Circular Economy: what kind of cooperation is needed at a territorial- scale?

Last week, we had the pleasure to attend a webinar co-organized by the student-led think tank CliMates and the social entrepreneurship association makesense. It focused on understanding the cooperation needed for the successful implementation of circular projects in cities and regions. Here we highlight the most interesting points discussed.

In our interconnected world, the flows of materials evade artificial and administrative frontiers, thus it is impossible to conduct an effective circular project working in isolation. A clear inter-organizational strategy must specify the cooperation between the different actors along the value chain. 

Broadening our analysis

In order to move towards this network governance, holistic models representing interdependence have to be used by decision-makers. In the webinar, two frameworks were presented: the urban metabolism and the industrial and territorial ecology.

Urban metabolism studies each urban area as a dynamic system with a continuous flow of resources, similar to how biological metabolisms work. Its goal is to pinpoint the existing structural gaps that have to be bridged in order to transition from a linear to circular metabolism. While the reorganization of infrastructures and functions is a necessary condition to achieve this, it is not sufficient. It needs to be supported by circular economy, that is, by an economic model that is regenerative by design. 

Industrial and territorial ecology (ITE) is a model of inter-company organization by exchanging flows or sharing needs (as defined by ADEME). This implies a pooling of resources, as well as a provision of recycling outlets for the companies, which can improve their competitiveness.  

These frameworks allow for a more exhaustive analysis on the environmental and economic impact of a given system and can help discover often overlooked possibilities for synergies among different agents to improve the local economy, taking our ecosystem as a priority.

They look at different action-scales, the city and the companies of a territory, each one being necessary to understand the other. This is one of the challenges of circular economy, the need to analyse a wide range of actors and ecosystems in order to integrate them most efficiently.  Regions are an ideal unit for circular economy projects since they can capitalize on the wide network of organizations and enterprises present. However, organizational challenges still slow down the green transition. One of the parts of the webinar consisted precisely on this: what is needed for good governance?

Governance for circular economy

Game theory has shown everyone can be better off by cooperating. However, this is not always the choice and we end up in a situation that could be improved. A big challenge to achieving cooperation is information asymmetry, that is, not every actor has the same information and our decisions are constrained by it. This highlights the importance of building a collective knowledge base and transparent organizational processes in order to ease collaboration between actors. This is especially important in circular economy due to the wide heterogeneity of stakeholders.

Conteh (2013) examines multi-actor governance in complex environments, finding three critical elements:

1. Vertical and horizontal inter-jurisdictional dimensions of joint policy action: the fragmentation of production and services processes creates collective action problems, which can be mitigated by institutional design. This pushes regional governments to develop strategic partnerships taking into account the nature of the agents. For example, vertical systems of governance may work for partners of the same sector but would be much harder in cross-sectorial relations (Hawkins and Andrew, 2011).
2. Multiplicity of lenses including non-governmental stakeholders: the governance process is becoming increasingly horizontal and there is a push towards participatory processes, where citizen organizations can also become involved.
3. Network dynamics: increased importance of monitoring the developing of the network, encouraging both informal and formal relationships between the members in order to obtain a commitment for a long-term vision.

In Veltha, we believe that building a network for European regions working in Circular Economy projects is key to spark good practised-exchange and the formation of a collective knowledge base. We are thankful for having participated in this webinar and we will integrate its insights to further develop our Policy Lab.

Interested in joining the Policy Lab? Apply here!

Resources:

Conteh, Charles (2013) Strategic inter-organizational cooperation in complex environments. Public Management Review, 15(4): 501-521

Hawkins, Christopher and Andrew, Simon (2011) Understanding horizontal and vertical relations in the context of economic development joint venture agreements. Urban Affairs Review, 47(3): 385- 412