Drivers and barriers in the transition from a linear economy to a circular economy

Abstract

A paradigm shift from a linear economy to a circular economy is crucial to reduce pressure on the environment and to improve the security of supply of primary raw materials. Under this new paradigm, governed by the imperatives of “reduce, reuse, and recycle”, the extraction of primary resources is minimised by extending the useful life of existing resources and materials. This paper seeks to identify the drivers and barriers of this circularisation and provide guidance for effective policies to hasten the transition to it. The innovative contribution made by this paper to this area of research is the empirical evidence it provides on the role played by economic, social, and environmental factors in the transition to a circular economy. To achieve this, yearly data from 2010 to 2019, for a panel of 19 European Union countries were analysed employing a Panel-Corrected Standard Errors estimator, which was shown to be an appropriate estimator for the data's characteristics. The circular material use rate was used as a proxy for the circular economy. The main findings suggest that the age distribution of a country is a significant predictor of a circular economy. Older people tend to be reluctant to change their behaviour, while young people are more inclined to move away from the so-called ‘take-make-waste’ extractive industrial model. Policies directed to older people to sensibilize them on the benefits and importance of a circular economy are thus required. When per capita income increases, the propensity to accept products containing recycled materials decreases. This finding merits the particular attention of policymakers. In turn, income inequality makes moving toward a circular economy more difficult. Those in the middle-income bracket are more likely to exhibit green behaviour, which implies that they are more aware of environmental issues.