Circular Economy: Everything You Need To Know
Economy / Finance
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By definition, the circular economy is restorative and regenerative and aims to ensure that products, components and resources in general maintain their usefulness and value at all times. This concept distinguishes between technical and biological cycles.
We must understand that the circular economy is part of the new emerging models that offer alternatives coherent to the current system and that fight against climate change in its essence, where some focus more on caring for people, others on ethical finance or in caring for the planet
A good development of the circular economic model implies respect for certain principles where the products must be thought, designed and manufactured taking into account the entire useful life ; from transport, distribution, use and end of life.
This implies applying the concept of Multi R , which is based on working together to rethink, redesign, remanufacture, repair, redistribute, reduce, reuse, recycle and recover that energy.
Intersection of environmental and economic aspects
As imagined by its creators, the circular economy consists of a continuous cycle of positive development that conserves and improves natural capital, optimizes the use of resources and minimizes system risks by managing a finite amount of inventories and renewable flows. In addition, it works efficiently on all types of scales.
The objective is to implement an economy based on the principle of “closing the life cycle” of products, producing goods and services while reducing the consumption and waste of raw materials, water and energy.
It is, therefore, an intersection of environmental and economic aspects where products must be able to extend their useful life with facilities to repair them and, finally, close the circle by being reusable and easy to dismantle.
The implementation of these principles entails a large number of benefits for both the environment and society, since the circular economy also considers social inclusion a key point. Among the benefits of the circular economy are:
- Decrease in the use of resources, reduction of waste production and limitation of energy consumption
- Creation of wealth and employment
- It allows obtaining a competitive advantage in the context of globalization, as it decreases the dependence on external and uncertain supplies
- Open the perspective to sustainable and sustainable growth
How does the circular economy work?
The fundamental principle of the circular economy is the use of the waste of some as raw material of others, drastically reducing both the generation of waste and the extraction of new materials and raw materials.
The circular economy advocates using most of the biodegradable materials possible in the manufacture of consumer goods – biological nutrients – so that they can return to nature without causing environmental damage by exhausting their useful life. In cases where it is not possible to use eco-friendly materials – technical nutrients: electronic components, metal, batteries … – the objective will be to facilitate a simple decoupling to give them a new life by reincorporating them into the production cycle and to compose a new piece. When this is not possible, it will be recycled in a way that respects the environment.
It involves all sectors
Sometimes we do not understand why it is necessary to apply the circular economy on materials and products in all sectors, both in society and in the business world:
- – We have some limits in the current economic model. The current economic model has an ecological footprint that is not sustainable , that is, the annual demand for natural resources of the world population is greater than what the Earth can really produce throughout the year.
- – We have to reduce competition for the exploitation of resources. According to the OECD , the volume of resources exploited has increased by 65% in the last 25 years.
- – Reduce the price of raw materials. The price of raw materials is increasing exponentially over time (only between 2002 and 2010 increased by 150%)
- The need to improve the environment and climate change. Literally the global warming of the Earth has skyrocketed.
Advantage for users and companies
Unlike other economic models where the economic aspect prevails over the social or environmental aspect, the circular economy supposes a substantial common improvement for both companies and consumers.
The companies that have implemented this system are proving that reusing resources is much more profitable than creating them from scratch. As a result, production prices are reduced, so that the sale price is also reduced, benefiting the consumer, not only economically but also socially and environmentally.