inc Explanatory Note 10

(10) The Circular Economy

Decoupling human well-being from resource consumption (i.e. more resource consumption does NOT mean more human welfare) is at the heart of theCircular Economy.  It takes essentially two forms: the fostering of reuse and extending service life through repair, remanufacture, upgrades and retrofits; and turning old goods into as-new resources by recycling atoms and molecules.  People – of all ages and skills – are central to the model.  Ownership gives way to stewardship and caring; consumers become users and creators. The remanufacturing and repair of old goods, buildings and infrastructure create skilled jobs in local workshops, and, with outmoded technologies (for example, electro-mechanical) disappearing from vocational training courses, value is restored to the skills and experience of workers from the past.

Yet lack of familiarity and fear of the unknown mean that the circular-economy idea has been slow to gain traction. As a holistic concept, it collides with the silo structures of academia, companies and administrations. For economists used to working with GDP, wealth creation by making things last is the opposite of what they learned in school. GDP measures a financial flow over a period of time; while the circular economy, by measuring quality as well as quantity, preserves physical stocks. Increasingly, however, concern over resource security, ethics and safety as well as green-house gas reductions are shifting our approach to seeing materials as assets to be preserved, rather than continually consumed and disposed of.