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Is it possible to use modeling to understand the transition to a circular economy better?

by Prittle Prattle Team
Is it possible to use modeling to understand the transition to a circular economy better?

For decades, economists have employed models to estimate climate initiatives’ future costs and benefits. With the growing interest in the concept and execution of a circular economy, the question is if models can also aid in better understanding the transition.

Yes, it is true! Models can help us better comprehend the relationship between economic development, material consumption, and environmental pressures associated with material extraction, processing, and disposal. Greenhouse gas emissions, soil, water, and air pollution, as well as harmful impacts on humans and aquatic and terrestrial ecosystems, are all examples. Samples can also be utilized to examine the costs and advantages of resource efficiency and circular economy (RE-CE) strategies, highlighting the trade-offs between economic repercussions and environmental impact reduction.

The OECD’s RE-CIRCLE project’s novel modeling methodology demonstrates that models can be a handy tool for understanding the transition to a circular economy. The OECD ENV-Linkages model has been developed for this project to include material used for 60 distinct materials from four different categories: biomass resources, fossil fuels, metals, and non-metallic minerals. Furthermore, the model has been modified to account for primary and secondary metals, implying that metal products can be manufactured using metal ores and recycled scrap metal.

The Global Material Resources Outlook, published in 2019, used these model advancements to illustrate that unless more aggressive policies are enacted, material use is expected to double by 2060, starting from 89 billion tonnes in 2017 and reaching 167 billion tonnes in 2060. In the absence of policy change, the daily use of materials would increase from 33 kg in 2017 to 45 kg in 2060. Population expansion and improved living standards contribute to this growth. Still, technological advancements and structural change can limit material growth (the evolution of the shares of the various activities in the economy). A rise in material consumption has a corresponding increase in environmental repercussions, including a projected doubling of greenhouse gas emissions.

RE-CE policies can help restrict the growth of material usage and its adverse effects on the environment. Using the ENV-Linkages model, simulations show that a RE-CE policy package can effectively lower raw material use while negatively impacting economic growth. In future years, the RE-CE policy package will cause a relative decoupling of raw material consumption from economic growth and a shift from natural to recycled resources. The use of fewer materials and a change from raw materials to recycled fabrics substantially influence the environment.

In comparison to the baseline scenario for the year 2040, the specific policy package examined in the model’s simulations shows that raw materials use can be reduced by 27% for metals and 8% for non-metallic minerals at the global level with a limited impact on global economic activity, equivalent to an overall loss of 0.2 percent of global GDP. The economic effects are minor, but they obscure regional differences, depending on whether countries are net importers or exporters of raw resources, accessible production technology, and primary and secondary material input costs.

In comparison to the baseline scenario for the year 2040, the specific policy package examined in the model’s simulations shows that raw materials use can be reduced by 27% for metals and 8% for non-metallic minerals at the global level with a limited impact on global economic activity, equivalent to an overall loss of 0.2 percent of global GDP. The economic effects are minor, but they obscure regional differences, depending on whether countries are net importers or exporters of raw resources, accessible production technology, and primary and secondary material input costs.
The potential impact of RE-CE policies on employment creation is a critical factor in ensuring their success. According to simulations with ENV-Linkages, the estimated RE-CE policy package has marginal but positive employment implications for most nations. The jobs lost in raw material-producing industries (such as mining and construction) are more than offset by new jobs created in rising industries (including recycling). Even though the aggregate employment effect is tiny, with only 18 million jobs in 2040, it conceals bigger reallocations across sectors and countries. Countries with significant extractive industries lose slightly more jobs than they create.
The additional elements of the ENV-Linkages model allow us to analyze both resource efficiency and climate policy, which is a significant benefit. There are substantial synergies when the RE-CE policy package is combined with policies that support a low-carbon energy transition. The mutually beneficial strategies result in a significant drop in raw material prices.
Policymakers have the analysis and database to support policy transitions toward greener economies because they can evaluate integrated policies within a consistent modeling framework.
The ENV-Linkages model has also been improved to investigate the economic effects of air pollution policies and interactions between climate and air pollution policies. These new modeling skills are currently being used to explore critical themes such as the impact of the Covid epidemic and reaction strategies on various environmental pressures. We’re also expanding the model to incorporate plastic usage and waste because we’re not afraid of challenges. This will enable us to investigate scenarios to reduce plastic pollution in the environment. All of these changes will have an impact.

This release is articulated by Prittle Prattle News in the form of an authored article.

Video Courtesy: Ellen MacArthur Foundation

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