DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS
20150924_Policymakers-Toolkit_Active-links
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78 • <strong>DELIVERING</strong> <strong>THE</strong> <strong>CIRCULAR</strong> <strong>ECONOMY</strong> – A <strong>TOOLKIT</strong> <strong>FOR</strong> <strong>POLICYMAKERS</strong><br />
action of capital accumulation and future capital requirements determines the<br />
investment pathway. A more granular representation, allowing for the distinction<br />
between old (fixed use) and new (malleable use) capital along with sector-specific<br />
depreciation rates would allow for better representation of the cost of transition.<br />
• More comprehensive and integrated representation of flow and stock externalities:<br />
economic impact assessment models are typically used to represent the<br />
impact of certain negative flow externalities such as greenhouse gas emissions<br />
or other types of harmful effluents; or to represent the impact of consumption<br />
of certain materials on their supply and availability. However, impact assessment<br />
models seldom have a comprehensive representation of flow and stock externalities,<br />
nor are they jointly assessed. In order to measure the true economic value of<br />
circularity, impact assessment models need to be able to core comprehensively<br />
capture flow and stock externalities generated from resource consumption and<br />
depletion in an integrated manner, and how the aggregate effect impacts production<br />
and consumption choices.<br />
Interpretation and presentation of results<br />
For CGE models, given their complexity, it can be helpful to complement a classical<br />
overview of results on key macroeconomic indicators with a description of the direct<br />
and indirect effects that underlie them. An example of such a ‘narrative’ of the modelling<br />
results from the Denmark pilot study is presented in Figure 20.<br />
Figure 20: Overview of direct and indirect effects in pilot CGE modelling<br />
SECTOR-SPECIFIC<br />
QUANTIFICATION<br />
<strong>ECONOMY</strong>-WIDE<br />
QUANTIFICATION<br />
Impact in focus<br />
sectors<br />
Cost savings and<br />
growth in revenue<br />
at sector level<br />
Economy-wide effects<br />
(from CGE modelling)<br />
Total Imports<br />
Total Exports<br />
Key macroeconomic<br />
impacts (net)<br />
Denmark GDP<br />
Cost savings and<br />
growth in revenue<br />
at product level<br />
Labour intensity<br />
Denmark job<br />
equivalents<br />
Circular economy<br />
opportunities<br />
Households’ income<br />
and consumption<br />
Denmark net<br />
exports<br />
Net government<br />
tax receipts<br />
Global emissions<br />
Denmark energy /<br />
emissions intensity<br />
Denmark resource<br />
intensity<br />
SOURCE: NERA Economic Consulting, Ellen MacArthur Foundation
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