Opportunities for Building Resilience
Research paper
Published 17 September 2020
Updated 30 March 2021
ISBN: 978 1 78413 415 0
The circular economy model has gained high-level political attention and support in Latin America and the Caribbean (LAC) in recent years. This paper provides analysis of the current state of circular economy policies in LAC and identifies priority issues for governments, businesses, civil society and the research community.
The multi-sector approach of the circular economy poses a major challenge to the institutions of LAC. Strong institutions and policies are key to the success of the circular economy transition.
Achieving circular economic development in LAC will require more transparent and accountable institutions across the region. Transparent democratic processes, supported by robust and accountable institutions, have been proven to have a strong bearing on the capacity of governments in Latin America to achieve economic development.55 Strong institutions are associated with high transparency, effective public spending and fiscal responsibility.56 This suggests that policymakers should take action to strengthen institutions in order to boost development, including circular economy initiatives.
There are important institutional and governance issues that are especially necessary to accelerate the adoption and implementation of a circular economy agenda in Latin America:
Supporting social innovation can be a promising approach for promoting an inclusive circular economy in LAC. Social innovation can be defined as ‘a novel solution to a social problem that is more effective, efficient, sustainable, or just than existing solutions and for which the value created accrues primarily to society as a whole rather than private individuals.’61 Social innovation is a central component of a theory of social change, in which the variety of everyday inventions on the micro level can lead to changing wider social practices.62
There is a long history in LAC of social innovation promoting health, education, food and energy security, social responsibility and sustainable development, where government institutions have failed.63 The SI-DRIVE initiative (Social Innovation: Driving Force of Social Change),64 which conducted a global survey of social innovation projects, found that more than half of the programmes surveyed in Latin America successfully shared their social innovations with projects in other territories, but only at the local level. Non-governmental organizations were essential for the implementation of most of these initiatives. However, without sufficient state support at local, subnational and national levels these social innovations lack scalability.
There are some examples of social innovation initiatives supported by national governments in Latin America. Argentina, Colombia and Chile have all embedded social innovation programmes within government ministries. For instance, in 2012, the Colombian government founded the Colombian Centre for Social Innovation, which sits within the Department of Social Prosperity; Argentina launched its National Programme for Technology and Social Innovation in 2013; and Chile incorporated social innovation into the agenda of the national economic development agency, CORFO.65 One successful example of social innovation that has benefited from strong government support at the city level is the cable car system in Medellín, Colombia, which was introduced in the early 2000’s to provide transport into the city for the poorest people living in hillside communities – the initiative was supported by education and social programmes.66
Even so, government-backed social innovation programmes in LAC are generally more marginal, lacking the support to operate at scale. In Chile, for example, a group of young professionals, under the name Potential Chile, were able to design a product that retained 97 per cent of particulate emissions produced by combustion of biomass in domestic stoves, contributing to a reduction in air pollution in the city of Coyhaique without affecting the inhabitants’ ability to heat their homes. Prototyping and testing of the product was funded in 2016–17 by the Ministry of Energy and CORFO. However, the project now needs further investment to enable it to be scaled up.67 Policymakers must recognize the key role that social innovation has to play in a just transition to a circular economy.
Most countries in the LAC region have introduced one or more of the six different types of policy measures that promote circular economy transitions:
Eco-design for existing products can optimize the remanufacturing process, further saving resources. Eco-design for new products can include design principles such as designing for energy efficiency, reparability, recyclability, minimization of packaging and chemical safety. Product design as it is needs to change considerably in order to fit into a circular economy.
In Brazil, a number of examples show how modular design and integrating shared transport services into real estate offerings can make efficiency savings for both construction and transportation. For example, modular design was incorporated into some of the venues for the Rio Olympic Games in 2016, with structures that could be removed, rebuilt, and repurposed. And in a number of São Paulo apartment buildings, a Brazilian real estate developer has launched residential buildings with shared car, motorcycle and bicycle hire schemes.75 However, many products such as electronics and cars are not originally produced in the region. Eco-design standards need to be global or they will be limited to certain products and sectors.
According to respondents to the Chatham House survey, the most important policies to advance the circular economy transition in LAC countries are the introduction of improved waste management and waste prevention policies, fiscal policies and EPR schemes. Respondents also highlighted the wider need for policy harmonization across the circular economy, sustainable development and climate change agendas and the importance of integrating policy measures that support the circular economy into other cross-cutting national-level policies, such as infrastructure development. Furthermore, to enable just transitions, policies and legislation relating to labour rights are fundamental to inclusive circular economy structures. For example, in 2019, Mexico updated its Federal Labour Law, which has removed barriers for workers wishing to access the justice system.76
The following case studies highlight the leading proponents of the circular economy in the region. Their experiences shed light on the current state of policy design, implementation challenges and sectoral opportunities.
After hosting the first Circular Economy Forum of the Americas in 2017, Colombia launched its National Strategy for the Circular Economy 2018–22 in November 2018 (Estrategia Nacional de Economía Circular– ENEC),77 with an updated version published in July 2019.78 The strategy aims to increase the rate of recycling and reuse of waste materials from 8.7 per cent in 2019 to 17.9 per cent by 2030.79 While this is the first strategy explicitly focusing on the circular economy in Colombia, this is not the first time that the country has created strategies and policies on green growth, sustainable production and waste management. The government produced a National Policy on Sustainable Production and Consumption in 201080 and green growth components – transforming the economy, generating low-carbon public policies and incentives, and increasing the involvement of the private sector – were included in its National Development Plan for 2014–18. A commercial carbon tax was passed into law in 2017; in October of that year, within months of its implementation, one of the country’s largest producers of concrete, Cemex, announced that it had become carbon neutral.81
Colombia was one of the first countries in the region to adopt EPR policies, introducing EPR into its first national policy on hazardous waste management, Decree 4741 of 2005, which regulates the prevention and management of hazardous residue and waste.82 In 2007, Colombia started implementing an EPR scheme to manage several end-of-life products containing hazardous waste materials, such as pesticide containers, expired medicines and lead-acid batteries. Light bulbs, small batteries, computers, mobile phones, and other household products as well as used tyres were added in 2010. The EPR scheme aims, in particular, to deal in an environmentally appropriate way with the estimated 110,000 tonnes of e-waste generated annually.83 However, the effective implementation and administration of the EPR system requires further improvement of the legal framework by defining clear targets. It also requires the active participation and collaboration of key actors in the product chain through legal requirements and economic instruments.84
Colombia has also been developing several strategies around the bioeconomy. At the World Economic Forum in 2016, the country announced its strategy for economic development, based on agro-industry, the service sector and tourism. In addition, the country’s National Planning Department conducted a Green Growth Mission, which proposed a shift to more socially inclusive, and resource-efficient, sustainable production processes.85
In recent years, the Chilean government has introduced several policies and strategies aiming to promote the transition to a circular economy. Among LAC countries, Chile has the most public initiatives devoted to the circular economy. In 2016, the country adopted Framework Law No. 20,920 for Waste Management, Extended Producer Responsibility and the Promotion of Recycling. It aims to protect public health and the environment by reducing the generation of waste as well as promoting recycling, reuse and other forms of valorization. The law established an EPR scheme and sought, inter alia, to enhance the inclusion of unofficial ‘waste pickers’.86 In 2018, Chile banned the commercial use of plastic bags, despite fervent efforts by the national plastics industry to block the process.87 Other examples of Chile’s engagement include the programme Construye 2025 (Build 2025), which seeks to promote sustainability and circularity within the construction sector,88 and the National Programme on Sustainable Consumption and Production, which covers areas such as sustainable construction, sustainable industry, sustainable lifestyles and waste management. The implementation of the latter is supported by the National Action Plan on Sustainable Consumption and Production (2017–22).89 Finally, the Chilean Plastics Pact initiative (Circula El Plástico, since 2019) brings together stakeholders from a range of sectors to promote a circular economy for plastics.
In 2016, Uruguay established the National System for Productive Transformation and Competitiveness (Transforma Uruguay), approved through Law 19472, with the commitment to promote productive and innovative economic development in the country. Participation in the design and implementation of Transforma Uruguay was not limited to government, it also included other public and private stakeholders, and incorporated social dialogue.
The final result of this process was the creation of a Circular Economy National Action Plan, which aims to strengthen human capacity; increase productivity and net savings in production costs; increase green job opportunities; achieve a greater visualization of initiatives and citizen participation; introduce greater innovation; and to bring about a reduction in CO2 emissions and negative impacts on watercourses and soil. Four ministries were involved in the design, and advisory councils were created to integrate workers, entrepreneurs, and academic institutions in the process.
The National Action Plan is made operational through projects such as Biovalor, which is funded by the Global Environment Facility (GEF), implemented by the UN Industrial Development Organization (UNIDO) and executed by three Uruguayan ministries. It aims to generate value from the waste derived from agro-industrial activities. Biovalor supported the Uruguayan National Development Agency (Agencia Nacional de Desarrollo – ANDE) in the design and implementation of the Oportunidades Circulares programme, which provides funding and other forms of support to circular economy start-ups. Biovalor has also developed its own project, Circularidad de Nutrientes en Tambos, an initiative to restore nutrient circularity in dairy farms.90
The Uruguayan government is also developing a national strategy for the bioeconomy,91 and recently launched a road map for Uruguay’s forestry sector.92 Since 2014, ECLAC, the World Bank and the World Wildlife Fund have identified Uruguay as a ‘green energy leader’.93 As early as 2004, its government introduced a law with the purpose of promoting reuse, recycling and recovery of packaging.94 The promotion of the circular economy and the bioeconomy are included in Uruguay’s national development plan.95
