DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

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78 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS action of capital accumulation and future capital requirements determines the investment pathway. A more granular representation, allowing for the distinction between old (fixed use) and new (malleable use) capital along with sector-specific depreciation rates would allow for better representation of the cost of transition. • More comprehensive and integrated representation of flow and stock externalities: economic impact assessment models are typically used to represent the impact of certain negative flow externalities such as greenhouse gas emissions or other types of harmful effluents; or to represent the impact of consumption of certain materials on their supply and availability. However, impact assessment models seldom have a comprehensive representation of flow and stock externalities, nor are they jointly assessed. In order to measure the true economic value of circularity, impact assessment models need to be able to core comprehensively capture flow and stock externalities generated from resource consumption and depletion in an integrated manner, and how the aggregate effect impacts production and consumption choices. Interpretation and presentation of results For CGE models, given their complexity, it can be helpful to complement a classical overview of results on key macroeconomic indicators with a description of the direct and indirect effects that underlie them. An example of such a ‘narrative’ of the modelling results from the Denmark pilot study is presented in Figure 20. Figure 20: Overview of direct and indirect effects in pilot CGE modelling SECTOR-SPECIFIC QUANTIFICATION ECONOMY-WIDE QUANTIFICATION Impact in focus sectors Cost savings and growth in revenue at sector level Economy-wide effects (from CGE modelling) Total Imports Total Exports Key macroeconomic impacts (net) Denmark GDP Cost savings and growth in revenue at product level Labour intensity Denmark job equivalents Circular economy opportunities Households’ income and consumption Denmark net exports Net government tax receipts Global emissions Denmark energy / emissions intensity Denmark resource intensity SOURCE: NERA Economic Consulting, Ellen MacArthur Foundation
DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS • 79 2.3.2 Map economy-wide policy options Objective: Complement sector-specific policy options identified in Section 2.2.5 with economy-wide policy options to enable a broad transition to the circular economy. End product: List of economy-wide policy options. To enable a systemic transition towards the circular economy, policymakers could, in addition to the sector-specific policy analysis, reflect on broader, economy-wide policy interventions. Figure 21 illustrates how such economy-wide policy and sector-specific policy interventions might work together. Three possible elements of economy-wide policy interventions are: setting a clear direction using metrics that reflect a broad definition of economic success, investigating the opportunities and challenges associated with adapting the fiscal system to realign incentives, and building knowledge by embedding systems thinking in education and launching broad circular economy research programmes. Figure 21: How economy-wide circular economy policy might complement sectorspecific policy POLICY OPTIONS TO ENABLE ECONOMY-WIDE TRANSITION CLEAR DIRECTION REALIGNED INCENTIVES EDUCATION AND KNOWLEDGE BUILDING POLICY OPTIONS TO ENABLE SECTOR-SPECIFIC TRANSITIONS 1 SECTOR 1 SECTOR 2 SECTOR 3 SECTOR 4 1 One policy package per circular economy opportunity. For definitions of policy types, see Figure 7. SOURCE: Ellen MacArthur Foundation. Adapted from Ellen MacArthur Foundation, SUN and McKinsey Center for Business and Environment, Growth Within: A Circular Economy Vision for a Competitive Europe (2015).
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DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

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