What is the Circular Economy?

Circular Economy Examples

  • The best example of a closed economy is collaborative consumption. Uber is a technology-based company that aggregates the cabs nearby and helps in meeting the commutation demands of the nearby riders for a given location. It offers Uber Pool to its customers or riders as a product offering.The Uber Pool allows riders to reduce their traveling costs. Additionally, the driver locates nearby travelers who get added up to the active pool rider’s busy trip.Therefore, the limited usage of resources for both cab owners and the rider saves huge costs and time. At the same time, it holds a good amount of fuel which could be further re-utilized for any other planned travel.Such innovative product offerings and concepts focus on reusing and recycling available resources with limited fuel usage. As a result, the rider can reach their destination and save on huge travel costs.

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Elements

The circular economy is based on and comprises the 3R concept. We can describe the 3R concept as reducing or least using raw materialsRaw MaterialsRaw materials refer to unfinished substances or unrefined natural resources used to manufacture finished goods.read more, reusing or re-utilizing the products and services, and recycling high durable raw materials and components. In addition, the 3R concept relies on the closed ecosystem, usage of renewable products and energy, and innovations into existing systems.

Why Switch to a Circular Economy?

  • The global population has appreciated drastically and exponentially. This factor has negatively impacted the resources that are available across the globe. Since resources are limited, so is the availability of raw materials for processing various types of finished products. Additionally, the extraction of raw materials has led to increased carbon emissions across the globe and adversely impacts the environment.Therefore, the world has to switch to a circular economy to lower carbon emissions and promote recycling and efficient raw materials.

Principles of Circular Economy

  • It promotes waste recycling as a resource and input to create more finished goods.The materials that are biodegradable automatically decompose and become part of nature.However, this is not the case for non-biodegradable resources. Instead, such items are re-introduced into the production system and reused to re-engineer new products.Use wastage to repair partially or fully damaged products. In such scenarios, one should analyze the scope of repairs.If it cannot recycle the waste, then valorize it to harness energy for the community.Ensures that all products are eco-friendly.

Importance

The circular economy is important as it promotes sustainable development. It advocates using waste as an input for producing new finished goods. It supports creating reserves of raw materials and adopting innovative methods to eliminate any steps that reduce the cost and time to make new finished goods.

Circular Economy vs Linear Economy

Both the types of economies are opposite.

  • A traditional economyTraditional EconomyA traditional economy is a system where goods production and distribution are driven by time-honored beliefs, customs, culture, and traditions. read more is never circular; rather, it is linear. A linear economy system generally performs the procurement of raw materials followed by the creation of end output and usage of the production to optimum levels followed by decomposition of the item after full utilization. On the other hand, a circular economy focuses on utilizing the already decomposed item and recycling it to produce a new output or refurbish the existing item with the intent of further usage.A linear economy is never a closed loop. In comparison, the circular economy is a closed loop. That is the case because the traditional economy does not understand the importance of all elements utilized in production. In contrast, the closed economy believes in each aspect involved in the production cycle.

Circular Economy Benefits

  • It reduces waste as it promotes the recycling of finished goods.It offsets any potential price rise of the commodity.Its adoption helps achieve efficiency and effectiveness as resources are recycled to get new products.It promotes the rental business by advocating to reuse of an economic entity rather than purchasing a new entity.

Disadvantages

Normally, teaching circular economy policies among vast populations is not easy. Additionally, this creates huge interdependence among several processes that create finished goods. Therefore, the unavailability of one input can impact the creation of other finished goods. As a result, it causes value erosion for interdependent businesses.

Conclusion

The circular economy is termed the closed-loop economy that promotes sustainable development. It is a system that does not relate to the traditional economic system, which is linear. Instead, it advocates the reuse and refurbishing of resources.

This article has been a Guide to What is Circular Economy and its definition. Here we discuss circular economy examples, its elements, principles, and benefits with importance, and disadvantages. You can learn more about it from the following articles: –

  • Pareto EfficiencyDeveloped EconomyClosed EconomyHomo Economicus