Natural resources, and the materials derived from them, represent the physical basis for economic growth. Recent decades have witnessed an unprecedented growth in demand for resources. This has sparked increased interest from policymakers in a transition to a more circular economy. Three main reasons are often highlighted for promoting a circular economy transition. First, reduced extraction, processing, and disposal of natural resources may have significant environmental synergies; more efficient resource use could represent an important tool for achieving climate and other environmental goals. Second, the reduced reliance on critical resource and material inputs and improved security of materials access that result from expanded domestic secondary material supply is important; supply risks associated with future geopolitical shocks could be mitigated in importing countries. Third, the activities that will drive any circular economy transition could also become significant drivers of job creation and economic growth. New opportunities will emerge in various sectors, including secondary material production, repair and remanufacture, the services sector, and the sharing economy.
This paper, The Macroeconomics of the Circular Economy Transition, reviews the existing literature on modelling the macroeconomic consequences of the transition to a circular economy. It provides insights into the current state of the art on modelling policies to improve resource efficiency and the transition to a circular economy by examining 24 modelling-based assessments of a circular economy transition.