Opportunities for the Circular Economy in Smart Cities: The Role of Digital Technology

Introduction

A major issue in our current global system is the linear flow of material and energy between nature and human economy (Korhonen et al., 2018a) at a speed faster than earth can regenerate its services. The subsequent depletion of our natural resources will be worsened by the significant growth of world population and people moving to cities (https://www.unfpa.org/migration). This migration will improve the lives of many to middle class standards synchronously causing an increase in the per capita consumption. Subsequently earth is reaching it planetary boundaries (Broman and Robert, 2017) and the global natural eco-system is becoming smaller (Korhonen et al., 2018a; Broman and Robert, 2017) in seize and volume. A logical answer to this challenge is reversing the linear model: a circular economy (CE) matching the ecosystem service cycles (Korhonen, 2018a). The CE is implemented through Circular Business Models (CBM).

We observe an enormous increase in circular initiatives but reviewing the literature on this topic also reveals several challenges. A 2018 report released in Davos during the World Economic Forum (Wit et al., 2018) stated that only 9% of the economy can be classified as circular. Most of the circular economy (CE) initiatives are small scale, non-complex projects often only in conjunction with a company’s suppliers. Many companies that are publicly categorized as circular, only implement several elements of the CE (Jonker, 2016b). The sharing platform-economy, such as Uber and AirBnb, highlight several positive attributes of the circular economy such as using over-capacity, but they tend to push out their negative side effects from their value proposition thereby not creating multiple positive value streams (Jonker, 2016a). Nußholz (2017) mentions that it isn’t clear how the CBM actually differ from LBM and Korhonen (2018b) even classifies the CE as essentially contested. The theoretical foundations on sustainable and circular business models have not been established yet.