Circular economy and technology

Source: Tim Heffernan, here

This is the third post regarding circular economy. In my first one (see here) I argued that before discussing the details we have to deal with the concept of circular economy and I put some conceptual questions. In my second one (see here) I discussed circular economy and economic growth and my conclusion was that circular economy can’t resolve (or it can only partially resolve) the conflict between environmental impacts and economic activity, even if it is 100% adopted worldwide because there are planetary, natural limits to growth. I finished this post writing that “Circular economy approaches are helpful and useful, but they are limited (and at the same time stimulated) by limits to growth.”

In this third post, I will deal with the relation between circular economy and technology development, or to put it in another way to study the dynamics between technology development and resource management.

We all know that any naturally or physically growing system can be understood in terms of stocks, flows and feedback. Stocks are accumulations of things that change over time through the interaction between inflows and outflows. Feedback occurs when changes in the size or composition of a stock affect the rates of inflows and/or outflows (feedback maybe positive or negative). As it has been proven, in a bounded natural environment, the balance between inflows and outflows is determined by different principles for renewable and non-renewable resources (for more see G. Turner “A comparison of The Limits to Growth with 30 years of reality”, Global Environmental Change 18 (2008) 397– 411 here).

Consider non-renewable resources like oil, rare metals, phosphorus etc. I think that if we use the example of oil, we can better understand the role of technology from a systemic point of view, exactly as it has been discussed by Donella Meadows at her masterpiece “Thinking in Systems – a Primer” (for more see here). 

So, when a new oilfield is exploited, part of the profits gained is invested in establishing new additional oil wells, something that results to additional oil extraction. This leads to more profits and extra investment in oil wells. This is a typical positive (or reinforcing) feedback and the economics work in such a way that the easiest (and less costly) oil resources are firstly depleted. In any case, there is a time where extraction will become more difficult and costly, so the expected benefits will be lower than the costs involved for oilfield exploitation and this will reduce the investments in new oil wells. This is a typical negative feedback or a balancing one. But this will also make oil scarcer, so its prices will rise and so more money will be available for investments in difficult and costly oilfields. This description outlines how different types of feedback determine the system’s behavior for short or long periods. Studying the history of oil exploitation certainly demonstrates the political, social and economic importance of those feedbacks (for more on this topic I strongly suggest Sonia Shah’s book “Crude: The story of oil”, see here). 

Source: New York Tines here

Nonetheless, what is the final result? As Meadows has shown and Sonia Shah demonstrated a. the potential lifetime of a newly discovered oil field (under the initial conditions and scale of operations) is substantially reduced as a result of the system dynamics b. oil companies invest for new fields in some of the most impoverished and unstable areas of the world and c. new technological advances (e.g. deep water drilling) are making new, very difficult and costly oil fields available but with substantial environmental and health risks.

In this point, I think it is useful to mention one of the key-conclusions made by the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling in its report "Deep Water: The Gulf Oil Spill and the Future of Offshore Drilling," Report to the President, January 2011 (for a summary see here).

“Scientific understanding of environmental conditions in sensitive environments in deep Gulf waters, along the region’s coastal habitats, and in areas proposed for more drilling, such as the Arctic, is inadequate. The same is true of the human and natural impacts of oil spills.”

It does seem to me that the concept of natural limits to growth is here again and technology can’t overcome it, no matter how advanced it will be. And the reason for that is that as our technologies become ever more advanced and complex, they try to resolve problems in much more complex and less understood conditions. The consequence of this exponentially increasing complexity is that “complex systems fail in complex ways”, which are not predictable!

From a resource point of view, further more advanced and efficient technologies make new oil fields available (e.g. fracking and its impact in US economy). So this provides more oil and maybe it expands the time where oil will be available, with a certain environmental cost (for details see here). Nevertheless, the big picture is that those technological advances are making the depletion of oil resources faster!

Source: here

It is not so difficult to prove that the role of technological advances is similar to renewable resources too; the main difference is that renewable resources like fish population are controlled by the balance between inflows and outflows and not but stock availability (scientifically we say that they are flow limited, while non-renewable are stock limited).

I believe the example of oil highlights the role of technology from a resource point of view. Technology developments can’t overcome limits to growth and at the same time they accelerate the process of depletion of non-renewable resources because stocks are finally limited, despite the temporal system dynamics and pricing. And certainly, as technology complexity grows, environmental and health risks are becoming more and more difficult to be managed.

The term “throughput” is frequently used to describe the flow of energy and matter from ecological resources through the economy and back to ecological sinks. At this point, I will use the phrasing from the article “A systems and thermodynamics perspective on technology in the circular economy” (written by Ramelt & Chrisp, available at Real World Economics Review, issue 68, see here).

“For industrial systems, a low throughput of matter and energy implies a smaller ecological footprint and greater life expectancy and durability of goods and infrastructure; a high throughput implies more depletion of resources that will need to be renewed and more waste that will need to be disposed of (Meadows and Wright 2008). System dynamics and thermodynamics tell us that a tolerable rate of throughput and entropic transformation is ultimately dictated by the natural system, not by economics or engineering.

A possible task for engineering, within limits, would be to maximise the durability of stocks by minimising inflows of low entropy natural resources and by minimising outflows of high entropy waste and emissions. The role that industrial societies have assigned to technology is, however, much more Herculean. We have asked it to simultaneously and boundlessly minimise environmental impacts and maximise economic growth.”.

The direct consequence of this analysis is that as long as we maintain high throughput, as long as we keep high material and energy consumption patterns (as nations, industries and citizens too) we can’t expect technology to manage the existing biophysical limits of the planet, independently of how circular we will make the economy. And the waste generation will keep growing because waste is the product of a high throughput and technologies can only accelerate its generation.