A new buzzword has arrived in the environmentalist vocabulary. The Circular Economy is arguably the Mecca of sustainability. A circular economy takes into account many different aspects of sustainability and wraps them all together, in a way that changes our relationship with products and the environment. The circular economy gets to the root of what environmentalists have been working towards for a long time, an economy that doesn’t exploit resources but uses them efficiently and in a way that they can be used many times over.

The current economic system used in most parts of the world is a linear system. The linear system operates on a model of Take, Make, and Dispose. This model can only operate in a world with unlimited resources. The current model collapses over time as resources become more difficult to extract and eventually run out. This model carries enormous environmental problems with it from deforestation, fracking, mining, pollution, habitat and biodiversity loss, species extinction, and natural carbon sequestration loss. As resources become harder to come by, humans go to greater and greater lengths to find resources for products we use every day. 

The Circular Model is different. The Circular Model is based on the principles of Make, Use, Return. This economy is based on the model of earth’s natural cycles of regrowth. The Sun grows plants which provide nutrients to living creatures who give that nutrients to other creatures who eventually die, creating nutrients for the next generation. Nothing is lost. When this model is applied to economics it causes us to rethink how we create products and make money. If waste from a product can be used to create another product then cycles are introduced into the economy. 

An aspect of the Circular model is to rethink the idea of owning things altogether. Leasing is at the heart of this movement. While this may sound a little new-agey, there are actually great economic incentives involved for companies and consumers. If we start thinking about products the same way we think about services then there is less need to own products, we would be potentially leasing products from a company and returning them when the consumer no longer wishes to keep it. The company would then refurbish the product or use the parts to create a new product. This gives incentives to companies to create products that last and are efficient as well as easier to reuse. Leasing could be applied to virtually everything we own. At the end of a products life, it is returned to the company and a new one is provided. This model gives consumers an incentive to recycle. It wouldn’t make sense for a consumer to throw a product away with this model. Less resources would need to be extracted and the circular model is achieved. 

There are already companies operating in this way. The Ellen Macarthur Foundation is a leader in the push for a Circular economy. The Organization has partnered with a wide variety of companies who have vowed to be part of this economy. Google, Philips, H&M, Unilever, and REI are companies who are promoting this circular economy. 

Of course, it is easier for a company who already specializing in services instead of products. Google can switch because they provide services, whereas a company like Philips has to revamp their business model to remake products. In the end, companies would stand to make more money. 

The subscription model has been catching on during the last decade or so from Netflix to men’s razors. Consumers are already on board with paid subscriptions to products they like. The goal now is to add the step of returning the product to the company it came from. This could be a challenge, as it is difficult to get the masses on board with new things. 

 A very simple example is from the company Toast. Toast operates on the model of brewing beer using surplus bread from bread manufacturers. About 34% of all bread produced is wasted. About half of that loss is from the production side. Toast uses bread that would be waste on the production side and turns it into another stream of revenue. Using a bi-product to create something new is at the heart of the circular economy. The U.K based company have moved to the U.S and provides home brewers with a beer recipe they can use at home to use their would be wasted bread. 

Critics of the circular economy say that extending products lifetimes will stifle the economy because less products are being sold. It is possible that less money would be circulating throughout the economy because consumers are paying subscription services instead of making choices about a company each time they buy. In addition, some say this will place a burden on manufacturers and their ability to be competitive. What if the innovation isn’t possible for smaller companies to be able to compete?

These are real hurdles for the circular economy. Making sure this new economy includes all people will be a challenge. These changes must address social issues we face today and work to solve those problems. Addressing social problems will be the best way to get more people on board as well.