The transition to a circular economy represents an ambitious movement – in all industries and across all aspects of the economy – towards a low-waste, high-resource-efficiency future.
While a core motivation of a circular economy is to minimise environmental impacts such as reducing greenhouse gas emissions or primary resource use, our study mainly articulates the case for such a transition from an economic value perspective – that is, GDP and employment. Circular activities and processes not only extend the usable life of products but also extend their value, create new jobs and raise economic growth.
The report investigates the potential economic effects of circular opportunities in three key sectors of interest, namely Food, Transport and the Built Environment. It considers Australian-specific circular opportunities to estimate economy-wide impacts for Australia. As a first attempt at estimating the potential economy-wide pay-off of transitioning to a more circular economy in Australia, this study is intended to lay the basis for more detailed future analysis.
Absent any valuation of environmental or social impacts, our report suggests that a future circular economy in Food, Transport and the Built Environment together represents a potential economic benefit of $23 billion in present value GDP by 2025. By 2047-48, we estimate that the benefit of a circular economy will likely rise to a present value of $210 billion in GDP and an additional 17,000 full-time equivalent (FTE) jobs for Australia. These effects are relative to a business-as-usual scenario representing the current level of circularity in the Australian economy. The approach applied here involves identifying potential opportunities across the key sectors based on Australia’s current business and economic environment. The economy-wide impacts of each circular opportunity is estimated in 2047-48, taking into account investment needs, costs and benefits.
We find that opportunities such as energy efficiency in dwellings and food waste reductions represent the greatest impacts in dollar terms, in part, due to the importance of these sectors in the Australian economy. The former, for example, is estimated to increase the output of the dwellings sector by 3.2 percent by 2047-48, with significant flow-on impacts across the construction, manufacturing and service sectors.
This report likely presents a conservative estimate of the impacts of a move towards a circular economy. Although we have considered a broad range of sectors and industries that encompass the key areas of economic activity in Australia, our list is by no means exhaustive and only identifies areas where the circular opportunities are most viable.
The estimates produced provide an understanding of the potential magnitude of positive impacts that could result from the adoption of the circular opportunities. This report highlights a substantial pay-off under a circular economy that is above and beyond its environmental benefits, reinforcing findings for other countries and jurisdictions.