By Liana Downey (CEO of Blueprint Institute)
Is the "circular economy" just the latest buzzword, or is it a critical shift we need to make for the future of our planet? Blueprint Institute CEO Liana Downey was recently a keynote speaker at the 2024 Circular Economy Conference held by UTS, speaking on the topic of “putting the economy in Circular Economy”. In the first of two posts on the subject, here are Downey’s observations.
Imagining a Circular Economy
Since childhood, I’ve been in awe of the sophistication of natural systems. Nature doesn’t generate waste in the way we think of it; it uses everything as an input. Whether it’s trees absorbing carbon, reefs protecting shorelines, or fungi breaking down organic matter, natural systems work in a closed-loop, sustaining life on Earth without creating pollution. These different elements work together in ways that make even the most complex human engineering seem crude by comparison. But beyond being impressive, these systems are vital for our survival—they are our life support.
As a child, I couldn’t understand why humans didn’t design systems with the same sophistication. Why did we create one-way systems that took an input, used it up, and created waste? But as I grew older, I realized the question wasn’t why we couldn’t do this—it was why we didn’t.
The Challenge of Circular Design
There are three reasons we don’t:
- It’s harder to design a circular system than a linear system
- We’re not reliably tracking the quality and quantity of our natural resources, and what gets measured gets managed; and
- We have the wrong incentives in place.
It’s Harder
Designing a linear system – one that takes an input and dumps any waste out the other end, is easier than having to think about how you might reuse waste as an input. However it’s by no means impossible. The range and calibre of presentations at the recent Circular Economy Conference at UTS provided an inspiring insight into what might be possible. Humans have a great track record of demonstrating ingenuity, especially when our back is against the wall. The work presented at the conference by chemists, engineers, waste-water treatment specialists and the like, absolutely reinforced this extraordinary capacity.
What Gets Measured, Gets Managed
We live in a world where economic indicators like GDP, unemployment, and inflation dominate public dialogue – and the back page of the Economist’s global indicators. Yet most primary schoolers can tell you that clean air, water, healthy soil, and thriving ecosystems are essential for life. And, by extension, most of us recognise that they are critical ingredients in economic activity. Yet these vital natural resources are not regularly tracked or updated in the same way that financial data is. You can’t see at a quick glance how much fresh water we have compared to other countries, how fertile our soil is, clean our air and water is, or how stable our plant and animal populations are – yet these are also important leading indicators and things of enormous value to us as citizens.
Australia is starting to make some progress, with a periodic review in the State of Environment Report, (the findings of which were hardly cause for celebration) but we have quite a way yet to go before the average Australian has the same visibility into these matters as we do into population growth or house prices.
Disconnect Between Costs and Rewards
Our current economic system, which has only been in place for about 60 years, doesn’t account for the finite nature of our resources or the natural boundaries of our planet. We reward businesses for generating waste and consuming resources, but we don’t hold them accountable for the environmental damage caused. For example, local councils may pay for plastic recycling, but plastic manufacturers, who make money from making plastics, aren’t expected to pay for the recycling. This disconnect between those who make the waste and those who bear its costs is more than an oversight; it’s a fundamental flaw in how we’ve structured our economy. The true costs of pollution are not adequately reflected in market prices.
Our profit-driven incentives behave as if resources are unlimited. The consequences for damaging the natural systems on which we depend, don’t come close to reflecting the downstream costs and risks of that damage. We’ve been able to get away with it for a while, but the clock is running down fast.
In a healthy system, incentives align with desired outcomes. As a parent, you wouldn’t pay your child to take out the trash and then dump it on the ground. Why then, do we reward companies for creating waste without making them responsible for cleaning it up? We need to redesign our economic systems to incentivize stewardship of our natural resources.
Why it Matters
Our current approach isn’t working. Consider these sobering facts about Australia: Australia holds the world record for the most mammal extinctions and ranks 4th globally for animal extinctions. Habitat loss is the leading driver of extinction in Australia, with an area the size of Tasmania (7.4 million hectares) of threatened species habitat destroyed between 2000 and 2017, more than 90% of without federal government approval. Yet there is hope—research has shown that circular economy approaches can halt and even reverse biodiversity loss. We are capable of making smarter, more sustainable decisions. It’s time to apply that intelligence to our economic systems before it’s too late.
Time for a Rethink
We must redesign our economic systems to:
- Track and report widely on soil, water and air quality, and ecosystem health, recognising these natural systems are essential to our survival.
- Shift our incentives to reward sustainability and resource regeneration – this includes pricing pollution and biodiversity destruction properly, to motivate companies to redesign systems to need fewer inputs and to produce less (or no) waste, and reduce and halt damage to ecosystems.
Track Natural Resource Indicators
By systematically measuring and reporting on soil composition, water purity, air quality, and biodiversity indicators, researchers can track changes in nature resources, identify potential risks, and alert others to the need to protect these fundamental life-supporting systems. Recognizing these habitats as more than just landscapes, but as complex, interconnected networks essential to human survival, requires a holistic approach that values ecological integrity, supports sustainable practices, and promotes proactive stewardship of our natural resources for our kids and grandkids and beyond.
Shift our Incentives, and Price Pollution
We’re a bit all over the place when it comes to pricing pollution. We’ve done some things well like waste levies, container deposit schemes and tiered pricing on water usage, and are just starting to think about how to price carbon emissions, but we have a long way to go more broadly. Nature underpins all life on Earth—jobs, industries, and economies depend on it. While the global scale of the challenge can be overwhelming, the changes we need to make start with small, everyday decisions. By adjusting our systems, we can halt and even reverse the damage we’re doing to the planet.
Liana Downey is the CEO of Blueprint Institute, an independent think tank, and former Deputy Secretary of NSW Education. Contact Liana at: [email protected]
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