Measuring the Economic Impacts of a Circular Economy: an Evaluation of Indicators

Abstract

AbstractA circular economy (CE) is often seen as a promising way to address pressing environmental challenges, such as climate change, biodiversity loss, and resource depletion. However, the CE concept remains contested, and the implementation of circular strategies (CS) does not automatically improve all dimensions of sustainability. However, assessing the economic impacts of CS implementation is crucial to making the transition from linear to circular value chains. Despite the broad literature on CE indicators, a critical evaluation of economic CE indicators (eCEis) that conduct assessments on a value-chain level is still missing. This study addresses this gap by critically evaluating how capable eCEis are of measuring the economic impacts of implementing CS at the value-chain level. We first identify existing meso eCEis through a literature review, deriving a sample of 13 meso eCEis. We then qualitatively evaluate the eCEis based on criteria synthesised from requirements for CE indicators proposed in the literature. We find that existing meso eCEis only partly fulfil these criteria and consequently have limited capabilities for measuring the economic impacts of the implementation of CS at a value-chain level. The indicators largely satisfy the specific criteria diagnostic and useful, moderately satisfy the criterion practical, and barely satisfy the criteria systemic and transparent. We therefore recommend that future studies on eCEis place a stronger focus on adopting a systemic perspective, discuss their limitations and uncertainties in more detail, and consider combining meso eCEis with the indicators of other dimensions (environmental, social) and levels (micro, macro).