Priorities for Developing Countries
Research paper
Published 22 May 2019
Updated 11 December 2020
ISBN: 978 1 78413 338 2
Developing economies will struggle to grow sustainably without significant investment in recycling, reusing and repairing used raw materials and products. This paper looks at opportunities to coordinate regional trade policies and investment programmes to rapidly scale up the circular economy in the developing world.
If the CE in developing countries is to gain political traction and attract investment, it is crucial that strategies be aligned with the existing priorities of governments and businesses. Opportunities for value creation through a transition to the CE exist across many sectors – from waste recycling and machinery repair in agriculture to remanufacturing in the textiles industry to resilient design in construction. All developing countries are thus in a position to craft appropriate, ambitious CE strategies that harness their respective competitive advantages.
Improved waste management and reduced waste generation can help to lower the number of premature deaths associated with the open burning of waste – estimated at 270,000 people a year.
There has yet to emerge a compelling narrative on the CE as a strategy for delivering on developing-country policy priorities such as economic diversification, job creation, agricultural development or energy security. Analyses of the CE and the opportunities it presents tend to occur through a developed-country lens that ignores policy priorities specific to lower-income settings. The potential for health benefits, for example, has not generally been the focus of CE strategies in Western countries. But in developing countries, where access to primary healthcare and improved health outcomes are policy priorities, the transition to a CE offers a number of opportunities. Improved waste management and reduced waste generation can help to lower the number of premature deaths associated with the open burning of waste – estimated at 270,000 people a year112 – while the use of refurbished equipment in healthcare facilities could significantly lower the costs of public procurement. Such equipment can cost up to 60 per cent less than new equipment.113
Similarly, understanding of CE practice tends to be narrow relative to the opportunities that the CE opens up. While respondents to the Chatham House–UNIDO survey indicated that the CE could support cleaner air, water and soil, greater resilience to resource shocks, job creation and poverty alleviation (see Figure 5), most respondents saw far greater opportunities for the CE to contribute to waste management strategies and industry rather than to other sectors of the economy such as energy, construction or environmental management (see Figure 6).
To galvanize buy-in and coordination across ministries, proponents of the CE should use it as an organizing principle that is mainstreamed across government strategies and sectoral plans, highlighting the ways in which CE principles and practice can be employed to accelerate the delivery of existing national development goals as well as the objectives of industrial strategies.
Commitments to increase the number and quality of jobs in the economy are a pillar of development strategies in most lower- and middle-income economies.114 The potential for the CE to contribute to job creation and economic development is significant, not least because many CE activities centre on local service delivery. While there have been few comprehensive studies of the employment effects of the CE in developing countries, case studies of relevant activities are encouraging. In the Nigerian city of Lagos, for example, where formal collection methods are used for only 40 per cent of the 10,000 tonnes of waste generated daily,115 entrepreneurs are designing solutions that reflect local skills and capabilities. ‘Wecycle’, a social enterprise, employs a fleet of cyclists to collect waste from low-income communities. Residents who supply their rubbish are rewarded with vouchers that can be exchanged for household items and common services, including crockery, food and mobile phone airtime.116 In addition to recycling, other start-ups in the region give this waste a second life as furniture, textiles or lumber.117
Meanwhile, in China 1 per cent of all new jobs created in the first half of 2018 were in the bike-sharing industry. The 100,000-strong national workforce in this sector includes those employed in bicycle manufacture, repair and distribution, as well as software development and maintenance (to support user access). In India, car-sharing firms have generated 30,000 new jobs in the state of Tamil Nadu.
Government-backed waste management projects can have a significant short-term impact on employment. An e-waste dismantling and recycling facility opened in Rwanda in 2017. The $1.5 million operation employs 1,000 people and has the capacity to process 7,000 tonnes of electrical and e-waste each year. Similarly, an e-waste recycling facility in Nairobi, established in 2013 through a public–private initiative between Hewlett-Packard, the Kenyan government and other partners, created 2,000 jobs in its first four years of operation.118
CE activities may also offer a buffer against increasing automation in industry and manufacturing. Much has been written about the potential for digital technologies, such as robotics and additive manufacturing, to displace low-skilled workers. For developing countries, where manufacturing and services provide only a limited share of employment but are prominent in state development plans, the prospect of increased automation is a strategic concern.119 The CE may provide a critical part of the response. Many tasks involving disassembly, repairs and remanufacturing are non-routine and involve a high level of knowledge. Compared with manufacturing assembly lines, it will take a long time before these tasks can be widely performed by robots, at least at a cost that can compete with the abundant labour found in many developing countries. The sorting of waste by product type and state of disrepair is difficult enough to automate; more complicated still are tasks involving collection from the streets and redistribution. Yet this will not always be the case. If waste streams become more regular and reliable, robots can play a role in their sorting and management, as demonstrated by Apple’s robot, Liam, which disassembles 1.2 million iPhones a year.120
Another common goal in developing-country industrial strategies is the desire to ‘move up the value chain’, i.e. to gradually move away from agriculture and raw material extraction towards higher-value-added industrial activities such as manufacturing and ultimately a higher-tech, service-led economy. Engagement in circular practices can support value addition and can be supported with minimal investments in infrastructure. Countries with a significant existing manufacturing base, for example, may already have the requisite skills and infrastructure to support product repair and remanufacturing at scale. Remanufacturing can be seen as a complementary rather than competing approach to manufacturing, capable of having a positive impact on employment and economic output.121 Both China and India (see Box 4) have signalled policy support for remanufacturing and other CE approaches because of the potential for employment creation and value addition.122
In resource-intensive economies, shifting towards a CE may present an opportunity to pursue economic diversification and access higher-value markets. In the medium to long term, however, continued dependence on natural resource extraction will present significant challenges for resilient economic growth.
In resource-intensive economies, shifting towards a CE may present an opportunity to pursue economic diversification and access higher-value markets. In the medium to long term, however, continued dependence on natural resource extraction will present significant challenges for resilient economic growth. Many resource-intensive economies are highly exposed to commodity price fluctuations, with the recent slowdown in growth in African countries closely tied to lower commodity prices.123 Many resource-rich countries already have ambitious plans to diversify their economies by moving up the value chain. The transformation of industrial assets and resource-processing facilities into regional reprocessing and remanufacturing hubs could support a transition away from quantity-driven resource export strategies towards value-added strategies. Whereas exports of raw, primary or scrap materials will often be relatively low-value, significant value can be added through their processing and remanufacturing into usable goods and materials. The production of car doors from scrap steel sheets is an example.
One notable exception to this model is that economies that export certain metals and minerals will likely feel less pressure to diversify. The central role of digital technologies in many circular activities and sectors will continue to support demand for commodities such as copper, lithium, gold, uranium and rare earth elements. Nonetheless, producers and exporters in the minerals and metals sector can boost their competitiveness in the short and long term through the early adoption of robust environmental and health standards in (re)processing and (re)manufacturing processes: as buyers and investors increasingly integrate the CE and sustainable business commitments into their business models, high-end materials that perform well against environmental and social governance metrics may attract a premium.
The Indian Resource Efficiency (InRE) strategy, released by the Indian Resource Panel (InRP) in 2017, details how CE approaches such as recycling, reuse, repair and remanufacture can support improvements in resource efficiency. InRP emphasizes the multidimensional benefits of a more resource-efficient economy in terms of complementing and accelerating existing policy priorities. These priorities include: positioning India as a global manufacturing hub; improving the efficiency of urban infrastructure; creating affordable housing; and reducing domestic pollution and waste. The InRE strategy identifies numerous opportunities associated with a more resource-efficient economy, including the development of industries focused on reprocessing waste (e.g. the reuse of construction and demolition waste in new building products) and job creation in green product certification, eco-labelling and green marketing. The strategy also considers a more formalized waste management sector – supported by government policy to deliver higher wages and improved labour, safety and environmental conditions, as well as new highly skilled jobs in design and manufacturing – with the aim of replicating the success of India’s information technology sector and enabling the country to become a global hub for resource-efficient innovation.
While the issue has received limited attention in the existing literature, integrating the CE with food security and agricultural development plans could offer an attractive policy avenue for developing countries, particularly those with ambitious targets for the agricultural sector. Tanzania’s National Development Vision 2025, for example, sets out to transform the economy ‘from a low productivity agricultural economy to a semi-industrialized one led by modernized and highly productive agricultural activities’ supported by industrial and service activities.125
Opportunities for CE approaches to minimize input requirements while adding value to agricultural outputs and creating new asset loops can be found along the entire food value chain, from production to processing to consumption (see Table 2). Certain practices in this area have long been the focus of policymakers at local and global levels seeking to boost productivity and reduce food loss and waste,126 while others reflect a departure from more traditional resource management approaches in the food system.
Sophisticated waste processing and treatment technologies – such as anaerobic digestion, the use of waste-eating microbes, and carbon capture and use – provide opportunities for generating value from food and agricultural waste. The technologies are increasingly being promoted in developing and emerging economies. In 2015, the Malaysian government introduced legislation mandating that household waste be separated into organic, recyclable and non-recyclable waste,127 while in Thailand the government has set targets under its National 3R Strategy to increase organic waste utilization by 50 per cent on 2012 levels by 2026.128 In Kenya, modern biodigesters – made from recycled plastic for easy transport and installation – have been distributed to more than 75,000 families. Biodigesters convert manure into biogas, a clean cooking fuel for stoves, and their use in Kenya has helped lower indoor air pollution and reduce emissions.129 In Kolkata, India, people came together to establish a local bus service that runs completely on renewable biogas,130 while Mexico has seen some of the biggest local innovations in wastewater management.131 Such technologies can also be cheaper than large-scale, mechanized production processes. For example, fares on the above-mentioned biogas-fuelled bus service in Kolkata are one-twelfth the price of those on the next-cheapest bus operator.
Beyond waste collection and reuse, circular approaches are being employed at the point of production to promote greater resource efficiency.
Beyond waste collection and reuse, circular approaches are being employed at the point of production to promote greater resource efficiency. Closed-loop systems such as aquaponics and hydroponics require drastically reduced land, fertilizer and water inputs. Some of the most advanced closed-loop agricultural technologies are being trialled in developing countries. Residents of Ho Chi Minh City in Vietnam have been trialling small-scale closed-loop aquaponic and hydroponic farming systems for growing cassava, tomato and lettuce; the initiative is in part a response to concerns over fertilizer and pesticide use.132 Lower-tech approaches to vertical farming have also emerged: in Kampala, Uganda, farmers are employing a simple construction of wooden crates – using earthworms to create fertilizer133 – while sisal sacks are used in a similar way to grow food in the urban slums of Nairobi, Kenya.134
For the recycling and reuse of organic waste, robust regulation will be important to mitigate the risk of unintended consequences. Food waste, heat-treated to render it safe for animal consumption, is an important source of animal feed (particularly in pig farming) in many countries: in South Korea and Japan, 43 per cent and 36 per cent respectively of food waste is used as feed for livestock; the process is regulated by laws regarding the treatment, storage and transport of food waste.135 In Europe and North America, the use of organic waste in animal feed has been strictly regulated since the discovery that the feeding of animal-derived waste to livestock was a contributor to the outbreaks of bovine spongiform encephalopathy (BSE) and foot-and-mouth disease.
|
Stage |
CE strategy |
Example initiatives |
|---|---|---|
|
Production |
Reduced resource inputs |
Precision agriculture using sensors and data analytics to monitor and apply resource input |
|
Yield improvements |
Breeding strategies to improve yield and resilience to pests, disease and climate impacts |
|
|
Reduced on-farm losses |
Sensors that monitor and prevent weather or pest damage to harvests and on-farm storage |
|
|
Asset sharing |
Leasing of agricultural equipment |
|
|
Recovery and reuse of agricultural inputs |
Closed-cycle production methods, e.g. aquaponics |
|
|
Recovery and reuse of waste streams from other sectors |
Recycling of wastewater for use in agriculture |
|
|
Minimization of food surplus |
Subsidy reform to discourage overproduction and promote quality over quantity |
|
|
Use of food and agricultural by-products |
Production of biochemicals and bioplastics from waste biomass |
|
|
Processing and distribution |
Reduced food loss in storage and transit |
Improvements in, and roll-out of, cool-chain technologies |
|
Reduced inputs |
Plastic-free biodegradable packaging |
|
|
Reprocessing of food waste into new products |
Reprocessing of fruit peels into fabric and paper |
|
|
Improvements in traceability for food safety |
Product tagging, which can be underpinned by blockchain technology, to monitor environmental conditions as food moves from ‘farm to fork’ |
|
|
Shared logistics |
Interconnected storage and transportation system across companies in the food, logistics and cool-chain industries |
|
|
Remanufacturing of food retail and storage equipment |
Refurbishment and remanufacturing of refrigerated display cabinets |
|
|
Consumption |
Extended food lifetimes |
Smart packaging solutions that preserve the quality and safety of foods by absorbing atmospheric compounds – oxygen, ethylene, moisture, etc. – that cause food to perish |
|
More sustainable consumer behaviour |
Nudging tactics to reduce food waste |
|
|
Post-consumption |
Redistribution of food waste |
Food surplus redistribution schemes |
|
Organic waste management |
Policies and legislation to encourage separation and differentiated recovery of household waste |
|
|
Recovery and refinement of food waste for human consumption |
Production of value-added surplus products (VASPs) that make use of food that is safe to eat but generally considered to be waste (e.g. carrot peel that is processed into a powdered soup mix) |
|
|
Recovery and refinement of food waste for animal feed and energy |
Use of food waste in the production of biofuel and bioproducts, including fertilizer |
CE approaches in agriculture could also contribute to improved food security. CE activities along the supply chain – including sensor-assisted approaches to monitoring resource inputs and climatic conditions; leasing models for agricultural equipment; and community-based renewable energy production – can all support productivity gains and improvements to the quality and availability of locally grown food in regions with poor market access. At the same time, the valorization of food and agricultural waste, whether through waste-to-energy projects, fertilizer production or novel circular products such as textiles made from food by-products, can create new markets and new income sources (see Table 2).
In reducing the need for primary materials and capturing the energy potential in waste, CE approaches can support strategies to deliver energy security and greater energy access. Many CE activities – reducing consumption; reusing, sharing and recycling products; minimizing losses in production – will limit overall demand for primary production and thus reduce the energy requirements of manufacturing. Some examples are as follows:
Waste-to-energy projects have received a lot of attention and funding from international development actors and the private sector. They offer a potentially easy solution to energy access issues in remote, hard-to-access areas. They can also relieve the pressure on resource-limited waste management programmes in lower-income countries, where facilities often struggle to handle rising volumes of unmanaged waste. The sector is growing fast: the proposed installed megawatt (MW) capacity in requests for funding for waste-to-energy projects to the Sustainable Energy Fund for Africa (SEFA) went from zero in 2015 to roughly 200 MW in 2016.145 In 2018, SEFA granted nearly $1 million to a solid-waste-to-energy start-up for a 10-MW power plant in Nairobi’s Kibera slum.146
However, the gains from such projects are not always clear cut. Burning waste should be considered a last resort, after all options for reuse, refurbishment or recycling have been exhausted. According to some stakeholders, landfilling waste may even be better from a net emissions perspective than burning it in some instances.147 Waste-to-energy plants often emit dioxins that can be very damaging to humans.148 And investment in waste-to-energy infrastructure risks lock-in to suboptimal practices: processes dependent on energy from waste in northern and western Europe have, for example, incentivized the practice of burning waste rather than reusing it in more productive ways.149
The environmental and health risks are exacerbated in settings where governance is weak and practices are poor. Waste effluent from donor-funded projects has been known to leach into nearby communities or into groundwater sources.150 Moreover, substandard technologies may escape detection in countries without the technological capacity to test for dioxin levels and other environmental impacts.151
It is becoming apparent that even a radical overhaul of current linear patterns of resource extraction and use is incompatible with global climate commitments. Developing countries are increasingly putting in place in place comprehensive ‘green growth’ strategies to reduce emissions and build their resilience to the impacts of climate change. Vietnam adopted a comprehensive national green growth strategy in 2014, for example, and green growth is one of the six strategies integrated into Malaysia’s plan for 2016 to 2020.152 The Africa Progress Panel has also highlighted the fact that many countries with extractive resources, such as Ethiopia, Ghana, Kenya, Nigeria and South Africa, have made strong progress towards climate-resilient, low-carbon development.
There exist certain trade-offs between the CE and climate mitigation. Approaches generally considered resource-efficient do not always reduce emissions. Primary resource extraction can, in certain circumstances, be less emissions-intensive than recycling and reuse, particularly where recycling is poorly organized or the separation of materials for recycling is inaccurate.153 Biomaterials sourced from plants or algae can play an important role in displacing non-renewable minerals and metals, but these benefits need to be balanced against the embodied emissions and environmental impacts of the substitute materials, some of which are water- and land-intensive to produce. Nonetheless, a series of recent reports, including ones by Material Economics and the Energy Transitions Commission, have found the CE to be a crucial means of reducing greenhouse gas emissions.154 The following benefits are of particular note:
For many developing-country governments, climate-resilient growth is as important as low-carbon growth. Thinking around the contribution of the CE to climate resilience is in its infancy, but there are a number of pathways through which CE activities, if properly implemented, can support climate adaptation across sectors (see Table 3). For example, CE practices can reduce the exposure of communities to climate hazards. In many countries, waste is a contributing factor to flooding in urban settings.158 Without adequate waste and water management infrastructure, drains and waterways become clogged with rubbish and pollutants; CE practices can lower the amount of unmanaged waste and thus reduce the potential for waste to heighten flood risk. CE practices can also boost the coping capacity of communities affected by climate change. Efficient water use, for example, will be a key strategy in promoting water security for the 3 billion people expected to be living in areas at high risk of water scarcity by 2050.159
|
Priority sectors |
Pathways through which the CE may contribute to climate resilience and/or adaptation |
Examples from developing countries |
Potential trade-offs for consideration by policymakers |
|---|---|---|---|
|
Food and nutrition security |
More circular agricultural approaches that mimic natural cycles, such as the recycling of nutrients and organic matter, could protect and improve soil fertility and reduce the use of synthetic fertilizers. This could increase the resilience to the negative impacts of climate change on crop yields and reduce dependence on international input supply chains. Closed-loop farming systems could support more local, self-sufficient and decentralized food networks, contributing to reduced exposure to price and supply shocks along international supply chains. |
Over centuries, small-scale farmers in Cambodia, China, Indonesia, Laos, the Philippines, Thailand and Vietnam have developed the closed-loop rice/duck farm method, whereby ducks and fish de-pest, weed and fertilize rice paddies.160 In Malawi, the FAO is working with networks of smallholder farmers to improve soil fertility by diversifying cropping systems, and by adding compost manure or legume residue to their soils.161 Hydroponic indoor farming systems are being used in Vietnam to grow crops in cities.162 |
Closed-loop urban and peri-urban agriculture systems may disrupt existing trade between rural and urban communities, threatening the resilience of rural livelihoods. |
|
Water security |
More efficient water use, closed-loop systems for agricultural wastewater recycling, desalination of salt water and reuse of wastewater from other sectors could increase the availability of clean water. |
In South Africa, water recycling methods and desalination processes were employed to ensure a continued supply of water in Cape Town during the city’s third year of drought.163 In India, a number of desalination plants have been established in states suffering from water shortages to generate usable water.164 |
Desalination can be extremely energy-intensive, creating a highly concentrated brine waste product which is often discharged back into the oceans. |
|
Energy security |
More efficient energy use and waste heat recovery can lower demand for energy inputs. Local waste-to-energy networks can reduce dependence on external markets for energy inputs. Closed-loop mini-grids can improve local electrification and reduce dependence on larger grids that may be exposed to climate impacts elsewhere. |
A community near Nairobi, Kenya, has added a waste heat recovery system to its solid-waste incinerator to create a supplementary source of low-cost energy.165 PV minigrids have been used in a number of Pacific Island states to deliver clean, reliable and self-sufficient energy to remote communities.166 |
An emphasis on resource efficiency in the energy system may lead to reduced redundancy, a core principle of energy-system resilience. There is a risk that lower costs of energy inputs may lead to a ‘rebound effect’ whereby increased energy efficiency is offset by increased energy consumption. |
|
Income security |
CE practices tend to allow for more local opportunities for value creation and employment, thus reducing exposure to resource supply shocks and other shocks. Agro-ecology and eco-efficient agriculture tend to be more labour-intensive than industrialized agriculture, thus preserving jobs in a sector which still provides the bulk of employment in developing countries. Diversifying agricultural production is one way to build resilient livelihoods in this sector over the longer term. |
In Nicaragua, a smallholder coffee-growing community diversified its farming practices. It allowed its plantations to be reforested with fruit, wood and fuel trees, and adopted composting to improve organic soil fertility. This allowed the community to withstand a two-year drought.167 |
Widespread adoption of CE practices could mean less income security in resource-intensive sectors, and could displace employment in waste management in the informal sector. |
|
Human settlements |
Modular homes built from more durable materials can support disaster preparedness in areas likely to be affected by floods and other extreme weather events. Improved waste management can mitigate the risk of rivers overflowing and flooding surrounding communities. |
Companies are building prefabricated, modular and hurricane-resistant houses in the Caribbean. The houses can be erected on stilts, moved to new areas and disassembled. The aim is to increase durability, flexibility and convenience, and reduce construction waste.168 |
Modular and more flexible design sometimes relies on the use of less resilient materials, for example lightweight hybrid materials rather than high-thermal-mass concrete, which could decrease the overall resilience of these homes to climate impacts. |
|
Infrastructure |
Debris collected in the wake of disaster-related damage to buildings and infrastructure can be reused in post-disaster recovery to build defensive infrastructure, such as sea walls, to reclaim land from the sea, and to improve the quality of essential infrastructure such as roads. Waste plastic can be used as a construction material to support more robust infrastructure such as roads. |
In China, construction and demolition waste is used for land reclamation and defences,169 while in Haiti, debris from natural disasters has been converted into concrete building blocks.170 In India, trials are under way to evaluate the potential to bury shredded plastic waste in roads, both reducing amounts of waste sent to landfills and increasing the durability of roads.171 |
The use of waste as a filler material in land reclamation can lead to contamination of soil and the destruction of marine ecosystems. Dumping waste into land reclamation sites may release toxic materials into soil and local waters if poorly managed. |
|
Ecosystem health |
Vertical farming and closed-loop food production systems can reduce the pressure of agriculture on land and water resources, while the use of organic waste as fertilizer can limit the leaching of nutrients into soils. Better waste management practices can mitigate the risk of toxic materials and chemicals entering water systems. |
A rural community cooperative founded by a local teacher in Shanxi, China, developed a training programme for local farmers to improve synthetic fertilizer use and promote closed-loop farming practices, including the use of fermentation beds for local livestock to reuse animal waste as a natural compost to improve soils.172 |
Negative impacts on biodiversity are potentially associated with the reuse and remanufacturing of waste products. Reintroducing waste products into production and use cycles can lead to contamination of air, soil and water if poorly managed. |
