The global economic system has developed in a linear fashion. Resources are extracted to produce goods, which are then distributed to markets, consumed and thrown away at the end of their useful life. This system was appropriate in a world of less than one billion inhabitants where resources were abundant and waste was not a particular problem.
However, over the last century as the global population has grown and our consumption patterns have become more resource-intensive, this model has had some significant, if unintended, consequences.
If current trends continue, our ability to continue meeting global demand will be affected. As this graph below shows, reserves of many critical minerals and fossil fuels are estimated to run out in the next 50 years. This will affect the production of a variety of goods across a range of sectors unless alternatives can be found.
Estimated remaining world supplies of non-renewable resources based on current economic scenarios
At the same time the amount of waste we produce is growing and becoming increasingly difficult to dispose of, putting pressure on local and global ecosystems. Over the next three decades, global waste production is set to rise by 70 percent, from 2.01bn tons in 2016 to 3.4bn tons of waste per year by 2050.1
These challenges call for a more circular way of thinking, where industrial and agricultural systems are designed to maintain value, preserve resources and restore ecosystems.
The Ellen MacArthur Foundation describes a circular economy as
an industrial system that is restorative or regenerative by design. The foundation suggests three principles through which circularity can be achieved2
The table below, developed by academics from the University of Utrecht, highlights the most value-adding activities in the delivery of a circular economy.
An urban circular economy is one in which cities keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end their life.5
New York City is the world’s second largest city in terms of consumption (after Tokyo). In 2015 the city consumed products and services worth $1tn, a figure that is expected to rise to $1.4tn by 2030. More than half the world’s population lives in cities, and as a result most consumption takes place there. According to a McKinsey study, large cities6 will account for 81 percent of global consumption and 91 percent of consumption growth between 2015 and 2030.7
It therefore follows that any attempts to achieve a circular economy will need to be supported – if not led – by cities and the businesses driving their economies.
New York City has suffered disproportionately from COVID-19 with over 20,000 citizens dying from the virus.15 This has particularly affected lower-income communities and communities of color as reported by Governor Cuomo in May 2020.16 More than half of the deaths in NYC were from people of Latino ethnicity or Black racial background.17 At the same time, by June 2020 the city had seen over 500,000 people become unemployed since the crisis started, which disproportionately affected Asian, Black and Latino people.18
With such a significant public health and economic crisis exacerbating racial and wealth disparities, we must be confident that launching a new initiative to promote New York City’s transition to the circular economy will play an important role in both supporting the city’s COVID-19 recovery as well as addressing these inequality challenges.
We believe the circular economy can play such a role on a number of fronts:
One of the consequences of the COVID-19 pandemic is that our confidence in global supply chains has wavered. In a world that can shut down international transport in a matter of weeks, an overreliance on globalized supply chains is a significant risk to business continuity and national resilience. As a result, nations and businesses will seek to build supply chain resilience by increasing the local purchase of raw materials, many of which can already be found in existing products that have reached the end of their useful life.
This will in turn provide greater opportunities for local business to thrive. Guided policy interventions will need to ensure these opportunities are also accessible to minority-owned businesses, many of which were particularly hard hit by the pandemic.19 Given that the City purchases close to $20bn of goods and services annually, shifting some of this spend toward circular and locally owned business can create significant demand and have a powerful ripple effect.
Another consequence of the pandemic is the drop in revenue many organizations have experienced. As a result, businesses and public bodies need to reduce their expenditures to offset the lost revenue and remain solvent. As the Partnership for New York City’s Call for Action and Collaboration report20 highlighted, “Going forward, governments will need to spend less and depend more on leveraging private financing and expertise.” There is an urgent need to make resources – financial and physical – go further. The World Economic Forum estimates that material savings of over $1tn can be achieved from reuse, recycling and upcycling.21 The circular economy offers several different ways to achieve this:
Extending the life of existing products, materials and resources so less is spent on purchasing new ones.
Getting better at securing raw materials from resources that might be considered waste.
Developing leasing and sharing models can extend the productivity of products while reducing individual spend.
As we emerge from the COVID-19 health crisis, New York is committed to a green recovery that puts equity, fairness, and confronting our climate crisis at the center of our city’s rebuilding efforts.
NYC COVID-19 Green Recovery22
As a recent OECD report described, city governments should “encourage more efficient use of resources, and more sustainable consumption and production patterns, notably by promoting circular economy to keep the value of goods and products at their highest, prevent waste generation, reuse and transform waste into resources.”23
As many previous studies have highlighted, and this report will show, the circular economy has the potential to create local jobs in a number of different sectors, including: waste diversion and recycling; small-scale remanufacturing and repair; and servitization through physical and digital services. Jobs that support the circular economy will also be created in education, logistics and public sector services. Many of these new jobs have the potential to redress existing economic inequalities as they will be accessible to lower-skilled workers with minimal additional training required.
Pollution tends to impact poorer populations disproportionately as they are more likely to live in close proximity to areas of higher air, water and soil pollution where the cost of living is lower. Research by
the NAACP and the Clean Air Task Force showed that Black Americans are 75 percent more likely to live in areas situated near facilities that produce hazardous waste.24 This population also suffered more during the COVID-19 crisis, in part because their immune systems were affected by previous and consistent exposure to pollutants.25
Circular economy solutions can help reduce this by contributing to a reduction in pollution. According to research by the Ellen MacArthur Foundation and Material Dynamics, “circular strategies for cities have the potential to reduce the societal costs of harmful emissions from particulate matter (PM2.5 and PM10) by 61%,” while “circular mobility solutions can reduce the societal costs of harmful emissions by 20–30%.”26
The C40 Mayors’ Agenda for a Green and Just Recovery27 identifies three types
of action cities can take to support a green and just recovery:
Jobs and an inclusive economy: Create new, good, green jobs fast, support essential workers and massively expand training to facilitate a just transition.
Resilience and equity: Provide fundamental public services for all, underpinning a fair society and strong economy, resilient to future shocks.
Health and wellbeing: Give space back to people and nature, rethink and reclaim our streets, clean our air and create liveable, local communities.
The circular economy can play an important part in delivering some of these actions.
However, we should also acknowledge that COVID-19 also presents some challenges to more circular approaches. The most prominent one being the resurgence of single-use items that had seen a drop in recent years, in particular in relation to single-use plastics. The Economist described this as a “pandemic of plastic pollution.”28 This is due to the growth in demand for personal protective equipment (PPE), the increase in online shopping and the packaging that comes with it, the temporary appetite for take-out food and a drop in recycling discipline.
It goes without saying that public health needs to take precedence in these extraordinary times and single-use PPE may be the best solution, but when it comes to consumer use, the hygiene benefits of plastics over reusable products are not proven. A June 2020 statement from a group of 119 scientists and experts confirmed that reusable containers are safe to use during the COVID-19 pandemic, provided hygiene measures are followed.29
This recent trend is worrying but the circular economy has an important role to play. The World Economic Forum has identified this challenge30 and suggests the circular economy can be a long-term solution, by favoring “a sustainable model of living and working that will benefit us long into the future – one that will create a healthier, more equitable and more livable future for all.”
World Bank Group, What a Waste 2.0: A global snapshot of solid waste management to 2050 (2018)
Kirchherr, J., et al., “Conceptualizing the Circular Economy: An analysis of 114 definitions,” Resources, Conservation and Recycling Vol. 127 (2017)
C40, Municipality-led Circular Economy Case Studies (2018)
Large cities include metropolitan areas with 150,000 or more inhabitants in developed regions, and 200,000 or more inhabitants in developing regions
McKinsey Global Institute, Urban World: The global consumers to watch (2016)
NAACP and Clean Air Task Force, Fumes Across the Fence-Line: The Health Impacts of Air Pollution from Oil & Gas Facilities on African American Communities (2017)
Ellen MacArthur Foundation and Material Economics, Completing the Picture: How the Circular Economy Tackles Climate Change (2019)