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How Can Circular Economies Benefit Smart Cities?
Drew Philp30. August 20228 min read

How Can Circular Economies Benefit Smart Cities?

At first glance, it may seem like comparing the cycle of the natural world to our current version of a capitalist economy might be like comparing apples and bicycles. But when we look a little closer, there are some striking similarities— and perhaps more importantly, differences— that we can put in relief next to one another to illuminate both.  

Nature’s economy is a circle. For millions of years, organisms have grown, and fed other organisms who eventually die, in turn feeding the original organisms. Think of a forest: A plant, fed by the sun, rain, and carbon in our atmosphere, grows. It’s eaten by a small herbivorous forest animal which is then eaten by a larger carnivorous animal. That carnivore eventually dies, providing nutrients to the soil, in which the plants grow, starting the cycle all over again.

It’s a perfect system, and a perfect circle, developed over millennia by evolution. Nothing is wasted. 

The entirety of nature works this way, the weather and water cycle, our oceans, our climate, and every ecosystem on the planet. Aside from an infusion of outside energy from the sun, it is completely self-sustaining. Without human beings removing things from that cycle, it would probably exist until the sun explodes in a couple million more millennia.

This is what we mean by sustainability.

Aside from some recycling, which is important yet still small-scale in relation to the problem, our economy works as a straight line slashing directly across that circle, in a linear fashion. We remove resources from this circular system, we make products from them, and we return little to our natural or economic system that is useful to either. We call this waste. 

In the not-so-distant future we’re going to run out of resources to exploit, including things like our shared climate, air, and oceans, not just raw materials like iron and potatoes. 

A circular economy is an attempt to make our monetary economy more like the natural economy. 

That is to say, a circle. 

What is a Circular Economy? 

What is a circular economyIn the perfect circular economy, there would be no waste. 

A circular economy is an entire economic system where according to the European Parliament

"The circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended.

In practice, it implies reducing waste to a minimum. When a product reaches the end of its life, its materials are kept within the economy wherever possible. These can be productively used again and again, thereby creating further value.”

Broadening these ideas, circular economies work on three principles, defined here by the Ellen MacArthur Foundation, one of the leading advocates for circular economies: 

  1. Design out waste
  2. Keep products in use
  3. Regenerate natural systems

The definition of the circular economy goes beyond the production of products and extends to how we use these products and interact with our environment. This is where the circular economy often interacts with cities. 

Take automobiles for example. Cars as products have nearly unlimited potential for recycling under the right circumstances. Part of creating a circular economy is doing all of the things law and innovation must do to make these products 100 percent recyclable from the tires to the headlights. 

But it extends to how we use these products as well. The perfect automobile is likely a train, but if we must have them, the perfect automobile would always be running and never sitting parked. This mythic automobile would be shared by enough people in intelligent enough ways that no individual would have to own their own car only to let it sit idle at night and during the workday.  This would give cause to fewer automobiles on the road overall.  

Fewer automobiles lead to more space that can be used for, among other things, pedestrian-friendly streets and business districts, greening our cities, and re-introducing the natural world, both of which have been shown time and again to have exceptional benefits to citizens and businesses. 

Of course, the idea of an automobile being constantly in use is unachievable. But we can be better. Cities are uniquely positioned to facilitate improved use of products and resources. Automobiles and transportation are but one example, and the circular economic principles of reducing all forms of waste (including time and money) and regrowing our shared environment can be tessellated to all municipal issues, including building and land use, healthcare, information technology, etc.   

It’s the job of smart cities to encourage and implement these practices. 

What are the Circular Economy Benefits for Smart Cities?

Cities are so important to circular economies because this is where most products are consumed and used. As such, much of the municipal role in helping to create circular, smart economics is in regulation and encouragement of consumption. 

Take food, for example. Cities may not have much say in the regeneration of soils and increasing agricultural biodiversity, but most food is consumed in cities and approximately one-third of all food is wasted. This presents not only an enormous problem but an enormous opportunity. Reducing and redistributing this waste has the potential to create jobs and improve environmental health while making cities more desirable places to live.  

Cities are hubs of innovation, and naturally much of the innovation needed to transform our economy will not only reside in cities, but can be encouraged. Cities also shoulder a large amount of the burden of the adverse effects of our current, linear economy, especially in areas of environmental pollution and health, access to nature, and the adverse effects of climate change. 

According to the Ellen MacArthur Foundation, “Two-thirds of us will be living in urban areas by 2050. Despite taking up just 2 per cent of global landmass, our urban centers consume more than 75 percent of natural resources, are responsible for over 50 per cent of solid waste and emit up to 60 percent of greenhouse gasses, contributing to pollution, climate change and biodiversity loss.”

Cities are uniquely positioned to work with multiple stakeholders to implement a vision for circularity, incentivize circular thinking, to manage the urban space, to procure goods and services in ways that align with the circular economy, and to shape markets and habits through regulation. 

Essential to these goals is fostering a civic culture of innovation and experimentation, aligning diverse interests and stakeholders, and engaging residents on deep levels so this new system of economics not only serves our shared environment and economy, but individuals, families and citizens. This economic change need not be painful, but when looked at as an opportunity to develop an economy in a strategic way can pay enormous dividends for cities themselves. 

Creating circular economies has the ability to create jobs, make citizens healthier and improve life, increase competitiveness and attraction, and drive innovation.    

Examples of The Circular Economy in Cities 

Below we’ve selected and detailed some examples of cities that have already introduced circular economic principles in their municipalities. These examples have all been supported by the Ellen MacArthur Foundation, and are organized here around each of bee smart city’s six fields of action of a smart city to show how these principles are being implemented across all strata of smart cities.  


One of the most powerful tools municipal governments have in creating circular economies is governmental procurement. Public procurement accounts for 15-20% of global GDP, and sub-national governments are responsible for almost 50% of procurement decisions.  

San Francisco has mandated that all of the carpets purchased for public buildings must exist on principles aligned with the circular economy. 

The Ellen MacArthur Foundation has also created a framework for municipal public procurement that can be found here.   


New York City, one of the global hubs of fashion, has started the #wearnext campaign to keep more clothes out of landfills. Bringing together brands, recycling companies, influencers, and resale businesses, the campaign used already existing infrastructure to get the word out and collect used clothing for recycling and resale. 

It was a success. An increase of 583 tonnes of collected clothing was recorded across the city compared to the same time period the year before.  


In 2017, Shenzhen China became the first city in the world to electrify all of its municipal buses. According to the Ellen MacArthur Foundation, “The adoption of new service models incentivizes manufacturers to design vehicle components so that they are maintained and kept in use, retaining value…. bus companies have been able to rent e-buses and batteries from manufacturers through service models, relieving the bus companies of large upfront investments and the need for technological expertise, thereby increasing the uptake of vehicles.”

The city has seen reductions in particulate matter, carbon emissions, noise, and the heat island effect. 


Singapore has been a leader in greening its city, thereby not just increasing biodiversity but making cities more livable for its residents. Even with a population boom, they have increased green areas from 36 percent of the city to 47 percent over the last five decades. The city has accomplished this through a system of carrots and sticks, requiring developers to replace green areas lost to construction and subsidizing green infrastructures such as rooftop gardens and green walls. 

Greening cities has obvious benefits to liveability, including reducing heat island effects, adding more space for recreation, and simply making urban areas a nicer place for human beings to live.    


The municipal government in Amsterdam has undertaken an ambitious plan to help grow the sharing economy through numerous vertices, including transportation, building use, product sharing, and more. Implemented across multiple city departments, a team within the city government has been created to help coordinate and facilitate holistic change across city services. 

Projects have included a fashion library, car and motorbike sharing, and the borrowing of household items. 


Cape Town implemented a program to help companies identify mutually beneficial opportunities for the exchange of resources, namely waste and recyclables. Examples include a fishing company using broken nets to be repurposed by another company for sports nets in schools.

The program has created more than 200 industry-wide jobs, and a seven-fold return to the overall economy was measured for each dollar invested by the municipality.  

Are Circular Economies Smart Investments For Smart Cities? 

Unequivocally, yes. Not only do circular economies help to challenge the looming climate collapse, but they can also make cities more liveable, create jobs, attract innovation and desirable residents, and overall improve the lives of citizens. In addition, they help cities do their part to achieve climate goals. 

Circular economies are smart economies, and they help to create smart cities.



Drew Philp

Drew Philp is the author of "A $500 House in Detroit: Rebuilding an Abandoned Home and American City" (Scribner, 2017). He has written for the Guardian, Buzzfeed, De Correspondent, and many other international publications. He lives in Berlin.