# The real cost of linearity
*Activity type: book*

## Chapter 1: The real cost of linearity

So far, the benefits that we’ve discussed of the transition to a circular economy are largely environmental. The relationship between circularity and climate change highlights the necessity of embarking on this transition, but ultimately, we are talking about an economic system. If an economic system is going to work, the economic benefits need to stack up as well.

There are a multitude of reasons for why we are currently embracing a linear way of working. Arguably, it is a reflection of the modern, post-war world, where economic recovery has evolved into consumerism and finding the cheapest and most efficient way to sell things. With advances in technology and consumer access to goods and services, mass-produced products are now cheaper than ever before. In today’s market, href="https://www.bbc.com/news/business-68563339" target="_blank" rel="noopener" (https://www.bbc.com/news/business-68563339). Shipping is usually free, and a lot of stuff is even given away for free with other purchases. The linear economy might just be a result of our relentless pursuit of efficiency, right? However, when we dive a little bit deeper, it becomes clear that many parts of the linear economy are really an incredible waste of money.

##### Textiles and fashion

href="https://www.wri.org/insights/5-opportunities-circular-economy" target="_blank" rel="noopener" (https://www.wri.org/insights/5-opportunities-circular-economy) estimates that global textile production uses almost 100 billion cubic meters of water each year, which is approximately 4% of global freshwater withdrawal. That’s a big price to pay, but despite that people throw away still-wearable clothes worth an estimated US$460 billion each year. This video from The Economist explains the true cost of fast fashion in more detail.

 

https://youtu.be/tLfNUD0-8ts?si=KcHsXCyfdfRcMkJ9
 

##### Food waste

The href="https://www.unep.org/resources/publication/food-waste-index-report-2024" target="_blank" rel="noopener" (https://www.unep.org/resources/publication/food-waste-index-report-2024) shows that, on average, each person wastes 79kg of food each year. That’s equivalent to at least one billion meals of edible food being waste in households worldwide every single day. Just managing that amount of waste is costing us more than US$1 trillion, annually.

We shouldn’t forget that throwing our waste into the bin is not free. Waste and landfill levies are rising to manage the growing cost of waste management. Inhref="https://www.epa.vic.gov.au/for-business/find-a-topic/landfill-guidance/waste-levy" target="_blank" rel="noopener" (https://www.epa.vic.gov.au/for-business/find-a-topic/landfill-guidance/waste-levy), the waste levy has grown significantly over the last few years, sitting at almost $170 per tonne for municipal waste in metro areas since 1 July 2025. And that is global trend, according to the href="https://www.unep.org/resources/global-waste-management-outlook-2024" target="_blank" rel="noopener" (https://www.unep.org/resources/global-waste-management-outlook-2024). This report estimates that in 2020, the cost of managing our global municipal solid waste was about US$360 billion. But for 2050, that estimate grows to a whopping US$640 billion. Even if we were to embrace recycling practices to get our growing waste volumes under control, the UN estimates for the cost to still be around US$270 billion. Perhaps unsurprisingly, the transition to a circular economy offers a different outlook altogether:

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Figure: Cost of global waste management under different scenarios. href="https://www.unep.org/resources/global-waste-management-outlook-2024" target="_blank" rel="noopener" (https://www.unep.org/resources/global-waste-management-outlook-2024)*

Instead of just reducing the cost of waste, transitioning to a circular system is expected to result in a net gain of more than US$100 billion. This shows how a circular future is the only future in which any of this makes financial sense. Keeping materials and products in use, eliminating waste by using it as a resource, reducing pollution and toxicity, and regenerating our natural environment are all activities that will result in economic gains.

##### Fossil fuel subsidies

The consumer products flooding the market at impossibly cheap prices are the result of linear efficiency and economies of scale, right? But are they really?

In a lot of cases, the financial viability of a lot of linear products is being artificially propped up by hidden subsidies. A good example is the pervasiveness of global fossil fuel subsidies. Although href="https://www.csiro.au/en/research/technology-space/energy/Electricity-transition/GenCost" target="_blank" rel="noopener" (https://www.csiro.au/en/research/technology-space/energy/Electricity-transition/GenCost), businesses in that sector still struggle to compete with tradition fossil fuel-powered solutions because the latter are disproportionally supported by subsidies. This has flow-on effects for a lot of material sectors as well, such as the plastics industry.

A href="https://www.imf.org/en/Publications/WP/Issues/2021/09/23/Still-Not-Getting-Energy-Prices-Right-A-Global-and-Country-Update-of-Fossil-Fuel-Subsidies-466004" target="_blank" rel="noopener" (https://www.imf.org/en/Publications/WP/Issues/2021/09/23/Still-Not-Getting-Energy-Prices-Right-A-Global-and-Country-Update-of-Fossil-Fuel-Subsidies-466004) concluded that global fossil fuel subsidies in 2020 totaled US$ 5.9 trillion, expected to rise further by 2025. If a clear picture of all such ‘hidden’ subsidies would be available, it is likely that they’d change the financial viability of many linear solutions.
