Developing countries are all too familiar with the sustainability challenges associated with urbanization and industrialization – challenges that include pollution, water scarcity and soaring volumes of waste. In the absence of new approaches, these stresses will only increase alongside population and economic growth, and will be exacerbated by climate change. A study by the Indian Council for Research on International Economic Relations found that economic progress is slower in cities that are not growing in a ‘compact’ way.28 These cities face severe natural resource pressures, infrastructure deficits and mounting pollution crises.
New development models that support economic and social objectives at the same time as avoiding these significant risks to development are therefore needed. The CE could help to resolve this dilemma by increasing economic productivity, generating employment and reducing exposure to volatility in raw materials prices. At the same time, CE strategies could avert some of the major pressures facing developing countries – including health and environmental effects from unmanaged waste – with clear benefits in terms of lives saved as a result of reduced air, water and soil pollution.29
Until recently, however, the CE has been seen as a rich-country agenda. Few studies have explored the demand for CE approaches among stakeholders in poorer countries, or have sought to understand where the concept might complement or conflict with existing priorities.30 A critical next step is the development of a more robust evidence base that moves beyond the current emphasis on case studies – and that recognizes trade-offs and risks as well as potential upsides.
Technology- and capital-intensive approaches, or approaches that require a strong policy signal and institutional capacity for implementation, may be more difficult to achieve in developing countries. But in some key areas, such as e-commerce and off-grid renewable energy, there are many examples of developing countries leading, rather than following, developed countries. And since many sectors are already undergoing profound disruption,31 CE approaches, such as those explored in Table 1, could be integrated within existing reform agendas.
A competitive advantage?
Today, lower- and middle-income economies are in many ways more ‘circular’ than their counterparts in the developed world. A higher share of economic activity revolves around repairing and reusing or sorting waste. In some cases this may be down to different mindsets or norms around recycling, but the evidence base for this is often weak. More ‘circular’ behaviour is often born out of economic necessity, while higher-value opportunities for reuse and remanufacturing are relatively rare.
The presence of widespread existing practices and skills raises an important question: could developing countries have a competitive advantage in some areas of the CE?
Nevertheless, the presence of widespread existing practices and skills raises an important question: could developing countries have a competitive advantage in some areas of the CE? One example is the practice of reusing and recycling textiles: currently this is more economically viable where there is an abundance of low-cost labour, as is the case in many developing countries.32 Making the shift towards a CE might also be more ‘intuitive’ in developing countries, in the sense that it may require less of a change in behaviour than in many advanced economies.
Such a shift is all the more urgent in the developing world given that the traditional path to industrialization and development – gradually moving from labour-intensive, lower-value manufacturing to higher-value-added technology and service sectors – is under threat from automation and advanced manufacturing techniques. A significant upside for CE approaches is that it will be a long time before tasks such as disassembly, repairs and remanufacturing can be widely performed by robots.33
Table 1: Examples of circular economy approaches in developing countries
|
Shelter |
Mobility |
Food |
Waste |
|
|---|---|---|---|---|
|
Extending the use cycle |
El Salvador – a housing NGO partnered with the government to use more durable earthquake-resistant building technologies in social housing.i |
India’s Tata Steel set up an Advanced Materials Research Centre along with the Indian Institute of Technology to develop lightweight, high-strength materials for automotives.ii |
Vietnam’s government is working with the World Bank on a supply chain for frozen food, to reduce losses and improve food quality.iii |
In Nigeria, about 70 per cent of all imported e-waste is functional – it is now sold to consumers after testing.iv |
|
Enabling additional use cycles |
Modular construction is being used for low-cost housing solutions in New Delhi, enabling more efficient disassembly at product end of life.v |
In Brazil, a number of companies are active in the market to replace car parts through the National Association of Auto Parts Remanufacturers.vi |
In Nigeria, tractor sharing among smallholder farmers is being used to improve agricultural productivity.vii |
In India, a new e-waste Extended Producer Responsibility system requires companies to set targets for collection and repairs.viii |
|
Minimizing impact |
In Vietnam, building materials from rice husks are used in Ho Chi Minh City to build more fire-resistant, heat-insulated and sound-insulated buildings.ix |
Fiat cars exported to Brazil contain polyurethane seat foams with 5 per cent soy polyol.x |
An entrepreneur in Indonesia is experimenting with bioplastic food packaging to reduce plastic waste in Jakarta.xi |
In India, EnviGreen has created a 100 per cent organic, biodegradable and eco-friendly plastic bag.xii |
|
Changing utilization patterns |
In India, new digital platforms such as Airbnb and OYO are allowing users to share rooms and homes.xiii |
7 million km of driving may have been cut by the introduction of UberPOOL in Bangalore and Delhi.xiv |
In Tanzania, the government is working with the World Bank to develop more water-efficient practices among smallholder farmers.xv |
In India, the government has passed new e-waste handling rules to divert waste away from local scrap merchants.xvi |
|
Looping an asset through additional use cycles |
In Haiti, debris from natural disasters has been converted into concrete building blocks to build affordable homes in Port-au-Prince.xvii |
In India, trials are under way to evaluate the potential to bury shredded plastic in roads, both reducing amounts of waste sent to landfills and increasing the durability of roads.xviii |
In Brazil, Procomposto, an SME start-up, provides waste collection and composting services to generators of organic waste in cities.xix |
In Tanzania, BORDA, ISWA and the Dutch government have given technical and financial support to municipal governments to improve municipal waste-management processes.xx |
Sources: Authors’ own analysis, see Appendix 3.
CE activities may also improve the competitiveness of export-oriented sectors in developing countries. Circular agricultural practices, such as recycling nutrients and organic matter to reduce the use of synthetic fertilizers, or practices such as crop rotation and cover cropping that minimize tilling and retain natural capital, can play an important role in building resilience while increasing yields for farmers.34 Introducing resource-efficient practices has led to record rice yields in some of India’s poorest regions.35
Better jobs?
The employment potential of circular activities, particularly around waste management, is already clear in many developing countries, although the jobs involved are largely in the informal sector. According to one paper, 0.5 per cent of urban populations are working in informal-sector recycling.36 In India, 1.5 million people are involved in informal waste management.37 According to various sources, Kenya’s second-hand clothing market is estimated to employ anywhere between 10,000 and hundreds of thousands of people.38 New jobs are also being created as waste streams shift or new business models emerge. In Kenya, an e-waste recycling scheme is estimated to have created over 2,000 jobs within four years of its launch.39 In India, 30,000 new jobs have been generated by car-sharing firms in the state of Tamil Nadu.40
New jobs are being created as waste streams shift or new business models emerge. In Kenya, an e-waste recycling scheme is estimated to have created over 2,000 jobs within four years of its launch
As CE activities are scaled up, these positive employment effects are likely to increase. The remanufacturing and repair of products tend to require more labour than does manufacturing from raw materials.41 Deconstruction, a necessary prerequisite to scaling up the reuse of building materials, is typically more labour-intensive than demolition.42 Resource-efficient and organic farming practices also tend to require significant labour, particularly in rural areas, and could thus help to support more balanced economic growth.43 Digital platforms for secondary products and new, more service-oriented business models could, in theory, provide opportunities to people in all segments of society, especially in ‘reverse logistics’.44
But will these be better jobs? Research on employment opportunities in OECD countries suggests that there may be opportunities at a variety of skill levels. Collecting, handling and processing waste will offer low-skilled employment,45 whereas remanufacturing requires a skilled workforce.46 Studies investigating the quality of jobs in the sharing economy suggest that these are often jobs with fewer benefits, less security and fewer opportunities for advancement and skills development.47 For the most part, it is too early to tell how this will play out in developing-country contexts.
At the same time, the CE could have negative impacts on employment in some heavy industries – politically sensitive sectors that are often important regional employers. In India, for example, the steel sector employs 230,000 people.48 China is already in the process of retraining and relocating 800,000 people in its coal and steel industries, due to massive overcapacity. Although higher-value-added opportunities for products from these industries could create more jobs overall, incumbent sectors may push to delay or weaken policy frameworks for the CE. This is akin to the situation in the energy sector, where some countries have tried to hold back renewable energy for fears of the impact on existing fossil fuel generators and grid companies.
Careful approaches are also needed to avoid rapidly displacing employment in informal sectors without addressing the near-term social impacts. In India, roughly 80 per cent of waste is collected and processed by informal workers.49 Each year 30,000 informal workers dismantle abandoned oil tankers for scrap metal in Bangladesh.50 Ride-sharing companies such as Uber are competing with informal minibus services in cities such as Addis Ababa, Nairobi and Jakarta. Here the most exciting opportunities may lie in hybrid approaches that provide access to finance for the informal sector and only gradually introduce people into formal tax structures.51
Harnessing digital disruption
Many CE ideas that have been discussed for decades are today being made possible by the digital revolution.52 Mobile phones have enabled companies such as Uber and Airbnb to disrupt incumbent businesses by unlocking underutilized assets. ‘Trace and return’ processes already allow firms to track their products while in use, optimizing the timing of repairs and upgrades. Online marketplaces for waste products and materials are being piloted in several US cities.53 The so-called ‘internet of things’ will bring a step-change in our ability to know where materials and products are in the economy.
Far from leaving this trend to OECD countries, companies in developing and emerging economies – such as Alibaba, Tencent and Huawei in China, or Safaricom in Kenya – are well placed to capitalize on it. The penetration of mobile payments is higher in Kenya, which also has a thriving start-up scene, than in some OECD countries.54 Moreover, many companies are introducing technologies that can trace products along supply chains with end-to-end certification – including using distributed-ledger technology to help curb corruption and ensure environmental integrity.55
Balancing the benefits and downsides of digital disruption will be essential for promoting inclusive economic growth. While connectivity is spreading rapidly through lower-income countries, the ‘digital divide’ remains a major problem. Sixty per cent of the global population still has no access to the internet, and 2 billion people do not own a mobile phone.56 In Africa only 12 per cent of women use or own digital technologies, versus 18 per cent of men.57 Moreover, sharing-economy approaches that require beneficiaries to own physical assets such as cars or homes – or shift jobs from one part of society to another – could reinforce social inequality.
Box 1: Pathways to a circular and green economy
Investments made in emerging and developing economies in the next few years will shape their natural resource demand, pollution and waste-management pathways for the coming decades. A huge scaling up of infrastructure is required to provide economic opportunity and access to modern services, as envisaged within the Sustainable Development Goals (SDGs).58 Yet industries essential to this process – cement, steel and energy, for example – demand significant quantities of water, land and minerals. A combination of low-carbon technology and circular systems may well be needed to deliver a more resilient, climate-friendly infrastructure roll-out.
In many developing countries, raw material demand is expected to grow in line with economic development (see Figure 3). Meeting many of the SDGs will require that demand for materials in those countries increases as basic human needs are met.59 Meanwhile, middle-class citizens in the developing world are already starting to consume more and reuse less – heading in the direction of wealthier people in developed countries.
It is possible that technical innovation and new business models could transform this pathway, decoupling economic growth from resource use. There is already evidence in emerging economies that future societies will need fewer resources than anticipated.60
Figure 3 shows that to achieve sustainable development at the global level, average resource intensity will need to fall even as well-being and quality of life continue to improve. For wealthier and more wasteful countries, a deep reduction in resource use will be needed. For emerging and developing economies, however, the aim could be to achieve development goals while maintaining current or similar levels of per capita resource consumption.
However, looking at individual countries separately can sometimes obscure the cross-border impacts of their varying development trajectories. The resource intensity of China’s economy, for instance, in large part reflects its role as a major manufacturer and processor of natural resources ultimately consumed in other countries. Waste exported from one country can become a valuable commodity in another, or alternatively (depending on how it is managed) can lead to negative health consequences. An inclusive approach requires looking not only at the employment and access questions within a country, but also at the cross-border effects of alternative development strategies.
Figure 3: Resource use and development pathways
Figure 3: Resource use and development pathways
28 Twari, M., Godfrey, N. et al. (2016), Better Cities, Better Growth: India’s Urban Opportunity, London, Washington, DC and New Delhi: New Climate Economy, World Resources Institute and Indian Council for Research on International Economic Relations, http://newclimateeconomy.report/workingpapers (accessed 12 May 2017).
29 Suez (forthcoming), Towards a waste crisis in emerging countries: impacts and solutions, briefing paper.
30 Two notable exceptions include Gower and Schroeder (2016), Virtuous Circle: How the circular economy can create jobs and save lives in low and middle-income countries; Ellen MacArthur Foundation (2016), Circular Economy in India: Rethinking growth for long-term prosperity (accessed 23 Oct. 2017).
31 Workshop participant, Kolkata Workshop, Jadavpur University, 25 July 2017.
32 Morley, N. J., Bartlett, C. and McGill, I. (2009), Maximising Reuse and Recycling of UK Clothing and Textiles: A report to the Department for Environment, Food and Rural Affairs, London: Queen’s Printer and Controller of HMSO 2007, Oakdene Hollins Ltd.
33 Merdan, M., Lepuschitz, W., Meurer, T. and Vincze, M. (2010), ‘Towards ontology-based automated disassembly systems’, IECON 2010- 36th Annual Conference on IEEE Industrial Electronics Society.
34 EIP-Agri (2015), EIP-AGRI Workshop ‘Opportunities for Agriculture and Forestry in the Circular Economy’: Workshop Report 28-29 October 2015, https://ec.europa.eu/eip/agriculture/sites/agri-eip/files/eip-agri_ws_circular_economy_final_report_2015_en.pdf (accessed 17 Nov. 2017).
35 Ellen MacArthur Foundation (2016), Circular Economy in India: Rethinking growth for long-term prosperity (accessed 23 Oct. 2017).
36 Velis, C. (2015), ‘Circular economy and global secondary material supply chains’, Waste Management & Research, 33(5): pp. 389–91, doi: 10.1177/0734242X15587641 (accessed 1 Nov. 2017).
37 WIEGO (2010), Organizing Informal Waste Pickers: A Case Study of Bengaluru, India, http://www.wiego.org/sites/default/files/resources/files/Chengappa-Organizing-Informal-Waste-Pickers-India.pdf (accessed 12 Sep. 2017).
38 Crowe, P. (2014), ‘The global business of secondhand clothes thrives in Kenya’, Reuters, 15 October 2014, https://www.reuters.com/article/us-kenya-textiles/the-global-business-of-secondhand-clothes-thrives-in-kenya-idUSKCN0I41DS20141015 (accessed 17 Nov. 2017); Kubania, J. (2015), ‘How second-hand clothing donations are creating a dilemma for Kenya’, Guardian, 6 July 2015, https://www.theguardian.com/world/2015/jul/06/second-hand-clothing-donations-kenya (accessed 17 Nov. 2017).
39 Fox, N. (2014), ‘Hewlett-Packard introduces large-scale e-waste recycling in Africa’, Guardian, 15 May 2014, https://www.theguardian.com/sustainable-business/sustainability-case-studies-hewlett-packard-ewaste-recycling-africa (accessed 15 Oct. 2017).
40 Retamal, M. and Dominish, E. (2017), The Sharing Economy in Developing Countries, London: Tearfund.
41 Dervojeda, K., Verzijl, D. and Rouwmaat, E. (2014), Clean Technologies: Circular supply chains, Brussels: European Commission; UN Environment Programme and International Resource Panel (2017), Promoting Remanufacturing, Refurbishment, Repair, and Direct Reuse, Workshop Report, 7–8 February 2017, Brussels, http://ec.europa.eu/environment/international_issues/pdf/7_8_february_2017/workshop_report_Brussels_7_8_02_2017.pdf (accessed 25 Oct. 2017).
42 Fraunhofer IRB (2001), Deconstruction versus demolition, http://www.irbnet.de/daten/iconda/CIB1459.pdf (accessed 25 Oct. 2017); Cooper, S., Skelton, A. C. H., Owen, A., Densley-Tingley, D. and Allwood, J. (2014), ‘A multi-method approach for analysing the potential employment impacts of material efficiency’, Resources, Conservation and Recycling, 109(2016), pp. 54–66, doi: 10.1016/j.resconrec.2015.11.014 (accessed 1 Nov. 2017).
43 The labour intensity of organic farming tends to be assessed relative to mechanized agricultural systems, which are not generally in place at scale in developing countries. Nink, E. (2015), ‘Study Reveals Organic Farming Is Financially Sustainable Around the World’, Food Tank, 9 June 2015, https://foodtank.com/news/2015/06/study-reveals-organic-farming-is-financially-sustainable-around-the-world/ (accessed 17 Nov. 2017); Hetemaeki, L., Hanewinkel, M., Muys, B., Ollikainen, M., Palahi, M. and Trasobares, A. (2017), ‘Leading the way to a European circular bioeconomy strategy’, From Science to Policy, 5, http://www.efi.int/files/attachments/publications/efi_fstp_5_2017.pdf (accessed 17 Nov. 2017).
44 Reverse logistics refers to all logistical operations relating to the reuse of products and materials, i.e. any process that moves a good from its typical end-of-first-life destination to another location for reuse or proper disposal.
45 Morgan, J. and Mitchell, P. (2015), Opportunities to tackle Britain’s labour market challenges through growth in the circular economy, London: Green Alliance, http://www.green-alliance.org.uk/resources/Opportunities%20to%20tackle%20UK%20Labour%20Market%20Challenges_sgl.pdf (accessed 25 Oct. 2017).
46 Ibid.
47 Retamal and Dominish (2017), The Sharing Economy in Developing Countries.
48 International Labour Organization (2014), Skills trends for green jobs in the steel industry in India, ILO Regional Office for Asia and the Pacific, http://www.ilo.org/asia/publications/WCMS_240450/lang--en/index.htm (accessed 1 Nov. 2017).
49 GIZ (2010), The Waste Experts: Enabling Conditions for Informal Sector Integration in Solid Waste Management: Lessons learned from Brazil, Egypt and India, https://www.giz.de/en/downloads/gtz2010-waste-experts-conditions-is-integration.pdf (accessed 1 Nov. 2017).
50 Kumar, R. (2013), Ship Dismantling: A status report on South Asia, http://www.shipbreakingplatform.org/shipbrea_wp2011/wp-content/uploads/2013/07/ship_dismantling_en.pdf (accessed 1 Nov. 2017).
51 In Brazil, for example, the government has a programme encouraging formalization through waste-picker associations and cooperatives. Gower and Schroeder (2016), Virtuous Circle: How the circular economy can create jobs and save lives in low and middle-income countries.
52 Ellen MacArthur Foundation (2016), Intelligent Assets: Unlocking the Circular Economy Potential (accessed 1 Nov. 2017).
53 The Materials Marketplace (undated), ‘Join the Circular Economy’, http://materialsmarketplace.org/united-states-materials-marketplace (accessed 12 Sep. 2017).
54 The Economist (2015), ‘Why does Kenya lead the world in mobile money?’, 2 March 2015, https://www.economist.com/blogs/economist-explains/2013/05/economist-explains-18 (accessed 1 Nov. 2017).
55 Abeyrayne, S. and Monfared, R. (2016), ‘Blockchain Ready Manufacturing Supply Chain Using Distributed Ledger’, International Journal of Research in Engineering and Technology, 5(8): pp. 1–10, doi: 10.15623/ijret.2016.0509001 (accessed 1 Nov. 2017).
56 World Bank (2016), World Development Report 2016: Digital Dividends, Washington, DC: World Bank, doi:10.1596/978-1-4648-0671-1 (accessed 1 Nov. 2017).
57 Ibid.
58 The New Climate Economy (2016), The Sustainable Infrastructure Imperative: Financing for Better Growth and Development, Washington: World Resources Institute, http://newclimateeconomy.report/2016/wp-content/uploads/sites/4/2014/08/NCE_2016Report.pdf (accessed 15 Apr. 2017).
59 Maxwell, S. (2011), ‘Ten propositions on climate change and growth’, http://www.simonmaxwell.eu/blog/ten-propositions-on-climate-change-and-growth.html (accessed 1 Nov. 2017).
60 Bleischwitz, R. and Nechifor, V. (2016), ‘Saturation and Growth Over Time: When Demand for Minerals Peaks’, Prisme N34, Paris: Centre Cournot, doi:10.13140/RG.2.2.24146.15049 (accessed 8 Oct. 2017); Lee, B. (2017), ‘Are we on the cusp of a demand revolution?’, Hoffmann Centre for Sustainable Resource Economy, https://hoffmanncentre.chathamhouse.org/article/are-we-on-the-cusp-of-a-demand-revolution/ (accessed 1 Nov. 2017).