# Reading: Linear and circular economy
*Activity type: book*

## Chapter 1: Linear economy

As the name implies, a ‘circular economy’ refers to a type of ‘economy’. So, let’s start there.

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Looking at the definition from the dictionary, the ‘economy’ is about the goods and services we produce and use, and of course the money that’s involved in all of that. The state of the economy is often considered synonymous with the state of a nation or country: When the economy is growing, things are going well, and vice versa. Regardless of whether this is an accurate measurement of progress and prosperity or not, the economy is something that plays a central role in our global society.

When we take a closer look at how the economy operates, it clearly revolves around the production and consumption of goods and services. The vast majority of those goods and services are delivered by taking resources from the environment, using that to make things, and when those things break or lose their value, we throw them away. Although this is a simplification, this take-make-waste mentality really is the modus operandi of our global economy today. 

![image](../../files/mod_book/chapter/62/image%20%281%29-2.png)

As you can see, it’s a rather linear process with a clear beginning and end, which is why we can call this way of working a linear economy.

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##### Examples of linear economy

As an example, consider a take-away coffee cup you might use at your local café. We would have taken stuff from the environment to make the plastic and paper used to produce the coffee cup. You’ll then use it to drink your coffee, and when you’re finished it will most likely make its way to a landfill somewhere. This is a fast-moving, single-use product, but the same goes for many longer-lived products.

Consider a laptop which you might use for a few years, but which will end up in the bin when you get something better and faster. Or think about a car, which might get turned into scrap after a decade of use. Or what about a building which could get demolished after 50 years, and turned into rubble? Although we employ some level of recycling or find a ‘second life’ for some of the materials, the vast majority of them will end up in a hole in the ground at some stage. In fact, the href="https://circularity-gap.world/2025" target="_blank" rel="noopener" (https://circularity-gap.world/2025) estimates that 93.1% of the global economy operated in this linear fashion in 2021.

Economic activity is central to our society, wellbeing, prosperity and progress, so it’s not something we’d want to stop doing anytime soon. But if we want to keep doing this linear taking-making-wasting indefinitely, there are some questions that need answering: 

![image](../../files/mod_book/chapter/62/image%20%284%29-2.png)

Where do all those resources come from in the first place? If we are continuously taking new materials from the planet, and we intend to keep doing this for the foreseeable future, is there an infinite supply to take from? And where do those materials go at the end? If we keep wasting and throwing stuff out the window, do we have an infinitely deep hole in the ground somewhere to contain it all? 

Obviously, neither of those things are true, and that is where this linear economy is running into some big problems. Taking resources from the environment without check or pause means we’ll eventually run out of those resources. And the drilling, mining, digging and processing we’re doing to get to those resources has negative consequences for that environment. Similarly, throwing out our waste, without consideration of how it impacts the environment? That is where our toxicity and pollution come from. That is where a lot of our emissions come from. It’s this way of working that is causing significant harm to the environment, the air, the land, and the water we rely upon to live and run the economy in the first place. And to make matters worse, it’s like we’re in a race to do that as quickly as possible; did you know that 99% of all products we purchase are href="https://news.un.org/en/story/2018/10/1021972" target="_blank" rel="noopener" (https://news.un.org/en/story/2018/10/1021972)?

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##### Impacts of linear economy

Consider some of these impacts that result from our linear way of working:

- Microplastic pollution has been detected on the summit of Mount Everest to the deepest oceans, in the very air we breathe and even in human blood.
Source: href="https://www.sciencedirect.com/science/article/pii/S0160412022001258" target="_blank" rel="noopener" (https://www.sciencedirect.com/science/article/pii/S0160412022001258)

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- Six out of nine planetary boundaries have been overshot in 2023. This includes limits to climate change due to emissions, novel entities found in the biosphere, biosphere integrity, freshwater change, land-system change and biogeochemical flows.
*Source: href="https://www.stockholmresilience.org/research/planetary-boundaries.html" target="_blank" rel="noopener" (https://www.stockholmresilience.org/research/planetary-boundaries.html)

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- Over the past two centuries, Australia has lost more mammal species than any other continent and continues to have one of the highest rates of species decline among countries in the Organisation for Economic Cooperation and Development (OECD).
*Source: href="https://soe.dcceew.gov.au/overview/environment/biodiversity#species-decline" target="_blank" rel="noopener" (https://soe.dcceew.gov.au/overview/environment/biodiversity#species-decline)

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- Ambient (outdoor) air pollution in both cities and rural areas was estimated to cause 4.2 million premature deaths worldwide per year in 2019.
*Source: href="https://www.who.int/news-room/fact-sheets/detail/ambient-(outdoor)-air-quality-and-health" target="_blank" rel="noopener" (https://www.who.int/news-room/fact-sheets/detail/ambient-(outdoor)-air-quality-and-health)*

This paints a rather dire picture, highlighting the importance of doing things differently. As the name of this module suggests, the answer lies in transitioning this linear economy into a circular one. Research and practice from around the world has shown that a circular way of working holds incredible promise to reduce these negative impacts, but also create opportunities for new ways of doing business. We’ll unpack all of that here, starting with an overview, next.

*Use the Table of Contents on the right to navigate to the next chapter - "Circular economy"*

## Chapter 2: Circular economy

In essence, a **circular economy **tries to offer an answer to the questions marks in our linear economy. By connecting the end and start of the linear system together, we end up with a closed-loop system.

![image](../../files/mod_book/chapter/63/image-2.png)

In a closed-loop system, resources that make their way to the end of the line are circulated back to the start through a variety of strategies such as reuse, repair and recycling. Waste effectively disappears from the picture, because it is circulated into a new resource instead. When these resources re-enter the system again at the start, they replace the new materials that would have needed to be extracted from the environment. This is how a circular economy gets rid of those two question marks of the linear economy, changing the take-make-waste system into a take-make-circulate system instead. In its most basic form, this is all a circular economy is, a closed-loop economic system.**
It’s important to acknowledge that this seemingly simple change represents an entirely different way of running our economy. As we’ve learnt at the start, the economy is about the goods and services we produce and use, and everything that we do to make that work. So naturally, the transition to a circular economy will have an impact on everything we do to make that work as well. This means that circularity is about recycling and waste management, but it is also about design and manufacturing. It is about logistics and business models, consumer behaviours and finance, it is even about regulation, policy and legislation. Everything that is somehow related to the way our economy operates – so almost everything we do – will be impacted by the transition to a circular economy. It represents a system in which all these different elements need to work together, which can quickly become an overwhelming aspiration that appears too broad for meaningful action.

To help simplify things, consider these three principles that underpin what drives a circular economy:

![image](../../files/mod_book/chapter/63/image%20%281%29-2.png)

We want to keep circulating products and materials at their highest possible value, which is how we maintain a closed-loop system. When done right, that’s how we can eliminate waste and its negative impacts such as pollution and emissions. Waste is what happens when resources fall out of the closed-loop system, so we want to avoid this is much as possible. That allows us to create an economy where we can still build the things we need in society today, but do so in a way that enables the regeneration of the environment and other natural systems. 

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##### Systems thinking

A phrase you’ll hear us use a lot throughout this course is ‘a circular economy represents a systemic shift’, so what does that mean, exactly? As we’ve seen in this chapter, the transition to a circular economy will have an impact on most – if not all – aspects of our economy. The three principles of circulate, eliminate and regenerate offer a rule-of-thumb on what underpins these impacts, but we’re still talking about something that requires collaboration across all parts of the economy. One party’s waste needs to become another party’s resource; Those who produce things need to collaborate with those who use them to make sure the loop is closed; Material extraction needs to be mindful of local ecosystems’, etcetera. All parts of the system need to work together if we are to make this circular thing work, which is what we mean when we speak of the ‘systemic nature’ of the circular economy. Because of this, the discipline of systems thinking plays an important role in the circular transition. 

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The University of Cambridge has written about systems thinking to help demystify what that means and how it’s applied. For more on systems thinking, check out these links: href="https://www.cisl.cam.ac.uk/news/blog/systems-thinking-rhetoric-action" target="_blank" rel="noopener" (https://www.cisl.cam.ac.uk/news/blog/systems-thinking-rhetoric-action) and href="https://www.cisl.cam.ac.uk/files/cisl_primer_demystifying_systems_thinking.pdf" target="_blank" rel="noopener" (https://www.cisl.cam.ac.uk/files/cisl_primer_demystifying_systems_thinking.pdf) .

Transitioning to an alternative economic model is a big task, but as you’ll learn here, it’s very much a necessary one. We’ll continue by elaborating on the link between the circular economy and climate, how it makes financial sense, but also what the challenges and our current progress look like. 

The next video from Monash Sustainable Development Institute shows how systems thinking works in circular economy
