The circular economy
Sometime back, I had written about planned obsolescence and the challenges of the disposable economy. About how products today are designed to have a shelf life—a period of time during which they can be used and after which we are constrained to replace them—either because a newer, more feature-rich model has presented itself or because the latest apps and software run too slowly on these old machines.
This economic construct requires a resource-intensive industrial infrastructure that focuses exclusively on the extraction and consumption of natural resources without paying heed to the need for replenishment or conservation.
There is an alternative way to think about industrial value creation, a model that is regenerative by design and aimed at ensuring that products are maintained at their highest utility at all times. This is the principle behind the concept of the circular economy that describes a continuous cycle aimed at preserving capital and minimizing system risk by efficiently tracking and managing finite stocks.
At its essence, the circular economy requires that value creation be decoupled from consumption of finite resources. It draws its inspiration from the biological world where the nutrients that are metabolized by life processes are generated from other living systems after their death and ensures that the earth remains a stable, self-contained ecosystem.
The circular economy attempts to mimic this circle of life, trying to achieve the same results through technical cycles that recover and restore products and components through strategies like reuse, repair, refurbishment, re-manufacture and re-cycling. It depends on sustainable practices, but more than that, looks to encourage a change in the way in which people think about their business. It asks them to focus on keeping products alive for as long as possible rather than requiring them to be constantly replaced.
Indian society has always had circular ideals. As a people, it is ingrained in us to reuse and recycle as much as possible. We are always looking for new ways in which to squeeze extended value out of discarded objects, transforming our old T-shirts into washcloths, dusters and mops, discarding them only when they are too frayed to use. On average we reuse up to 60% of our discarded plastics—10 times as much as the US.
However, for the most part, this recycling happens at the end of the value chain by the poorest sections of society—most of whom treat this as a scarcity management strategy rather than as an integral part of the economic construct. This results in value loss, not to mention health risks for those who extract value from waste (the rag pickers and garbage processors). Additionally, as the Indian middle class has begun to expand, we have begun to forget our cyclical habits, increasingly seduced by Western models of conspicuous consumption.
We have the opportunity to incorporate principles of the circular economy into our social fabric—and the time to do that is now. For instance, much can be improved in the Indian construction industry, which, even though it accounts for 8% of the gross domestic product, is still largely disorganized and resource-inefficient. While the Smart Cities Mission will help bring feedback-driven efficiencies to our cities, we could do with more constructive action in the areas of urban sanitation, water management and local community development.
Similarly, in the agricultural sector, we should look to develop digital food supply chains that transmit accurate market information to food producers, connecting them more closely with customers. We could also look to borrow from nature, developing self-sustaining cultivation habits like rice-fish farming, which improves rice yields without the use of fertilizers and pesticides.
The other area of the economy that shows considerable promise is urban mobility. By de-emphasizing ownership and creating efficient multi-modal urban transport solutions that, for instance, use ride-hailing technologies for last-mile connectivity, India could ensure that, unlike the West, vehicle ownership never rises above its current 5% levels—and people remain content with using public transport solutions to get to wherever they need to go. This will achieve better utilization as we treat vehicles as a service—not a product to be owned. When we migrate to electric vehicles that use sustainable charging solutions, we can only expect to achieve greater efficiencies.
In order to truly reap these benefits, businesses across industry verticals will need to integrate circular practices into their business practices. They will need to design products that are easy to repair, using materials that are longer lasting. In addition, they will need to create alternatives to planned obsolescence, developing strategies by which products can be re-purposed and generate revenue from services rather than sales. They should find ways to forge cross-industry collaborations with the aim of creating value chains across industry verticals.
In 2015, the ministry of environment and forests established the Indian Resource Panel with the specific purpose of facilitating the use of recycled materials and promoting resource efficiency. I can see this initiative facilitating efficient flows of materials from the product design stage to collection after use, repair, reuse, refurbishment, and recycling. After all, all we need to do is to tap our cultural instincts and we will have no problem adapting circular practices directly into our national economic model.
Rahul Matthan is a partner at Trilegal. Ex Machina is a column on technology, law and everything in between. His Twitter handle is @matthan.
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