Econometric perspective on Circular Economy Andrew Rutgers

WHAT CAN WE TELL ABOUT THE CURRENT CIRCULAR ECONOMY? 'CE' has existed, probably as long as economics Things are maintained and rebuilt Things are rented Things are resold The concept of CE would likely seem obvious a century ago How big is maintenance, resale, rental compared to other industries today?

Hypothesis Circular Economy can increase the quantity (a) and quality (b) of employment Circular Loops are usually done by smaller businesses Circularity relates to the lifetime and value of products Circularity increases with Income Circularity decreases with inequality

Available Dataset - US Economic Census Conducted every 5 years (2017 is the most recent) Mandatory for all businesses establishments to report Systematically collected and analyzed Includes total revenue, total payroll, total employees Aggregated at typically county level – though sometimes to state level depending on respondents

811211: ‘Consumer Electronics Repair and Maintenance Categorizing Loops Industry Retail (New) Reuse Resale Maintenance Recycling Homes Cars Consumer Electronics Clothing 811211: ‘Consumer Electronics Repair and Maintenance

1. Circular Economy can increase the quantity (a) and quality (b) of employment

1. Circular Economy can increase the quantity (a) and quality (b) of employment

2. Circular Loops are usually done by smaller businesses

2. Circular Loops are usual done by smaller businesses

Loop Revenue Ratio How much of consumer spending on a good is in each loop? New purchase Maintenance Rental Resale Loop Revenue Ratio = Revenue in Loop / Total revenue in industry Example – Recycling : LRR (Recycling) = Total Revenue In Recycling / (Revenue in Retail + Revenue in Maintenance + Revenue in Resale + Revenue in Recycling )

3. Circularity relates to the lifetime and value of products Clear relationship to lifetime Though few industries strongly represented

3. Circularity relates to the lifetime and value of products Clear relationship to Value Though few industries strongly represented

4. Circularity increases with Income Data showed no significant correlations between state by state income and LRR levels. However: Data is all US, so income levels are relatively similar. Comparison to other countries could show more trends.

5. Circularity decreases with inequality

Hypothesis  Results Circular Economy can increase the quantity (a)  Maintenance and rental have higher Payroll per Revenue quality (b)  Resale and recycling pay better than retail Circular Loops are usually done by smaller businesses  Except recycling, yes Circularity relates to the lifetime and value of products  clear correlations, but limited data Circularity increases with Income  no correlations Circularity decreases with inequality  higher rental, lower maintenance with higher inequality