Understanding the Circular Economy: Overview of the Issues

GUSTAVO FERRO

Buenos Aires

Congreso; LVI Reunión Anual de la AAEP; 2021

FCE-UBA

This essay tries to synthesize a recent discussion on circular economics, aiming to clarify the concept, itsrelationship with the notion of “decoupling”, and how technology, business, and economic policy influence it. Inessence, circular economy means turning waste into something valuable. The concept encompasses someprevious notions, such as bioeconomy. Technology of Fourth Industrial Revolution helps to decoupling growth fromresource use. The reach of decoupling is disparate between growth optimistic and growth pessimistic thinkers.Business models comprehended in circular economy vary from eliminating waste, maximizing use extension ofcapital and durable consumption goods, until recovering materials and energy from process and products, turninggoods into services by sharing, and replacing property by lease or pay-per-use models. Policies to induce orincentivize circular economy includes fiscal incentives through taxation and subsidization, command and controlmeasures, and voluntary coordination efforts at the international level.