What is Circular Economy?

Circular Economy

The concept of circular economy (CE) was first officially used by Pearce and Turner (1990)[1]. it refers to a new economic model based on the basic principle that “everything is an input to something else”, which is completely unlike the traditional linear economy. The Ellen MacArthur Foundation describes the circular economy as an industrial system that restores or reconstructs according to its intent and design. It switches to renewable energy, eliminates the use of hazardous chemicals and waste that degrade reusability through superior design of materials, products, systems, and business models. In simple words, circular economy aims to turn the waste outputs of one industry into the resource inputs of another or create the internal circulation in the enterprise itself (closed-loop). The circular economy contributes to increasing business value, reducing resource exploitation and waste treatment costs, and minimizing environmental pollution.

[1] Pearce, D.W. and R.K. Turner (1990), Economics of Natural Resources and the Environment, Hemel Hempstead: Harvester Wheatsheaf.

The need for transition from linear economy to circular economy

In the current context, the transition from linear economy to circular economy is essential for all countries in the world, not except Vietnam. The four main reasons for this transition are:

(1) The demand for raw materials is increasing while these resources are getting exhausted, especially for mineral resources, which are non-renewable resources;

(2) The dependence on foreign raw materials, which leads to global political tension;

(3) The contribution to climate change (greenhouse gases emissions, especially CO2) increases extreme climate change causing serious consequences. The transition to a circular economy aiming to use sustainable energy will mitigate climate change;

(4) The economic opportunities will be created, especially for business and science, in the field of innovation, design, recycling, and creativity.

Solving problems related to raw material scarcity, using sustainable energy, minimizing waste at each stage of the product life cycle, and reusing available materials, etc require a significant investment in highly qualified human resources. Thus, it increases the competitiveness in the economy. Recently, the Ministry of Natural Resources and Environment of Vietnam, said that the transition from linear to circular economy is becoming a global trend.

CIrcular Economy in vietnam

The concept related to the circular economic model have existed in Vietnam since 20 years ago with different identification. That is the VAT model (Garden – Pond – Livestock pen), which we have applied quite successfully. Besides, the concepts about “ecological industrial zone”, “cleaner production”, “zero-emission”, recycling, reuse, and remanufacturing are part of the circular economy, which have been mentioned a lot in recent years. These concepts have been expressed through the Party and State policies related to environmental protection. Additionally, they have been researched and applied by Universities/Institutes including the Institute of Strategy and Policy on Natural Resources and Environment – the Ministry of Natural Resources and Environment in Vietnam, and Institute for Environment and Resources (Vietnam National University – HCMC).


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