recent report put out by the Ellen MacArthur Foundation and McKinsey & Company, it was found that “over US$1trillion a year could be generated by 2025 for the global economy and 100,000 new jobs created for the next five years if companies focused on encouraging the build-up of circular supply chains to increase the rate of recycling, reuse and remanufacture.”.

Systems thinking, as I previously mentioned, is also critical as a tool in implementing a Circular Economy. Systems thinking enables us to do expansive and detailed thinking where solutions are reflected on so that wise decisions and choices can be made that take into account impacts and consequences socially and environmentally through considering interconnections and interdependencies. There is also “closed loop thinking”. When considering a by-product, can this material or waste be used in another industry or in another manufacturing process instead of putting it into the environment, moving “from waste to resources” as the OECD says?

However, business and governments face many challenges given that the status quo has been maintained for decades. There are also entrenched vested interests in keeping the status quo going on its present destructive path. However, there is one inescapable reality that businesses and their executives face, as management consultants Accenture point out – “continued dependence on scarce natural resources for growth exposes a company’s tangible and intangible value to serious risks.”

These risks can be reduced through moving towards a circular business model. Resources need to be regenerated if businesses are to survive in the long term. In fact, the term “resource” from the Latin means to rise or recover again, hence the distinction changes to “re-source”. It is a recursive, systemic distinction, reflecting ongoing cycles that sustain life. This is of course vastly different to how we presently see resources in the linear economic model of take, make and dispose, based on depletion and destruction where resources revolve around us, a human-centered worldview.

In nature there is no such thing as waste. Everything is recycled again and again and again which is of course necessary for the ongoing continuum of life. All living systems, including ourselves, are sustained by ongoing cycles in ecosystems and the biosphere. Nothing exists in separation. Systemic interconnectedness and mutual interdependency is the fundament of life in these ongoing cyclical flows.

Imagine for a moment what our world would be like if we transition to a circular economy. There would be clean air, clean water, an abundance of life, and diversity of species. Soils would be fertile instead of contaminated or depleted of nutrients. Barren land would be reclaimed and regenerated for farming or for bio-based materials. We would learn how to work with the natural cycles of nature instead of depleting or destroying it. Forests would be regrown with a view to sustainable harvesting and managing. No toxic chemicals in products (there would be no environmental pollution and no human health issues related to chemical toxicity), no pesticides or heavy metal contamination of food and soils – our food would be healthy to eat through organic farming practices). Fisheries would be sustainably managed (both oceanic and freshwater). Countries would become more self-sufficient

In other words, we would no longer be exposed to the fluctuating risks of markets and supply and demand of scarce resources. Consumers all over the world would be able to live sustainable healthy lives due to the changes taking place in business and governments, Consumers cannot live healthy and sustainable lives if business does not provide the goods and services for them to do so.

We can begin the process of sustaining life itself, both human and environmental in transitioning to this kind of economy. Social and economic benefits abound if we transition to a Circular Economy. Consumers drive demand, businesses grow and expand, new businesses start up creating new jobs, governments regulate, provide policy and incentives, economies grow and develop in the transitioning process.

It’s a win-win for humanity, business, governments, the environment and the web of life on which we depend for our ongoing, continued co-existence. The challenges and hurdles in transitioning to this kind of economy can be overcome. It requires a willingness and commitment to overcome them, to come up with answers and solutions, to work together and collaborate to make this happen as a collective transitional process.

Useful links

Resource Productivity in the G8 and the OECD – A Report in the Framework of the Kobe 3R (Reduce, Reuse, Recycle) Action Plan

Towards a circular economy: A zero waste programme for Europe European Commission

Making obsolescence obsolete: design to reduce waste

Imagine throwing away 21,000 of these
Imagine throwing away 21,000 of these

Today’s post is by Maroussia Klep of the OECD Environment Directorate

Let’s be honest, waste reduction doesn’t have much of a ring to it. To many, it’s a complex policy issue without much hope if consumers keep throwing their cans away in the street. Yet, designers are taking a different view, looking at reducing waste from a business angle.

The amount of material being extracted and wasted today is scary. In recent decades, the high consumption levels in developed countries, combined with rapid industrialisation in emerging economies, have led to unprecedented levels of demand for raw materials. In just thirty years, the quantity of materials extracted for consumption has increased by 60%. Even more worrying is that a fifth of these materials end up as waste. This represents over 12 billion tonnes of waste per year; the equivalent in weight of more than 21,000 Airbus A380s. Considering that the global economy is expected to quadruple by 2050, and that the world population keeps increasing, one might wonder how, and for how long our planet will be able to keep providing supplies.

In this context, one solution to avoid a collapse of natural resources is to break the link between economic growth and material extraction. A number of OECD countries have already demonstrated that this works: they manage to increase production, while at the same time reducing resource exploitation. These efforts are conducive to a “circular economy” approach. This new model aims to move away from the traditional, linear economic model, under which materials are extracted, consumed, and finally thrown away. With a circular economy, old products are re-used and remanufactured into new ones for as long as possible in order to preserve existing resources and to minimise extraction. When products finally reach their end of life, material is recovered and fed back into the economy, instead of being discarded. If this approach is handled efficiently, the notion of waste could one day become obsolete!

Designers have an important role to play in supporting a circular economy. In addition to studying the aesthetic and practicality of a product, they now have to cope with the threat of resource scarcity, and to somehow create an opportunity from it. In order to encourage re-use and recycling of a product or parts of it, designers can make used products easy to disassemble for example. Think of the quantity of valuable material lost in your old phone abandoned in the cupboard! Designers can also promote the use of recyclable materials in production. In Japan, a green tea company changed the design of its bottles to make them thinner and transparent instead of green-coloured, which facilitated recycling, and reduced costs. The global fashion retailer H&M also jumped on board recently: a few months ago, they launched their first trousers and skirts made out of textiles fibres recycled from used clothing collected from consumers.

These examples show that good design can be good for business – by reducing the quantity of materials purchased and used in production – and, at the same time, diminish pressure on the environment.

Policy makers can encourage and support firms and designers in many ways. First, in order to make the most efficient use of materials, designers need data and guidance on the availability and recyclability of resources. OECD work on Sustainable Materials Management and on Material Flow Analysis support these efforts, by promulgating measures aimed at preventing and reducing waste generation and managing residues in an environmentally sound manner. In addition, policy makers can promote the use of certain materials by setting requirements for green public procurement and product standards. Instruments such as taxes and standards can also be used to encourage recycling and material recovery. Finally, policy makers should ensure the good functioning of recycling markets, and encourage the entry of efficient recycling operators in order to make it a profitable business.

Of course, recycling and re-use efforts are undermined if consumers treat nature like a big garbage dump. Not only continents but even our oceans are starting to resemble giant dustbins. Awareness campaigns and communication efforts towards consumers are thus essential for closing the loop, and require joint efforts by corporations and municipalities. Those are but a few examples whereby public bodies can stimulate efforts by the private sector on the preservation of resources.

We live in interesting times. The planet is being exploited as never before, and there is no sign that global consumption will stop rising. On the other hand, some new trends provide hope. Businesses are starting to worry about the shortage of critical resources and are joining efforts by policy makers to move towards a circular economy. Amidst this paradox, a new, unexpected actor comes on stage: designers. By connecting financial and environmental interests from the point of production, design has indeed the potential to help reduce much damaging waste.

Useful links

OECD work on resource productivity and waste

OECD work on green growth and sustainable development

Managing expectations in fisheries

Fisheries handbookToday’s post is from Roger Martini of the OECD Fisheries Division

When I tell people I work in fisheries, the first question they ask is: “What fish can I eat?” Concern about the sustainability of fish stocks is widespread, and many people want to be sure they are making responsible choices when they buy fish. Given that most fisheries, especially in OECD countries, are managed by governments committed to their sustainable exploitation, this demonstrates a stunning lack of confidence in current approaches to fisheries management.

They are right to be concerned. It is estimated that about 30% of world fisheries are currently overexploited, with many depleted or recovering from depletion – and this is not specific to any region. Despite their best intentions, fisheries managers often struggle to effectively restrict harvest to sustainable limits. Fishers are often accused of being part of the problem by rushing to catch as many fish as they can, but this is unfair. They respond to the incentives that governments give them as the regulator of the fishery. Some rules encourage responsible behaviour, while others promote getting as much as you can today.

There are many reasons why fisheries become overexploited, but it usually comes down to asking fisheries to be and do too many things. Fisheries are often depended on to provide jobs and support rural communities, notably in developing countries where the sector acts as a buffer of last resort for marginalized populations. Communities seek to preserve fishing’s traditional role, and consumers are reluctant to find alternatives to culturally-important fish. Fisheries often have multiple objectives, not all of which are explicit, feasible or compatible. Something has to give, and usually it is the fish stock that suffers.

Our understanding has advanced greatly about how to manage a fishery sustainably and profitably. For example, we know that fishers are willing to take a long-term view of the fishery if they know they can benefit, even if it involves short-term sacrifices. Establishing individual or community rights to the fishery does this by giving fishers a stake in the health of the stock. Allowing fishers to trade these rights among themselves promotes more efficient fishers and reduces overcapacity and the pressure it places on management.

Half a century ago, the main interest that governments had in fisheries was how to expand them. That seems like a long time ago, but many of the policies developed back then are still around in one form or another. Subsidies for building vessels, or for their modernisation and improvement, once a way to bring economic development to coastal regions, now mainly aggravate problems of fleet overcapacity. Given that governments also spend considerable sums on decommissioning vessels – removing them from the fishing fleet – it seems strange that such policies could continue. But beneficiaries of existing programs can always be expected to resist change. The trick is to show them that the alternatives are even better.

The OECD Handbook for Fisheries Managers describes how to do just that. It demonstrates the importance of putting stock management first, having a sound objective-setting and policy-making process, and making practical changes that encourage progress. The advice put forward in the Handbook can help put fisheries on a sound footing such that one day when my friends see fish in the store they can buy it with confidence, knowing that the fishery it comes from is sustainable and responsible. And that’s what really matters.

Useful links

Fisheries: While stocks last?

OECD work on aquaculture

OECD work on the impact of climate change on fisheries

OECD work on the impact of globalisation on fisheries

OECD work on aquaculture certification schemes

OECD work on responsible fisheries policies

Managing our natural resources: can we build more with less?

Click to see full size
Click to see full size

Tomorrow June 5th is World Environment Day. In today’s post Peter Borkey of the OECD Environment Directorate looks at how we use and manage natural resources.

I’m continually amazed at how our planet has a way of keeping things in balance. Of course we know there are limits but nature’s cycles go on maintaining an environment capable of sustaining life. Natural resources and the raw materials they provide are part of this balance. They are also the basis of our economies.

As the illustration at the top of the article shows, materials used in construction like sand and gravel account for the largest share (36%) of OECD materials consumption in weight. You won’t be surprised that fossil energy carriers such as oil, coal and natural gas are next at 26%; while biomass for food and feed (20%), metals and metal ores (11%), wood (3%) , and industrial minerals (2%) make up the balance.

Unfortunately for the planet’s balancing act, the more of these materials we consume, the more environmental pollution we cause. We see that extraction, production and processing, use and final disposal can cause problems such as water and air pollution from mining operations, carbon emissions from material transport and processing, and pollution from product use, landfill and incinerators for final disposal.

Globally, the extraction of material resources continues to grow, closely following economic growth, but I’m glad to say we are seeing some signs of “decoupling” between the two. In OECD countries, the growth of material extraction and use is slowing down while GDP continues to grow. Material consumption peaked at slightly above 18 tonnes per capita in 1980. Since then there has been a slow reduction to 17 tonnes per capita today. That may sound like very slight progress, but over the same period economic output (as measured by GDP) has doubled. We use 45% less material for each unit of economic output, a real improvement in resource productivity.

Put simply we are doing more with less, but overall we are still using more material. The sheer scale of this increased output means that environmental pressures are not falling – in fact they have continued to intensify in many areas, leading to a doubling of material consumption at the global level since 1980. Per capita OECD material consumption remains large, and is about 60% higher than the world average. In fast developing countries like China and India, material consumption is rapidly increasing, albeit starting from a much lower base than in the OECD. Global increases in material consumption intensifies competition for resources, sometimes contributing to volatile prices, and generally resulting in increased material consumption globally.

To balance these distressing worldwide statistics, several countries have been showing us how the worrying trends can be reversed. For example, Germany, Italy and Japan have succeeded in decoupling material consumption from economic growth in absolute terms and diminished their overall domestic material consumption. They have recognised that with the right policies, based on the 3Rs (reduce, reuse, recycle), waste is not something to be discarded, but a resource that can be fed back into the economy. Efforts in municipal waste management (10% of total waste) and recycling have been central in contributing to this success, but we all need to make a bigger effort in sustainable waste and materials management.

Here is how a range of actors can make further efforts in sustainable waste and materials management:

Governments can encourage resource productivity, through fees for the use of resources, charges for environmental damage, or by supporting longer product lifespans such as through increased legal minimum warranty periods. For example, in 2010, increasing the lifespan of mobile devices by 50% would have avoided the generation of 50 million end-of-life mobile devices in the US alone, reducing waste by one­‑third.

The private sector (with the right incentives) can identify new business models linked to improved resource efficiency of production processes and realise that “less material” can mean “more value”. You may be one of the millions to have used car sharing (US) or a car club (UK) to rent a vehicle to escape for the day, or even to go and do the shopping. The streets of Paris are now full of Autolib vehicles. Another example that increases efficiency is chemical leasing where instead of selling a chemical a company provides the service that the chemical delivers, but keeps ownership of the chemical with the opportunity to recycle and reuse it.

Consumers need to be more aware of the role that every one of us can play and contribute through better product choices and behaviour. As my grandfather used to preach: “think globally, act locally”. Correctly separating household waste already contributes to minimising our material footprint but we still need to do better.

The OECD is helping member countries with the statistics, analysis and policy advice on how we can all make it easier for the planet to maintain the balance so that humans can continue to build, grow and prosper while using less natural capital.

Useful links

OECD work on material resources, productivity and the environment

OECD work on resource productivity and waste

OECD work on biodiversity, water and natural resource management

A lesson in resources management from Elinor Ostrom

You don’t expect big tough fishermen to go around tying bows on baskets, or to get worried if they see a bow they didn’t tie themselves. But speaking at a seminar on her work organised by the OECD Directorate for Trade and Agriculture last week, Nobel laureate Elinor Ostrom explained why that happens.

Maine lobster fishermen use this system when another man sets his traps on their patch. It’s a warning to the poacher that he’s been found out. If he persists, he receives at visit at home. If that doesn’t convince him to mend his ways, he can expect a whole range of other sanctions, up to the destruction of his boat.

This is an example of a self-organising system to manage common pool resources.

These are resources such as fish stocks or forests to which more than one individual has access, but where each person’s consumption reduces availability of the resource to others.

One of the most well-known treatments of the question is Garrett Hardin’s 1968 book The Tragedy of the Commons, which describes how overexploitation of common pools was rapidly increasing worldwide. Traditional economists proposed two responses to overexploitation.

The first is privatisation with adequate means of measurement and control. This depends on having the necessary technical and financial means to exercise adequate control and may only be feasible if ownership is restricted to a few participants.

The second is government ownership and a tax on using the resource.

Ostrom proposed a third solution: retain the resource as common property and let the users create their own system of governance. In Governing the Commons: The Evolution of Institutions for Collective Action, Ostrom argues that common property governance doesn’t have to be tragic, and that users themselves can devise rules and enforcement mechanisms that may be better than restrictions imposed by outsiders with little knowledge or understanding of local conditions.

One of the more surprising conclusions of her research is that users should take care of monitoring and sanctions themselves (or entrust this to someone accountable to them). As the Nobel committee points out, this “challenges conventional notions whereby enforcement should be left to impartial outsiders”.

Monitoring and sanctioning can be costly, if only in the time spent doing them, yet Ostrom’s case studies show that many people are prepared to carry out governance duties.

Her research raises questions as to exactly why individuals are willing to bear the burden of these often thankless tasks that benefit others.

Useful links

OECD Insights: Fisheries

OECD work on fisheries