Why to transition towards a Circular Economy in Colombia?

The Colombian economy has historically been influenced by a linear economic model based on "Take-Make-Dispose". This model has resulted, to some extent, in economic growth by using the widely available natural resources through the extractive industries. However, current economic, technological, environmental and societal challenges raise the question of whether this path of economic development has really been effective in creating wealth and a healthy environment for all the population and which strategies are suitable to meet current Sustainable Development challenges.

The convenience of this linear economic model has been questioned globally because of recent evidence of different trends: (1) A lower availability and lack of affordable prices for energy and high-quality materials (precious and basic metals), (2) high volatility in prices for different commodities including oil, copper and agricultural products, (3) water scarcity and depletion of groundwater reserves, (4) constant loss of biodiversity including fish stocks, forests and land, and (5) growing pollution of water, air and soil and their consequences on human and environmental health. As Webster (2016) points out, a linear economy is not suitable to work under current realities because of its high dependence on large quantities of cheap and easily affordable materials and he argues that efficiency improvements in energy and materials consumption are short-term solutions that are not going to modify the finite nature of stocks but will only delay their depletion, encouraging a radical change in our current operating economy.

The need of a Sustainable Development strategy in Colombia

The question that arises is how are these current trends related to the Colombian reality being a rich country in natural and energy resources? Some of the most visible consequences of the adopted linear economy are reflected in the national economy deceleration due to falling prices of commodities such as oil, coffee and coal, which represent about 70% of total exports and more than 50% of Foreign Direct Investment (MarketLine 2016). In addition, exports of these primary goods have been directly affected by a declining demand from China, Europe and the United States and the noticeable reduction of foreign investment in oil activities. This deceleration has resulted in increasing the current account deficit from $ 6 billion (2.9% of GDP) in 2007 to $ 18.8 billion (6.4% of GDP) in 2015 (MarketLine 2016) and the loss of around 40,000 jobs linked to the oil sector in 2015. Moreover, according to the Organization for Economic Cooperation and Development (OECD), the dependence on the extractive sector has hampered the creation of a diversified, resilient and high value-added industry supported by innovation.

In this context, it is worth reviewing the role of the manufacturing sector in the country's economic performance. Although manufacturing industries have been important in the national economy, there has been a reduction in their share of the GDP, from 15% in 2000 to 12% in 2016 (DANE 2017). Furthermore, exports have been concentrated mostly in food, metallurgical, chemical and oil & gas industries and there is a growing need of generating greater value-added industrial activities and reducing their energy intensity. In addition, public and private investment in innovation is just 0.19% of GDP; while more developed nations invest up to 1% of GDP in order to achieve Sustainable Development (OECD 2015). Thus, we can conclude that the linear economic model has failed to benefit Colombia, as it did in times of prosperity in more developed economies in Europe and North America.

An analysis of Colombia's environmental performance also leads us to rethink the current development strategy. As the data published by the Global Footprint Network (2016) indicate, Colombia’s biocapacity [i] has decreased remarkably with a trend to surpass the limit and to be unsustainable for human survival, being the extractive sector one of the main contributors to this problem (Vallejo et al. 2011). Moreover, growing population and urbanization have increased the amount of generated waste threatening aquatic and terrestrial ecosystems as well as have intensified the production of carbon dioxide and other greenhouse gases which affect air quality leading to human health problems and climate change. These problems are evident in the daily reality of Colombians as shown by their many complaints about the air quality in the main cities: Bogota and Medellin.

Another alarming environmental aspect is waste generation. It is expected that population will grow by 20% in 2025, with 80% living in urban areas and generating 1.5 kg waste/ person / day (Hoornweg & Bhada-Tata 2012). This is a public concern since the country does not have a suitable infrastructure for waste treatment, calling urgently for strategies to reduce waste production and to reincorporate these materials within the value chains. In Colombia, 92% of municipal solid waste goes to landfills, 7% is dumped in uncontrolled sites and only 1% is recovered through composting or recycling with a precarious infrastructure by waste pickers who do not have safe and rewarding working conditions (OECD / ECLAC 2014). This situation is made worse being aware that some of the largest landfills in Bogotá and Barranquilla are reaching their maximum capacity and represent a high environmental risk for the country. Thus, it is evident that Colombia needs effective strategies to eliminate current environmental impacts while growing sustainably the national economy.

Is the Circular Economy the solution to Sustainable Development challenges of the Region?

The Circular Economy (CE) has been recognized as a promising model for decoupling economic growth from environmental damage. Globally, different governments and leading companies are embracing its principles as a strategy to strengthen their economies by effectively managing available resources, innovating in their products and business models, eliminating negative externalities such as pollution and restoring natural capital.

Some of the basic concepts of the CE are traced back to the 19th century and its theory has been nurtured and refined with complementary schools of thought such as the industrial ecology, Cradle to Cradle® design, the blue economy, the performance economy among others. This is reflected in three basic principles as described by the Ellen MacArthur Foundation: "(1) Preserve and enhance natural capital by controlling finite stocks and balancing renewable resource flows; (2)Optimize resource yields by circulating products, components, and materials at the highest utility at all times in both technical and biological cycles; (3)Foster system effectiveness by revealing and designing out negative externalities”.

These three principles are the basis for concrete actions to shift from a linear to a Circular Economy requiring profound changes in our current operating system. For example, a CE would eliminate the use of non-renewable resources (such as oil and coal) and would promote the use of renewable resources as long as their flows are balanced, and natural capital is maintained or enhanced. This new paradigm would also recirculate the available materials so that they continue contributing to the economy in a cost-effective and safe way preserving materials energy and value. Thus activities such as maintenance, reuse and remanufacturing play a very important role in a CE while recycling is considered less cost-effective because of the energy intensity in recycling processes. These activities are possible only if materials, products, services, processes and business models are intelligently designed with recovery in mind. Finally, the effectiveness of the system would be promoted by eliminating the use and emission of toxic substances, avoiding negative externalities such as air, water and land pollution and climate change (Ellen MacArthur Foundation, 2017). In this way, a CE as it is known today implies a deep paradigm shift not only in the way we design, produce and sell goods and services but also in the way we consume and treat products at the end-of-use.

For Colombia, the Circular Economy means a favourable model to reduce the dependence on the extractive sector, to create a diversified economy by exploring other economic opportunities such as the bioeconomy and different circular business models, to improve competitiveness through innovation, to create safe and rewarding job opportunities for all the people involved in the informal recycling sector and to induce an economy that regenerates the Earth’s biocapacity and achieves a real Sustainable Development in the country.

ASDF as a member of the United Nations Sustainable Development Network, through the Circular Economy Platform of the Americas (CEP-Americas) is committed to linking individuals and organizations with similar ideas to explore, identify and develop solutions inspired by the Circular Economy principles to address the different challenges of Sustainable Development of the American nations. Future blogs will explore opportunities within a Circular Economy framework, as well as the enablers to transition towards a CE in Colombia.

References

DANE, 2017. Cuentas Económicas Nacionales Trimestrales, Producto Interno Bruto - PIB. Available at: http://www.dane.gov.co/index.php/estadisticas-por-tema/cuentas-nacionales/cuentas-nacionales-trimestrales#pib-por-rama-de-actividad [Accessed February 28, 2017].(In Spanish)

Global Footprint Network, 2016. National Footprint Accounts: 2016, Oakland. Available at: Please contact Global Footprint Network at data@footprintnetwork.org for more information.

Hoornweg, D. & Bhada-Tata, P., 2012. What a Waste : A Global Review of Solid Waste Management, Washington DC. Available at: https://openknowledge.worldbank.org/handle/10986/17388.

MarketLine, 2016. Colombia In-depth PESTLE insights, London.

OCDE/ECLAC, 2014. OECD Environmental Performance Reviews: Colombia 2014, Available at: http://dx.doi.org/10.1787/9789264208292-en.

OECD, 2015. OECD Economic Surveys: Colombia 2015, OECD Publishing. Available at: http://www.oecd-ilibrary.org/economics/oecd-economic-surveys-colombia-2015_eco_surveys-col-2015-en\nhttp://www.keepeek.com/Digital-Asset-Management/oecd/economics/oecd-economic-surveys-colombia-2015_eco_surveys-col-2015-en#page82.

Vallejo, M.C., Pérez Rincón, M.A. & Martinez-Alier, J., 2011. Metabolic Profile of the Colombian Economy from 1970 to 2007. Journal of Industrial Ecology, 15(2), pp.245–267.

Webster, K., 2016. The Circular Economy: A Wealth of Flows Second Edi. Ellen MacArthur, ed., Kindle Version: Ellen MacArthur Foundation Publishing.

[1] Claudia Lorena García is a Project Manager at the Americas Sustainable Development Foundation. She holds a bachelor degree in Chemical Engineering and a Master’s degree in Innovation and Technology Management from the University of Bath (UK). During her Master’s degree she performed research on the Circular Economy (CE) tailored to emerging countries, analyzing the opportunities and challenges to transition towards a CE in low and middle countries in the American continent.

[1] The Americas Sustainable Development Foundation (ASDF) is an independent advisory foundation focused on linking people, ideas, and action to achieve sustainable development across the American continent. See for more information: www.sustainableamericas.com

[1] Biocapacity is the ecosystems’ capacity to produce biological materials used by people and to absorb waste material generated by humans, under current management schemes and extraction technologies.