IDEAS home Printed from https://ideas.repec.org/p/wis/wpaper/2402.html

Materials, Technology and Growth: Quantifying the Costs of Circularity

Author

Listed:
  • Marcelo Arbex

    (Department of Economics, University of Windsor)

  • Zachary Mahone

    (Department of Economics, McMaster University)

Abstract

Environmental concerns over growing raw material extraction and waste generation have led many governments, including the United States, to introduce policies intended to reduce the extraction of new materials from the earth and boost material recycling. In the policy sphere, this is referred to as circularity. This paper develops a quantitative growth model with material use and directed technical change to quantify the costs of circularity policies. We study the United States goal of 50% recycling by 2030 and find it would require doubling recycling subsidies and cost 0.17% in consumption-equivalent welfare. However, this policy would also increase virgin extraction. Achieving a substantial reduction in new material extraction itself is very costly. Returning to 1970 levels of extraction entails a long run consumption cost of 6% and lost growth of 1.1% per decade.

Suggested Citation

  • Marcelo Arbex & Zachary Mahone, 2024. "Materials, Technology and Growth: Quantifying the Costs of Circularity," Working Papers 2402, University of Windsor, Department of Economics.
    • Handle: RePEc:wis:wpaper:2402
    as

    Download full text from publisher

    File URL: http://web2.uwindsor.ca/economics/RePEc/wis/pdf/2402.pdf
    File Function: First version, 2024
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stephie Fried, 2018. "Climate Policy and Innovation: A Quantitative Macroeconomic Analysis," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 90-118, January.
    2. Lafforgue, Gilles & Rouge, Luc, 2019. "A dynamic model of recycling with endogenous technological breakthrough," Resource and Energy Economics, Elsevier, vol. 57(C), pages 101-118.
    3. Zhou, Sophie & Smulders, Sjak, 2021. "Closing the loop in a circular economy: Saving resources or suffocating innovations?," European Economic Review, Elsevier, vol. 139(C).
    4. Krausmann, Fridolin & Gingrich, Simone & Eisenmenger, Nina & Erb, Karl-Heinz & Haberl, Helmut & Fischer-Kowalski, Marina, 2009. "Growth in global materials use, GDP and population during the 20th century," Ecological Economics, Elsevier, vol. 68(10), pages 2696-2705, August.
    5. Rebecca L. C. Taylor, 2020. "A Mixed Bag: The Hidden Time Costs of Regulating Consumer Behavior," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(2), pages 345-378.
    6. Timothy J. Kehoe & Edward C. Prescott, 2007. "Great depressions of the twentieth century," Monograph, Federal Reserve Bank of Minneapolis, number 2007gdott.
    7. Krausmann, Fridolin & Erb, Karl-Heinz & Gingrich, Simone & Lauk, Christian & Haberl, Helmut, 2008. "Global patterns of socioeconomic biomass flows in the year 2000: A comprehensive assessment of supply, consumption and constraints," Ecological Economics, Elsevier, vol. 65(3), pages 471-487, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julia K Steinberger & Fridolin Krausmann & Michael Getzner & Heinz Schandl & Jim West, 2013. "Development and Dematerialization: An International Study," PLOS ONE, Public Library of Science, vol. 8(10), pages 1-11, October.
    2. Soto, David & Infante-Amate, Juan & Guzmán, Gloria I. & Cid, Antonio & Aguilera, Eduardo & García, Roberto & González de Molina, Manuel, 2016. "The social metabolism of biomass in Spain, 1900–2008: From food to feed-oriented changes in the agro-ecosystems," Ecological Economics, Elsevier, vol. 128(C), pages 130-138.
    3. Mazzarano, Matteo, 2022. "Material governance and circularity policies: How waste policies and innovation affect household appliances' accumulation," Ecological Economics, Elsevier, vol. 200(C).
    4. Mathieu, Valentin & Roda, Jean-Marc, 2023. "A meta-analysis on wood trade flow modeling concepts," Forest Policy and Economics, Elsevier, vol. 149(C).
    5. Raupova, Ozoda & Kamahara, Hirotsugu & Goto, Naohiro, 2014. "Assessment of physical economy through economy-wide material flow analysis in developing Uzbekistan," Resources, Conservation & Recycling, Elsevier, vol. 89(C), pages 76-85.
    6. Raphael Asada & Tamás Krisztin & Fulvio di Fulvio & Florian Kraxner & Tobias Stern, 2020. "Bioeconomic transition?: Projecting consumption‐based biomass and fossil material flows to 2050," Journal of Industrial Ecology, Yale University, vol. 24(5), pages 1059-1073, October.
    7. Singh, Simron Jit & Krausmann, Fridolin & Gingrich, Simone & Haberl, Helmut & Erb, Karl-Heinz & Lanz, Peter & Martinez-Alier, Joan & Temper, Leah, 2012. "India's biophysical economy, 1961–2008. Sustainability in a national and global context," Ecological Economics, Elsevier, vol. 76(C), pages 60-69.
    8. Finn Kydland & Carlos E.J.M.Zarazaga, 2002. "Argentina's recovery and excess capital shallowing of the 1990s," Estudios de Economia, University of Chile, Department of Economics, vol. 29(1 Year 20), pages 35-45, June.
    9. Juan Carlos Conesa & Timothy J. Kehoe & Kim J. Ruhl, 2007. "Modeling great depressions: the depression in Finland in the 1990s," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 31(Nov), pages 16-44.
    10. Etienne Lorang & Antonello Lobianco & Philippe Delacote, 2023. "Increasing Paper and Cardboard Recycling: Impacts on the Forest Sector and Carbon Emissions," Post-Print hal-04690101, HAL.
    11. Sardone, Alessandro, 2025. "Road to Net Zero: Carbon policy and redistributional dynamics in the green transition," IWH Discussion Papers 16/2025, Halle Institute for Economic Research (IWH).
    12. Xu, Qi & Liu, Kui, 2024. "Hero or Devil: A comparison of different carbon tax policies for China," Energy, Elsevier, vol. 306(C).
    13. Ragnheiður Bogadóttir, 2020. "The Social Metabolism of Quiet Sustainability in the Faroe Islands," Sustainability, MDPI, vol. 12(2), pages 1-18, January.
    14. Cheng, Ya & Sinha, Avik & Ghosh, Vinit & Sengupta, Tuhin & Luo, Huawei, 2021. "Carbon Tax and Energy Innovation at Crossroads of Carbon Neutrality: Designing a Sustainable Decarbonization Policy," MPRA Paper 108185, University Library of Munich, Germany, revised 2021.
    15. Fries, Steven, 2023. "Sequencing decarbonization policies to manage their macroeconomic impacts," INET Oxford Working Papers 2023-26, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    16. Aaron Tornell & Frank Westermann & Lorenza Martinez, 2003. "Liberalization, Growth, and Financial Crises: Lessons from Mexico and the Developing World," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 1-112.
    17. Batidzirai, B. & Smeets, E.M.W. & Faaij, A.P.C., 2012. "Harmonising bioenergy resource potentials—Methodological lessons from review of state of the art bioenergy potential assessments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(9), pages 6598-6630.
    18. Betts, Caroline, 2021. "Accounting for Japan's Lost Score," MPRA Paper 109285, University Library of Munich, Germany.
    19. Krausmann, Fridolin & Gingrich, Simone & Eisenmenger, Nina & Erb, Karl-Heinz & Haberl, Helmut & Fischer-Kowalski, Marina, 2009. "Growth in global materials use, GDP and population during the 20th century," Ecological Economics, Elsevier, vol. 68(10), pages 2696-2705, August.
    20. Keiichiro Kobayashi, 2006. "Payment uncertainty, the division of labor, and productivity declines in great depressions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(4), pages 715-741, October.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wis:wpaper:2402. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Trudeau (email available below). General contact details of provider: https://edirc.repec.org/data/dwindca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.