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Geospatial Data can Amplify Circular Economy

Location data, combined with other digital technologies, helps in tracking the identity, position, and status of products, which is key to maximizing the value of materials in each stage of their lifecycle, says Dr. Rudiger Ahrend, Head, Economic Analysis, Data & Statistics, OECD Centre for Entrepreneurship, SMEs, Regions and Cities.

Dr. Rudiger Ahrend

Why do we need circular economy policies now more than ever?

A circular economy is a model of production and consumption which involves sharing, reusing, refurbishing, and recycling existing materials and products as long as possible, so that the lifecycle of products is extended. An OECD (Organisation for Economic Co-operation and Development) model based on current government policies from around the world has shown that, by 2060, growing incomes and populations will drive a strong increase in global materials’ demand. Worldwide, the environmental impact of extraction and processing of key materials — including biomass, fossil fuels, metals, and non-metallic minerals — is projected to double at the very least. Policies that assist in reducing the worldwide consumption of raw materials, and consequently their extraction and processing, will help avoid a wide range of environmental impacts.

Materials extraction and processing are responsible for 71% of greenhouse gas emissions (from fossil fuel use for energy supply, agriculture, and industry) and accounts for substantial water, soil, and air pollution. For example, plastic production and waste generation roughly doubled between 2000 and 2015, resulting in multiple environmental impacts, including high-energy use, pollution from landfills and incineration, and impact on ecosystems from uncontrolled disposal of waste, such as marine litter. Metal extraction and processing cause soil acidification, degradation of water flow and toxic effects on ecosystems and humans. The European Commission estimates that more than 90% of biodiversity loss and water stress come from resource extraction and processing.

The 2020 OECD Regional Outlook outlines how cities can contribute to circularity. Not only climate change, but the potential for new jobs has motivated cities’ and regions’ actions on the circular economy as described in The Circular Economy in Cities and Regions report of the OECD.

The concept of a circular economy is fast gaining traction in the developed world. Where do developing countries stand in this respect?

Developing and emerging countries are extracting and processing an ever larger share of materials. A large share of this serves to meet consumption in high-income countries. In addition, some developing and emerging countries are catching up with the living standards in high-income countries. This is, of course, more than welcome, but unfortunately it also illustrates the unsustainable nature of material consumption trends worldwide. High-income countries will need to show the way in circular economy practices, take into account the environmental footprint of materials use wherever it arises, and work with developing countries to incorporate circular economy practices, including through pricing-in environmental impacts of raw materials use.

There are many businesses running on the circular economy model. For example, steel production from recycled scrap reduces raw iron use in Europe substantially, lowering emissions and energy consumption sharply. Repair and reuse services are also emerging for consumption goods

Can you throw light on a few businesses that are based on circularity and the kind of new business models we are likely to see in the future?

There are many businesses running on the circular economy model. For example, steel production from recycled scrap reduces raw iron use in Europe substantially, lowering emissions and energy consumption sharply. Repair and reuse services are also emerging for consumption goods. But many barriers are holding up large-scale deployment of such practices, including the fact that environmental costs of material processing are not included in the prices we pay for new goods. Digital technologies will foster innovative circular economy business models in the provision of manufacturing goods-as-a-service. For example, real-time on-demand car ride-sharing can meet daily mobility needs provided by cars in cities, lowering the number of vehicles by more than 90%, as well as congestion and CO2 emissions by more than 30%.

How can geospatial data and technology, especially location information, enhance the circular economy?

Geospatial data can enhance the circular economy through a more efficient management of production and consumption processes, as well as that of public service delivery. On the production side, location data, combined with other digital technologies, helps in tracking the identity, position, and status of products, which is key to maximizing the value of materials in each stage of their lifecycle — including by calling for maintenance or recycling of the products. On the consumption side, geolocation data is essential for improving economic and resource efficiency, particularly for underused assets. In many cities, we can see examples where location data can act as enablers of the circular economy. Car and bike sharing systems, as well as smart public transport, require geolocation and real-time data to be effective. Indeed, a growing number of city governments are leveraging digitalization — including geospatial data — to achieve sustainability and circular economy objectives. For example, through geo-localized smart bins, authorities can know in real-time when trash bins need to be emptied, and thus improve waste management.

The OECD is currently working on a framework to measure the performance of smart cities in terms of the impact of their digital tools, which exploit geospatial data on different sustainability outcomes.

Can you tell us a little about your work at the Centre for Entrepreneurship, SMEs, Regions and Cities (CFE), and your professional journey prior to joining OECD?

Prior to joining OECD, I worked as an academic researcher and independent consultant. In the OECD Centre for Entrepreneurship, SMEs, Regions and Cities, I head a division that specifically deals with economic and data analysis, as well as with creating statistics. In doing so, we are increasingly relying on geospatial data. We have created the OECD Laboratory for Geospatial Analysis (also known as the Geospatial Lab) which is a platform that proposes to connect people from different organizations, including academia, government agencies, the private sector, and statistical offices, to develop and disseminate policy-relevant analyses based on geospatial information. The idea is to encourage widespread adoption of geospatial data in shaping policies that make a difference in tackling today’s place-based problems.

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