Three types of economy for posterity


Two weeks ago, Capital Cambodia published an article that talked about Cambodia putting circular economy in motion, a concept that has has been studied extensively in Europe and worldwide.

Two weeks ago, Capital Cambodia published an article that talked about Cambodia putting circular economy in motion, a concept that has has been studied extensively in Europe and worldwide. It is largely viewed as a potential strategy for societal development, aimed at increasing prosperity while reducing dependence on raw materials and energy.

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Many businesses regard circular economy as a way to enhance economic growth and increase profits. Governments across the world actively engage in the discussion on the benefits of a circular economy and its impact on employment, economic growth, and the environment.

In actual fact, there are three kinds of economy, comprising linear, reuse and circular economy. The difference between these economies is clearly drawn out by the Dutch government.

The Ellen MacArthur Foundation works with business, government and academia to build a framework for an economy that is restorative and regenerative by design. It is said that there’s a world of opportunity to rethink and redesign the way we make stuff. ‘Re-Thinking Progress’ explores how through a change in perspective we can redesign the way our economy works – designing products that can be ‘made to be made again’ and powering the system with renewable energy. It questions whether with creativity and innovation we can build a restorative economy.

In a circular economy, economic activity builds and rebuilds overall system health. The concept recognises the importance of the economy needing to work effectively at all scales, for large and small businesses, for organisations and individuals, globally and locally.

Transitioning to a circular economy does not only amount to adjustments aimed at reducing the negative impacts of the linear economy. Rather, it represents a systemic shift that builds long-term resilience, generates business and economic opportunities, and provides environmental and societal benefits.

The model distinguishes between technical and biological cycles. Consumption happens only in biological cycles, where food and biologically-based materials (such as cotton or wood) are designed to feed back into the system through processes like composting and anaerobic digestion. These cycles regenerate living systems such as soil, which provide renewable resources for the economy. Technical cycles recover and restore products, components, and materials through strategies like reuse, repair, remanufacture or (in the last resort) recycling.

Origins of the circular economy concept

The notion of circularity has deep historical and philosophical origins. The idea of feedback, of cycles in real-world systems, is ancient and has echoes in various schools of philosophy. It enjoyed a revival in industrialised countries after World War II when the advent of computer-based studies of non-linear systems unambiguously revealed the complex, interrelated, and therefore unpredictable nature of the world we live in – more akin to a metabolism than a machine. With current advances, digital technology has the power to support the transition to a circular economy by radically increasing virtualisation, de-materialisation, transparency, and feedback-driven intelligence.

A perfect example given by the Dutch government shows that the world population is growing and this is affecting the environment. To ensure there’s enough food, water and prosperity in 2050, we need to switch from a linear to a circular economy. That’s why the government has developed the government-wide programme for a circular economy. The aim is to ensure healthy and safe living and working conditions, and cause less harm to the environment.

For a long time, our economy has been ‘linear’. This means that raw materials are used to make a product, and after its use any waste such as packaging is thrown away. In an economy based on recycling, materials are reused. For example, waste glass is used to make new glass and waste paper is used to make new paper.

To ensure that in future there are enough raw materials for food, shelter, heating and other necessities, our economy must become circular. That means preventing waste by making products and materials more efficiently and reusing them. If new raw materials are needed, they must be obtained sustainably so that the natural and human environment is not damaged.

According to Dutch government, it wants its economy to be circular by 2050. To achieve this, it has developed a government-wide program on establishing a circular economy, in which several ministries are involved. It includes programs aimed at handling raw materials more efficiently, for example From Waste to Resource, Green Growth, and Biobased Economy. The program will help to create a safe and healthy human environment.

To date, there have been no studies on the benefits relating to Cambodia’s adoption of circular economy. “However, Cambodia aspires to move towards it. Waste can become the source or raw material,” says E Vuthy, deputy secretary of the Secretariat of the National Council for Sustainable Development.

Let’s wait and see.

Benjamin is a business consultant based in China

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