Laura Wellesley of Chatham House says countries like Tanzania, India and South Africa could leapfrog the West to embed responsible production and consumption in their economies – but co-operation at a global level is urgently needed
It is now well understood that a radical global shift to more sustainable growth and consumption patterns is required. Demand for raw materials and natural resources is increasing as the global population gets larger and richer. At the same time climate change means we need to use fewer resources and find cleaner means of production.
In this context, interest in the idea of the circular economy is growing fast, most notably in the EU and China. But the model’s potential for developing countries has so far been overlooked by policymakers and businesses. This week a new report from Chatham House– the first of its kind – maps out the key challenges and opportunities.
An Inclusive Circular Economy: Priorities for Developing Countries, highlights how developing countries are already global centres of production and are also set to become the global drivers of consumption. Success now in embedding circular principles in industrial growth and infrastructural development strategies can help to ensure that the needs of growing and urbanising populations are met without risking rises in resource use, emissions and environmental pollution. For example, in adopting modular, adaptive and resilient design principles, the circular economy can help to deliver quality housing and infrastructure at low economic and environmental cost.
The circular economy could provide new opportunities for economic diversification, value-creation and skills development
The circular economy continues to be understood primarily as a waste management and recycling strategy by many, but the economic opportunities are far broader and more diverse. With the right enabling conditions, the circular economy could provide new opportunities for economic diversification, value-creation and skills development.
Developing countries are in a strong position to take advantage. Their large informal sectors already practice circular activities, in areas such as electronic waste (e-waste) and phone repairs, for example, and could engage in higher-value circular economy supply chains. With enough investment, developing countries can leapfrog developed countries in digital and materials innovation to embed sustainable production and consumption at the heart of their economies.
Some developing countries are already showing what is possible. National growth strategies in Tanzania, India and South Africa all emphasise the potential of the circular economy to create more jobs, foster more resilient industries and limit environmental impacts. The first regional alliances on this topic in Africa and South America are starting to bear fruit.
A transition to a circular economy nevertheless brings certain trade-offs that require careful management. In the absence of a co-ordinated and strategic approach to the circular economy at national or international level, there is the risk that companies will adopt tokenistic – or, at worst, harmful – activities under the umbrella of circularity that preclude more sustainable or higher-value material use. Waste-to-energy initiatives using sub-standard burning practices, for example, may bring environmental and human health risks and may be drawing on waste streams better suited to second-life products.
Trade-offs may also arise where circular solutions imply significant shifts in industrial policy: in resource-intensive economies, for example, circular approaches can support value addition but may also risk job losses among those employed in resource extraction and primary processing.
The report also highlights particular challenges to scaling this approach in emerging economies. They include limited institutional and regulatory capacity, limited access to finance, uneven access to technology and a reliance on resource-intensive industries. At a global level, the current lack of international attention and regional integration on the circular economy in developing countries is limiting progress and holding everyone back.
Greater co-operation is needed at the global level to agree on common rules and standards for international circular value chains
Getting this right will require co-operation. Greater focus is needed on circularity in international value chains, and on the governance and investment frameworks required to enable a global circular economy. In 2015, East African countries proposed a ban on imports of secondary textiles to protect their domestic industries, concerned about large volumes of cheap second-hand clothes from China entering the market.
After the US threatened retaliation, the ban was replaced with an import tax, but the episode highlighted how the trade in secondary materials, if not carefully managed, can lead to tensions with traditional sectors and between countries.
And in 2018, China’s imposition in 2018 of a de facto ban on solid waste threw light on the importance of developing integrated, transparent supply chains in waste and secondary materials if harmful waste-dumping practices are to be avoided and circular value chains are to emerge at scale.
Greater co-operation is needed at the global level to agree on common rules and standards for international circular value chains, particularly where they risk displacing traditional workers or are associated with environmental or health risks, as is the case with e-waste.
Policy makers have a key role to play. There is an urgent need to widen the global circularity conversation to include developing countries and to invest political and financial capital in promoting the development of an inclusive, global circular economy.
Developed-country governments have an important role to play in facilitating a meaningful dialogue on how the international dynamics of circular economy policies may best be managed. Support from international agencies such as the UN Industrial Development Organization (Unido) and the UN Environment Programme (UNEP) will be critical to facilitating the piloting of circular economy solutions among small and medium-sized enterprises (SMEs) in developing countries and along international value chains to demonstrate the viability of cross-border circular value chains at scale.
The next two years present a moment of opportunity to develop a global vision for the circular economy aligned with climate action
And proactive engagement by multinational companies with suppliers in developing countries – including SMEs and those operating in the informal sector – will be necessary for circular activities to be scaled up in a manner that is inclusive and avoids the displacement of vulnerable workers.
The next two years present a moment of opportunity to develop a global vision for the circular economy aligned with climate action and the broader sustainable development agenda. There is much scope for aligning circular strategies with climate action and sustainable development commitments at the national and international level. Key international milestones in global climate change talks, in the delivery of the UN’s Sustainable Development Goals in the agreement of a global treaty on biodiversity protection in 2019 and 2020 present a unique opportunity to integrate the circular economy into existing global political agendas and catalyse increased public and private investment in the roll-out and scale-up of circular solutions in developing countries.
Laura Wellesley is research fellow at Chatham House.