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Measuring the Effects of Increasing Circularity in the Economy Through Recycling

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The circular economy is a productive and consumption paradigm, aimed at reducing resource utilization and waste generation. By looping materials and resources and extending the life cycle of durable goods, the environmental impact of human activities is reduced. This paper contributes to understanding the effects of the increment of recycling activities (a subset of circular activities), on production, employment, and the environment in a developing country with a large informal labor sector. The analysis is based on an enhanced input-output matrix or waste input-output matrix (WIO), within a hybrid (including monetary and physical transactions) model accounting for the recycling sectors interlinking with the rest of the economy and final consumption. The study quantifies some of the effects of accomplishing the Paris Agreement Commitments recycling goals, showing emission reductions and job creation in the recycling sector. Also, the results show not-so-obvious effects of partial substitution of virgin raw material production by recycled materials, on total employment quantity and quality (gender, age, or formality composition) in the context of a prevalent informal labor market in recycling activities.

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  1. Because of lower access to durable goods by comparison with developed countries (due to relatively low-income levels and long-standing import substitution policies, which turn durable goods more expensive than in most open economies), Argentina has important repairing, rental, and leasing equipment sectors. The life cycle of durable domestic goods, machinery, tools, and vehicles is prolonged as consequence. Recycling, on the other hand, reaches mostly paper and cardboard, plastics, pneumatics, and metals, among others, employing low-skilled workers in informal ways.

  2. We considered two lists of keywords: (1) Environmentally extended input-output analysis; Waste input-output; Waste supply and use; Physical input-output; Physical supply and use; Hybrid input-output; Hybrid supply and use; Mixed-unit input-output. (2) Waste management; Waste treatment; Waste footprint; Recycling; Incineration; Landfill; Disposal; Energy recovery. We applied each keyword in (1) crossed with each one in the list (2). We used Scopus to perform the bibliometric analysis. In the ‘Article title, Abstract, Keywords’ query. Additionally, we include the keywords employment and jobs.

  3. Such as a specific census or survey

  4. Ferraro et al. [10] established that for Argentina, the bulk of production and employment in the circular economy takes place in the service sector of repairing, maintenance, and rental (356.3 thousand employments, of which 61% are informal). In agroindustry circular activities, the intensity of labor is lower than in urban waste and industrial material recycling.

  5. Our model does not require a perfect correspondence between wastes and treatments. We consider \(M\) types of waste \(i\) that are assigned to \(K\) treatments \(j\) through a matrix S, whose cells are the shares \({s}_{\mathrm{ij}}\), and \(\sum_{i=1}^{K}{s}_{\mathrm{ij}}=1 (j=1,\dots ,\mathrm{M}\)).

  6. Backward linkages characterize the relationship of a sector with its supply chain. \({BL}_{\mathrm{j}}\) captures the multiplier effect of the increase in the production of sector j, which implies a greater demand on other sectors whose goods are used as inputs to produce j [21].

  7. Formally, \({BL}_{\mathrm{j}}\) is the sum of row elements of the inverse matrix \({L}^{*}\) for each column j. Production is the sum of the row elements corresponding to activity sectors, recycling is the sum of the row representing recycling sectors, and disposal is the sum of treatment sectors.


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We thank valuable research assistance from Benicia Marisol Añón Galeano.

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Correspondence to Gustavo Ferro.

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Romero, C.A., Rojo Brizuela, S. & Ferro, G. Measuring the Effects of Increasing Circularity in the Economy Through Recycling. Circ.Econ.Sust. (2023).

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