Handling Collection

HC4: Economics Matter

Circular Economy ObjectiveThis sesison looks at some of the economic justifications of the circular economy model. Circular products are all nice and well, but why would anyone make them if there was no economic gain?

Lesson Objectives•Understand the economic advantages of a circular economy model compared to the linear economy•Develop a deeper understanding of how business models need to change for a circular economy•Look at case studies of companies doing something circular

The linear economy

The linear economy

This is the model of production we have adopted for at least 200 years.

List the problems associated with running this model. Break them into social, economic and environmental problems.

Linear economy depends on efficiency

To operate successfully, the linear economy has four key requirements:

Cheap energyCheap materialsCheap labourCustomers with access to spending power

What happens if some or all of these factors are no longer available?

Commodity prices

Investigate prices

In pairs, choose one commodity from the list on the right. Visit www.indexmundi.com/commodities where you will investigate the cost of your commidity over a twenty year period.

What has happened to the cost of your commodity? What does that mean for a company depending on using those materials?

Choose one from:

CopperAluminiumSilverUraniumTinGoldCottonSunflower oilSugarBeef

The circular economy

Why might the circular economy offer a way out of high prices? What is the key difference between a circular economy and a linear economy?

Case study: washing machines

Imagine we leased washing machines instead of owning them.

What would be the economic advantages of the manufacturer of running this model?

Think about materials, energy and transportation.

Might the customer get a better deal with this model?

Use

Repair

Remanufacture

You investigate

1. Visit http://www.ellenmacarthurfoundation.org/case_studies2. Find a case study you like the look of3. Make sure your case study involves a company that makes a product4. Answer the questions that follow

Case Studies (2)

Answer the following questions

1.Which company did you research?2.What is clever about the product they have created?3.How do they get the product back from the customer?4.What happens once they get the product back?5.What does the company say about their product? You may need to visit the company’s website to find this out.6.Use another piece of paper to sketch a diagram that demonstrates how this company or product works.