Connections between Circular Economy and Ecological Economics

Due to the increasing speed of climate changes, along with unbridled economic growth and existing social disparities, research efforts have focused on approaches to develop and promote balance among resources within both ecological and economic systems. Among these are the principles of circular economy (CE) and ecological economics (EE).

CE is a concept that has been disseminated in recent years as a strategy to promote circularity in industrial ecosystems under the umbrella of sustainability. EE is a field of study that emphasizes the dependence between economic fields and natural ecosystems. Although both seek to stimulate the sustainable development of the planet, it is necessary to understand that these are different concepts, both in categorization and in meaning. Based on this tenet, this article starts with the question: What are the differences and interdependencies presented by CE and EE?

This study is based on a literature review, characterized as exploratory research that seeks to contribute to explaining the problem at hand. The works used as bibliographical sources were collected from the Capes Periodicals portal, which aggregates several textual and referential databases. In addition, Google Scholar was used as a library for sources. Thus, the discussion is based on the chosen publications and the definitions of the concepts of CE and EE, highlighting the scope of their differences, relationships, and interdependencies, and the dimensions in which they fit within the principles of sustainability.

In general terms, the sustainability tripod is a widespread concept that aims to integrate three dimensions of organizational performance: social, environmental, and economic. Addressed by John Elkington (2004), since its inception the triple bottom line has sought to assist governments, companies, and nongovernmental organizations to evaluate their projects and policies in a more balanced way through the lens of sustainability (Slaper & Hall, 2011). When well applied, sustainability actions can generate 1.) positive environmental impacts, such as reducing the use of virgin raw materials and renewable energy sources, and decreasing waste and emissions; 2.) positive economic impacts, such as reducing expenses through greater use of intrinsic values of resources, reduction of expenses with legislation and environmental taxes, and the creation of a positive image to organizations; and 3.) positive social impacts, such as creating new jobs and strengthening the sense of community and cooperation (Korhonen et al., 2018). As a result, CE and EE can be inferred to align with sustainability.

Ellen MacArthur Foundation, organization that promotes the transition from the current linear model to the circular model, defines CE as an industrial system that is intrinsically restorative or regenerative, and that seeks to replace the concept of “end of life” of products (Ellen Macarthur Foundation, 2013). This alternative replaces the current linear model in the economy, which is based on the collection, manufacture, use and disposal of materials (Toilet Board Coalition, 2016). The circular model has been treated as a combination of the practices of reduction, reuse, and recycling, requiring a systemic change for its implementation. However, it mainly aims to generate economic prosperity, environmental preservation, and social equality (Kirchherr et al., 2017) and can be applied in the waste, recycling, electrical, heating, renewable energy, trade, and services sectors, among others (Lipińska, 2018).

On the other hand, EE can be seen as a science that considers the environment to have an absolute limit for expansion of the economy. Thus, the economy as a subsystem cannot exceed the limits of the larger system in which it is contained, the environment. The biggest challenge of EE is in preventing an expanding economy, which continues to exist, from exceeding these natural limits (Romeiro, 2012). The scientific field of EE considers the natural, social, and human sciences and argues that economic processes cannot be studied in isolation; they must be viewed within the social and environmental context (Røpke et al., 2017).

The field of research within EE seeks to understand the relationship between economics and ecosystems and the beings that comprise them. It is based on asymmetry of information and understanding regarding environmental issues and sustainability, precaution, irreversibility of damage to natural ecological systems, and focuses on ethical issues (Aslaksen et al., 2013). In economics, EE seeks to achieve higher standards of quality of life (Temesgen et al., 2021).

Among other goals, EE has focused on transitioning from an income-based economic system to a circular system (Bruel et al., 2019). However, although the relationship regarding circularity exists, CE and EE are different concepts. CE is presented as a strategy that seeks sustainable production and consumption, while EE is a transdisciplinary scientific field (Røpke et al., 2017). In this sense, CE is considered by Stojanovic (2019) as a subdiscipline integrated with EE and ecological management as well as other approaches that are also part of this larger field of study and research (for example, agroecology, industrial ecology, and urban sustainability).

It is worth pointing out that EE is a relatively new field that began in the late 1980s, fueled by dissatisfaction with the economy at the time and the environmental problems it caused. It is radically opposed to neoclassical economics, seeking to focus on human welfare not necessarily related to economic growth (Temesgen et al., 2021). Also considered a new concept, with research more widespread only about 20 years ago, CE has been seen as an alternative to addressing social, economic, and environmental challenges that, to be solved, require profound changes in the current economic system (Temesgen et al., 2021). Human welfare, the focus of EE principles, is also considered in the efforts toward circularity, based on the balance between the dimensions of sustainability.

Thus, like EE, the principles of CE also contradict neoclassical economics. Among the initiatives advocated by CE are the sharing economy (Geissdoerfer et al., 2017) and the adoption of local currencies (Temesgen et al., 2021). Sharing economy includes the cooperative use of goods, such as the use of public transportation, and local currencies encouraging local commerce. These initiatives align with practices advocated by EE, such as pluralism of values, cooperation opposed to competition, a vision of coexistence within the community, and a focus on circular rather than linear flows (Temesgen et al., 2021).

Stojanovic (2019) highlights that in recent years, several strategies have been considered in order to promote the principles of EE, CE being one of them. Reinforcing the interaction between these fields, Millar et al. (2019) believe that research aimed at CE needs collaboration between aspects of EE, industrial ecology, and cleaner production principles. These fields of research are precursors to the development of circular economic principles.

Similarly, Bruel et al. (2019) believe that EE and industrial ecology are the founders of CE, and that an interaction and reconciliation of these fields are promising for the theoretical and practical development of CE. Thus, an interaction between the concepts and efforts aimed at the diffusion of both is shown as an alternative for the achievement of sustainable development, with a direct focus on environmental preservation and the promotion of a better quality of life.

Circular economy can be considered one of the strategies used to promote the ideas advocated by ecological economics. From this perspective, neoclassical economic models are made circular by reducing the use of resources and using the full intrinsic value of materials as a way to reduce emissions and waste disposal and respect the environmental limits considered by ecological economics. In this way, CE presents itself as a branch of the principles defended by the transdisciplinary science that is EE. EE views the economy as a subset of the environment and therefore considers that the economy is bounded by the natural boundaries of the planet. Developing circular economy can be a way to ensure that the boundaries are not crossed, enabling sustainable economic development that goes far beyond economic growth; rather, it is focused on the promotion of quality of life and the preservation of natural resources.