THE BLOG
12/18/2014 05:07 pm ET Updated Feb 17, 2015

The "Circular" Economy - What it Is, and Why it Is Important

Let's assume you're traveling at a set speed on a very, very long road, but one that does have an end. Assuming nothing else changes, you will eventually get to the end of the road. At that point, there is nowhere else to go.

That is how a linear economy works. A linear economy is one that uses natural resources to produce goods. Eventually finite resources will be exhausted. It may take years, decades or even centuries, but eventually things that are finite will always run out. Efforts to reduce, re-use and recycle all slow the rate of consumption, but there is only so far that you can extend finite - although they may be vast - resources. It is a mathematical certainty.

That's why there is such as focus on renewable resources; things that replenish themselves. That would equate to being on a road that is still under construction. This can slow the inevitable but in the end, unless the speed of construction is faster than the progress along the road, one will overrun the end. That is the concept of behind 'Earth Overshoot Day.'

Each year the Global Footprint Network, an international sustainability think tank, calculates the day by humans have consumed what the Earth is capable of replenishing in a calendar year. The days between Overshoot Day (August 19 in 2014) and the actual end end of the year make up the 'environmental deficit' - the amount we are drawing down the Earth's natural reserves.

The promise of renewable resources is that if we lower our consumption rate below that of the replenishment rate, we will never run out. But for all of our efforts that focus on efficiency - and shifting from non-renewable to renewable resources - we have not stopped the inexorable progress of Overshoot Day earlier and earlier each year. And the fact that it keeps getting earlier shows that we're not only catching up to the 'end of the road' we're also increasing the rate we're approaching that 'milestone'. That is why efficiency is only a partial answer.

My father in law is a farmer. When something breaks, he keeps all the salvageable parts. He knows that he may need them one day. Like a sailor in the middle of the ocean, a person will make do with what they have if she knows that she cannot get additional supplies.

Our spaceship Earth is not unlike that boat at sea. It's a huge boat, but against the vast expanses of space we also know we cannot rely on other planets (or the moon) to meet the increasing resource needs of an expanding global population.

In contrast, a circular economy takes in goods at the end of their useful life cycle and uses them as the raw materials to either recreate them (like recycling paper) or new products (like tires becoming asphalt). When the 'end' is also the 'beginning' of another process, one can carry on infinitely, like a road that reconnects back to itself.

By reducing our consumption of finite resources; (and helping to get us under the 'overshoot' of renewable resources) the promise and power of developing a circular economy is the ability to continue to meet the needs of people (and expanding the progress we have made toward longevity and quality of life) in a way that is sustainable.