As is well known, the circular economy respects and sustainably preserves the fundamental functions of the environment: to act as a supplier of natural resources, waste recipient, and provider of utility. Although many countries agree to respect these functions of the environment, the success of their efforts to implement the circular economy remains low. Instead of preventing waste in order to save resources and support the assimilative capacity of the environment, we are producing more and more waste; for example, with packaging waste, which is reaching a new high in Germany, and with microplastics that are appearing in the food chain worldwide.

About 30 years ago, I was drawn to the larger context of the circular economy. In the early 1990s, the German government tried to curb the further increase in the volume of beverages in disposable packaging, especially beverages in one-way plastic bottles. There was a threat of a mandatory deposit fee for drinks in one-way containers if the combined share of refillables fell below 72%. As an economist, I was skeptical about this peculiar regulation, as it was only targeted at beverage producers and distributors, but not directly to consumers. Indeed, the regulation has failed, and that is the main reason why Germany has a now quite efficient mandatory deposit system – at first glance perfectly suited for Germany’s path to a circular economy. In fact, some 98% of empty one-way drinks containers are returned to collect the refund, a success story, if this result is related to the situation in other comparable countries.

However, the aim of the original legislation was to prevent waste, to respect the waste hierarchy in line with the goals of the circular economy. It was not only interesting for me to observe the further development of the proportion of refillables. Not entirely unexpectedly, this share has continued to fall to around 40%, and there seems to be no end. In addition, there could be a kind of moral self-licensing: the return of empty bottles “licenses” consumers to buy even more drinks in one-way bottles, and the existence of such an obviously efficient take-back system, supported by increasingly efficient recycling, “licenses” drinks producers to offer even more drinks in disposable packaging.

This example and other examples show very clearly that framework conditions – regulations, social norms, available technologies – guide consumers and producers regarding their decisions relevant to the environment. Experience to date suggests that the incentives provided by such a framework need to be carefully analyzed: will consumers, under the given conditions, help to prevent waste or succumb to “fast fashion”? How will consumers react to new environmental technologies in the digital economy? Will producers use their knowledge and expertise for a “Design for Environment” (DfE) or rather delay design changes of environmental relevance? Will waste management organizations support waste prevention through appropriate measures or promote a “design for recycling”? How can other countries be motivated to reduce greenhouse gas emissions when countries differ significantly in terms of economic well-being, as well as geographic and climatic conditions? How can global environmental problems, such as plastic waste pollution, be addressed in general?

These are just some of the questions that arise in the context of the circular economy, questions that need to be answered. Empirical evidence, including the above example, shows that it is not straightforward to design framework conditions in such a way that economic agents support the implementation of the circular economy with their actions.

In my book Implementing the Circular Economy for Sustainable Development I deal with these topics in detail. Following the introduction of the concept of the circular economy, I look at its reception in literature and practice and examine its economic and technological context. I then devise holistic environmental policies that are linked to the principle of Extended Producer Responsibility (EPR). These policies provide guidance on circular economy strategies and include packaging waste, plastic waste, textile waste, and climate protection, among others. Learn more with compliemtnary chapter, Chapter 20 – Packaging Waste in a Circular Economy.

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About the Author

Hans Wiesmeth, Professor emeritus of the Faculty of Business and Economics of Technical University of Dresden (TUD), Germany, is currently President of the Saxon Academy of Sciences at Leipzig. He held professorships in economics at University of Bonn (1981-1992), and at TUD (1992-2015).

Hans Wiesmeth was Vice-Rector Research at the TUD from 1993 through 2000, Dean of the HHL – Leipzig Graduate School of Management from 2005 till 2010, and President of DIU – Dresden International University from 2010 through 2014. He currently serves as Academic Director of the Laboratory for International and Regional Economics at Ural Federal University in Yekaterinburg, Russia.

Hans Wiesmeth has visited many international universities, including the University of Western Ontario in London, Canada, in the academic year 1986/87, and York University in Toronto, Canada, in the academic year 1988/89. He participated in various national and international research projects, in particular in EU projects referring to environmental issues, such as waste management and renewable energy sources in developing countries.