Green Growth And A Circular Economy

Green growth has emerged as a dominant policy response to climate change and ecological breakdown. Yet until now, growth in Gross Domestic Product (GDP) has gone hand in hand with the rise in greenhouse gas emissions and biodiversity loss. Can “green” growth actually change this? Many critics argue that it cannot; they argue that decoupling growth from environmental damage relies too heavily on untested “technological fixes.” Circular Economy perspectives could help narrow this divide. But before we consider that in the context of Nepal, let us first look at what is meant by green growth.

For the Organisation for Economic Co-operation and Development (OECD), it is “growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies.”

According to the World Bank, it is “economic growth that is efficient in its use of natural resources, clean in that it minimizes pollution and environmental impacts, and resilient in that it accounts for natural hazards and the role of environmental management and natural capital in preventing physical disasters.”

The United Nations Environment Programme (UNEP) defines a green economy as one that “‘simultaneously grows income and improves human well-being ‘while significantly reducing environmental risks and ecological scarcities.”

Such definitions, therefore, exist on a spectrum. The World Bank, for example, seeks to “minimize” the environmental impact of growth, but one cannot minimize environmental impact as it nevertheless increases. The OECD is slightly stronger in that it seeks to “maintain” resources and environmental services but, here too, there is no demand to reduce impact. The UNEP offers the strongest definition in that it calls for “reducing environmental impact and ecological scarcities,” and for “rebuilding natural capital.”

In Nepal, the central challenge of this debate — how to develop in a way that balances societal needs, economic growth, and ecological costs — could not be more pressing. Growth is necessary and legitimate, yet air pollution, freshwater poverty, toxic rivers, water table depletion and soil erosion are just some symptoms of the development and rapid expansion witnessed over the last couple of decades. With Nepal’s population predicted to rise by25% by 2050, this challenge is only set to get bigger.

Circular Economy is not a growth strategy, but it has economics and new ways of creating value at its heart. In its purest form, it goes far further towards operating within our planetary boundaries than any of the definitions of green growth given above. Underpinned by a transition to renewable energy sources, it entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system. It is founded upon three core principles:

1) keeping products and materials in use,

2) designing out waste and pollution, and

3) regenerating natural systems.

The global economic system and most development is, of course, a long way from this ideal, and some see Circular Economy ideas as unrealistic. Yet circularity, like green growth, also exists on a spectrum; “circular-ish” is better than a completely linear “take-make-dispose” model. Circular methods can also create wealth. In innovation and new business models, there is untapped potential for job and market creation, in addition to increasing social surplus derived from decreasing pressure on the natural environment.

Transitions to circular ways of doing business are not easy, but they are sometimes closer than they appear. In fact, developing economies have a head start in some ways. A friend of mine has kept his motorbike on the road for 38 years and still uses it daily. Of course, this is mainly out of economic necessity as well as his love for a well-built piece of machinery, but items are repaired again and again in Nepal, whereas in the West, they may have been disposed of at the first instance. Now, as the West wakes up to resource scarcity, concepts such as thrift shops, tool libraries, car-sharing and repair cafes are creating value and new markets. Manufacturers are even starting to design out waste-making products to make them more durable, recyclable, and often modular, i.e., they are designed for repair rather than disposal.

One of the major transitions needed in Nepal, and the basis for a Circular Economy, is in the waste management sector. The negative externalities caused by waste in Nepal contribute to ill-health, poor sanitation, greenhouse gas emissions, and water pollution. With a recycling rate that is currently estimated at less than 3%, developing an ecosystem that fosters innovation, incentivizes waste separation, and supports the private sector should be a priority. There is money to be earned and jobs to be created in this endeavor. Up to 70% of solid waste is biomass, which should be harnessed to create compost or for energy generation; many dry waste materials too have intrinsic value, particularly e-waste, glass, and plastics. Doing so will require political will, vision, well-designed policy instruments, and, in all likelihood, an extensive public-private sector collaboration.

At the Himalayan Circular Economy Forum, we aim to foster discourse and analyses on issues such as this. We seek to learn from circular transitions overseas, with a focus on green cities and waste. Every sector, every business, and every consumer can play a part in moving towards a more circular economy. We will bring circular ideas to life and promote collaboration and innovation. By doing so, we can ensure that circular economy perspectives can play a major role in supporting Nepal’s green growth agenda.

By Mark Perrin

Senior Fellow at Nepal Economic Forum

Technical lead at HiCEF

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Nepal Economic Forum

NEF is a not for profit organization aiming to redefine the economic development discourse in Nepal.