3 Reasons Why Embracing the Circular Economy Can be Powerful for Middle Income Countries
The circular transition is crucial to building a resilient economy, protecting social wellbeing and mitigating the climate crisis. The move to circular economy can be especially powerful for lower- and middle-income countries. The Circular Economy Action Agenda sets out the way forward for business, government and civil society.
Photo: Alvaro Reyes on Unsplash / WEF
In Chile, we have a dream that many share: to live in a world without waste. Such a dream requires a move towards a circular economy, where waste and pollution are designed out, products and materials are kept in use, and natural systems are regenerated.
Wherever you live, a circular transition is crucial to building a resilient economy, protecting social wellbeing, and mitigating the climate crisis. However, it can be especially powerful for middle income countries, given the impact to jobs and our particular vulnerability to the effects of the climate crisis. Understanding these opportunities brings us one step closer to the change that the circular transition can bring.
1. A sustainable economic recovery
The circular economy offers a $4.5 trillion economic opportunity by reducing waste, stimulating business growth, and creating jobs. Making better use of raw materials is not just good for the planet, it’s a financial imperative. The International Resource Panel found that more sustainable use of materials and energy would add an extra $2 trillion to the global economy by 2050.
“The circular economy offers a $4.5 trillion economic opportunity by reducing waste, stimulating business growth, and creating jobs.”
And there could be particular advantages for low- and middle-income countries. International Resource Panel modelling shows that by 2060, with the right sustainable policies in place, growth in global resource use can slow by 25%. Meanwhile, global GDP could grow by 8%, with a particular benefit for low- and middle-income nations.
2. Promoting decent work
Creating a circular economy offers a way to formalize and improve the living and working conditions of thousands of people working in the informal recycling sector, especially women. Research shows that a circular economy could generate up to 4.8 million jobs in Latin America and the Caribbean. In Chile, we have set a goal to create more than 180,000 formal jobs from the circular economy by 2040, for example through the repair industry, a key part of the circular economy. This will help us reach our target of increasing recycling rates from 4% to 65%, vital to our economic wellbeing and key to building a future where decent work is a priority.
“Working towards a circular economy could create a net increase of 6 million jobs by 2030, reports the Pace's Circular Economy Action Agenda”
3. Mitigating the climate crisis
How can a circular economy help? While switching to renewable energy could reduce emissions by 55%, the remaining 45% can only be tackled by changing the way we make and use products and food. If the world created a circular economy for just five key sectors — cement, aluminum, steel, plastics and food — we could cut CO2 emissions by 3.7 billion tons by 2050, equivalent to eliminating current emissions from all forms of transport.
“Changing the way we make and use products can help us address 45% of global greenhouse gas emissions, reports the Pace's Circular Economy Action Agenda”
The circular economy will also help us build a strong system resilient to the effects of climate change. Moving to a circular economy will take several decades. The work will be tough. However, there are huge benefits and opportunities within our reach. We must lead this transformation, to protect well-being as well as the climate.