Reduce, reuse, recycle

How does a circular economy differ from a linear one? Professor Simon Evenett, Director of the Swiss Institute for International Economics and Applied Economic Research at the University of St. Gallen, has a simple explanation. “If you think about making a car within a linear economy, you would bring together resources, which would then be used to make steel — the intermediate inputs — which are then used to make a car. Once the car is no longer used by its first owner, perhaps it is sold to a second one,” he says. “But eventually, the car is just scrapped.”
In a circular economy, however, the resources from the scrapped car would be extracted and then used for another productive purpose. Furthermore, he adds that “once you realise resources can have a longer life than in the past, you might design products and services differently in order to ensure that the resources used in them have a future afterwards.”
Such forward-thinking product design is a focus for David Christian. A few years ago, he started his company, Evoware, which creates cups and packages made of seaweed.“ Our main goal is to reduce plastic waste,” says the young entrepreneur. “We want to replace single-use plastic.”
The company’s products are both edible and biodegradable. “So, if people don’t want to eat it, they can just throw it away, without harming the environment,” Christian says. The entrepreneur was born in Indonesia, one of the largest contributors to the ocean’s plastic waste problem. “By changing the way we consume, we can clean the ocean,” the founder of Evoware argues. “But we can not do it alone. All sectors should work together in order to create a circular economy. Business as it is right now won’t be sustainable. We make, we consume, we dispose.”
So should our economic system serve growth and profit, or the well-being of our planet? “It is a misunderstanding to think that economists support growth without limits,” says Evenett, “We are very aware of the adverse effects that economic activity can have. A properly trained economist would be very sensitive to the idea that economic growth could be too fast from a resource-spoiling point of view.”
According to Evenett, a fundamental principle in economics is a distaste for misallocated resources. “One form of that is destroying or getting rid of resources which actually still have use,” Evenett says. “I think one of the most creative things about the circular economy is the idea that resources can be used multiple times through different stages in their lives and ultimately reused and brought back.”
So might our economic system turn into a circular economy, perhaps in the next few years? “With all of these changes, you have slow acceptance over time,” says Evenett. “This is not going to be revolutionary, it will be evolutionary.”
To Evenett, the notion of a circular economy seems more relevant for some sectors and products than for others. Not every schema associated with the circular economy would be one economists like. “It is important to understand that the economic logic is not dogmatic. It is about the choice between alternatives. Under some circumstances, people might choose a renewable versus a non-renewable source. In other situations, people might choose a linear versus a circular model,” he says. It all comes down to prices: “What would be interesting over time,” he adds, “is whether innovation by firms expands the range of goods and services where the principles of the circular economy apply.”

Circular and linear economies serve different goals, and the economy of the future may draw on both to achieve different goals.