06 Conclusions and recommendations
The circular economy has a central role to play in LAC, but the success of the model will depend on the strength of alliances, both within and between countries.
Despite the challenge of moving away from the current linear economic model, the proliferation of circular economy related strategies, policies and initiatives in LAC suggests that many governments – and businesses – understand the potential of circular models of growth. However, a number of critical questions remain over the implementation of national circular economy policies and their alignment with economic and industrial policies. Can the countries of the region balance the demands of the private sector with wider environmental and social policies? The following points outline the key areas that will determine the success of circular economy transitions in LAC:
- Forging productive partnerships and transformative alliances, both within and between countries in the LAC region, is crucial for a successful transition to a circular economy. Cooperation is needed at the regional level to coordinate and scale up initiatives, share best practices and, at times, pool technical and financial resources. Advancing and operationalizing a regional circular economy alliance and roadmap, as discussed by the regional Forum of Ministers of Environment in late 2019, presents an opportunity to advance a common circular economy narrative and political agenda in the region. Furthermore, regional initiatives such as the Circular Economy Platform of the Americas212 and Circular Economy Forums213 provide important opportunities for stakeholders to openly share their knowledge and experiences.
- The aftermath of the COVID-19 crisis provides a unique opportunity for a green recovery; a just transition to a circular economy offers a suitable framework to ensure an inclusive and environmentally, socially and economically resilient future for the region. The lockdowns imposed at the country level have exposed the fact that, in the current linear system, what is good for the economy is rarely good for the environment or society. The significant increase and rebound in emissions and pollution to pre-pandemic levels in many countries,214 following the end of lockdown measures, show that the linear economic model is not an option for a sustainable recovery in LAC.
- One key factor for success will be the degree of long-term commitment shown by the region’s political leaders to the global sustainability agenda and the SDGs. Political leaders and governments who understand both the opportunities and challenges associated with the circular economy transition, including the social aspects, will be key players, given their ability to introduce and enforce legislation that promotes circular models and addresses identified challenges.
- Increasing state capacity and building strong, transparent institutions are important to ensure the transition from a linear to a circular model. Strong institutions for integrated and coherent policymaking – which address resource efficiency and waste management policies and align them with budgeting and social policies – are key for a just circular economy transition that promotes economically, environmentally and socially resilient societies.
- To ensure just transitions and inclusive political processes, such as participatory roadmapping processes, it is essential to actively involve all stakeholders. Lack of public trust in political leaders presents a significant challenge for many countries in the region, and regaining this trust is part and parcel of ensuring the acceptance of transparent and participatory processes.
- The challenge of municipal waste management must be a priority for national and local governments in the LAC region. The inclusion of informal sectors in municipal waste policy initiatives is one example of the social issues to be considered in a just transition context. The transition to a circular economy in the LAC region requires significantly improved municipal waste management, reduction and recycling systems for plastics, wastewater recycling and secondary materials markets. LAC countries that manage to establish such systems, especially in the aftermath of the economic crisis caused by COVID-19, could reap benefits in terms of improved public health and environmental quality, job creation, revenue, and enhanced access to critical secondary materials for local businesses.
- Governments also play a critical role as sources of funding for new initiatives in infrastructure, education and R&D, which are important for instigating and linking the circular economy transition with the development of Industry 4.0 technologies. International development finance institutions will need to expand their funding portfolios beyond waste management to support innovation and the uptake of technology for the circular economy. Public funding is not enough, however, and governments must also incentivize the private sector to mobilize resources for a digitally enabled circular economy.
- The winners in the circular world will be the individuals, companies and countries that are able to innovate and create business opportunities in the new environment. Country-level factors such as the quantity and quality of infrastructure, the degree of digitalization and technological advancement, level of human capital, and access to finance are all likely to be important. By working together, national governments, cities, companies, universities and civil society stand a greater chance of capitalizing on the opportunities of the circular economy transition.
- Entrepreneurship has important potential for the circular economy in the LAC region, as this community is already innovating in the reuse, sharing and recycling space. More financing is needed, however, to scale up these ideas and build the required networks. Furthermore, support for social innovation in the circular economy is needed to ensure inclusiveness and to achieve progress on the social objectives of the SDGs.
- LAC countries should continue to encourage the growth of circular economy business models, to drive innovation and capture value, and create high quality and decent jobs in addition to exporting raw materials. While continued strong growth is expected in demand for primary resources in many middle-income countries and emerging economies, at least in the short term, access to markets in Europe, the US and even China will increasingly become subject to environmental standards and circularity criteria, which are likely to become part of future FTA negotiations.
- EPR policies and governance models in LAC countries need to incentivize not only producers, but other actors in the supply chain, to carry out their allocated tasks and responsibilities. The effectiveness of EPR policies will require the introduction of ambitious yet feasible targets. Furthermore, efficient information management systems and online registries are needed. Additional economic instruments to complement EPR systems can be used to promote secondary materials markets. Finally, it will be necessary to establish complementary policies to promote eco-design and product innovation and to strengthen regulatory controls over intellectual property.
- The transition to, and policies for, an inclusive circular economy need to be guided by an increasingly robust and ambitious science base. Education programmes and research capacity on the circular economy are developing within the LAC region but need to be strengthened further. International research partnerships can contribute to increase the innovation capacity of LAC institutions. Transdisciplinary research approaches, co-creation with societal stakeholders, and social innovation are important to ensure sustainable and socially just outcomes.
- To become leaders in a sustainable circular bioeconomy, LAC countries must ensure that significant value addition is generated within the domestic economy. Simply exporting unprocessed natural resources and biomass to supply other regions such as the EU, US or China, and not develop their national bioeconomies, is insufficient and will not deliver on environmental, social and economic objectives. The challenge here is twofold: how to shift from large-scale agriculture, commodities and energy crops that drive deforestation and biodiversity loss to regenerative food systems; and how to create sustainable value chains for new goods and services derived from biodiversity assets.
212 Circular Economy Platform (2016), ‘Empowering Circular Economy In the Americas’, https://www.cep-americas.com.
213 For example, see FORO de Economía Circular Chile (n.d.), https://foroeconomiacircular.com (accessed 22 Jun. 2020).
214 Plumer, B. and Popovich, N. (2020), ‘Emissions Are Surging Back as Countries and States Reopen’, New York Times, 17 June 2020, https://www.nytimes.com/interactive/2020/06/17/climate/virus-emissions-reopening.html (accessed 18 Jun. 2020).