Unleashing the Power of the Circular Economy

2
Industrial
development has
brought enormous
economic growth
But the linear
economic model
is unsustainable
Our society
needs to steer
away from global
overshoot and
collapse
Our economic model is hitting a brick wall
During the last century, industrial and technological development in
combination with global trade has resulted in an enormous economic growth,
which has propelled human welfare. In developed countries living standards
are high, and countries like China, Brazil, India, Indonesia are quickly catching
up. This development path is rooted in exponentially increasing resource
usage. During the twentieth century, worldwide material consumption
increased eight-fold. [3] By 2050, global resource use is expected to have
tripled. [4]
More and more signs show that this practice cannot be sustained. [5, 6, 7] The
dominant business model behind economic growth is a linear process, also
characterized as “take, make and waste”. [8] This model is “disconnected” from
the physical world, because the impacts on human, social and natural capital
and the long-term availability of critical resources are not taken into account.
The price for negative environmental impacts, called externalities, is either
too low (as is the case for CO 2 in the EU ETS system) or non-existent (as for
biodiversity loss).
As a result the human footprint exceeds the Earth’s biocapacity by more than
50 per cent. [9] Planetary boundaries have already been exceeded for climate
change, biodiversity loss and the human interference with the nitrogen
cycle. The boundaries for global fresh water use, change in land use, ocean
acidification and interference with the phosphorous cycle are soon to be
approached. [10]
The world thus faces an unprecedented number of environmental challenges
that are global in scope and interconnected by nature. [11,12] The growing
population, globalised markets and growing material consumption will even
[13, 14]
further increase environmental and social pressure.
Concerns about the effects of economic activities on society and environment
have been vented for 50 years. In 1972, the report Limits to Growth was
published by the Club of Rome and spread the alarming message that with
business-as-usual, the human population is headed for global overshoot and
collapse. [15] In an update and review of this report the unsettling conclusion
was reached that the changes in policies over the past 30 years had been
insufficient to get on a more sustainable track. [16, 143] The current financial crisis
is a symptom of the economy itself suffering from a linear production model.
[5,8,12] Thus, out of necessity, mankind needs to break the current bond between
prosperity and material consumption. [17,18]
10