On the Economics of the Circular Economy: Significance and a Framework of Analysis – Transitioning from a linear to a circular bioeconomy – challenges and opportunities – 2023 Water for Food Global Conference.pptx

On the Economics of the Circular Economy: Significance and a Framework of Analysis – Transitioning from a linear to a circular bioeconomy – challenges and opportunities – 2023 Water for Food Global Conference.pptx

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  On the Economicsof the Circular Economy: Significance and a Framework of Analysis Ahmed Chennak1, Kostantinos Giannakas1, Tala Awada2 1Department of Agricultural Economics, 2Agricultural research division, University of Nebraska – Lincoln [email protected]
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  The state ofour economy Disposal of Waste Use Production Raw Materials Only 6% of the global economy is circular, and half of the linear flows enter the economy and leave it within a year ((Haas et al., 2015) Adapted from Haas et al., (2015)
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  The state ofour economy
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  The state ofour economy • By 2050, food production would need to increase by 70% (IPCC, 2022) • 1.7 earths needed by 2050 to support current population trends and ecological footprints • Cost inefficiency of the global food system is $1-2 trillion (FAO) Food, feed, fuel, fiber and bioenergy production Environmental degradation (water, soil, atmosphere, and ecosystems) Energy supply, storage and distribution Urgent need for mitigating and adapting to climate change Food waste (30-40 % of food ends up in landfills) Poverty and Injustice
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  The state ofour economy • GHG emissions have continued to rise globally • We are still not reducing our GHG emissions fast enough to avoid warming that will be greater than 1.5° C and possibly 2° C in the coming decades (IPCC, 2021)
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  From linear tocircular economy • Circular economy: • Closing resources loops • Slowing resource loops • Narrowing resource loops • Regenerative resource flow
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  From linear tocircular economy • Critics: • Understanding and definitions of circular economy • Focus on technical and engineering approach (i.e., system of processes) • The adoption of circular economy • Circular supply chains are rare (Soufani and Loch, 2021) Ashby et al. 2019 Ekins et al. 2019
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  Objectives and contributions •Need for an increased emphasis on the economics of the circular economy • General framework for the transition from linear to circular economic system • Economic and policy issues involved
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  A general framework •Fundamental transformations and technological changes • The environment (green) • Linear supply chain (black) • Circular supply chain (blue) • Scalability • Circularity metrics and indicators
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  Key economic issues •Production Functions/Production Technologies and Quantity of Output Produced • Costs of Production • Costs of Establishing the CE Units and Producing the Secondary Products • Market Structure • Quality of the Products and Consumer Preferences • Rebound Effect • Uncertainty about the Economic Impacts of Increased Circularity • Additional Revenues from Waste and Byproducts • Benefits from Corporate Social Responsibility
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  Policy implications • Expectedbenefits versus expected costs • Market failures • Effective policies • Clear understanding of the economics of the transition to circular economy
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  Summary and ConcludingRemarks • Circular economy is critical to tackle societal and environmental challenges • Methods and processes; while necessary, they are not sufficient for successful transition to increased circularity • Understanding of the economic impacts of circular economic processes • General, scalable and adaptable framework • Key economic issues that arise and policies
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  Thank you! [email protected]