Environmentally-extended input-output analysis of circular economy scenarios in the Philippines

Abstract

Conventional economic systems are based on the unsustainable use of natural resources. Circular Economy is a framework for socio-technical regime change that prioritizes material loops to improve resource efficiency. The framework promotes business activities that capitalize on material recirculation pathways and extended product life cycles. Many countries have begun adopting Circular Economy principles through policies, targets, and action plans, but research in this area has focused largely on developed countries and major emerging economies. The lack of scientific analysis of Circular Economy implementation in developing countries is a critical research gap with significant implications on global material flows. Fast-growing countries such as the Philippines will benefit from the regime change towards Circular Economy to resolve sustainability issues from economic and demographic trends. Policy interventions need to be calibrated to enable a smooth transition to circularity. To address this gap, this study uses a 16-sector Environmentally-Extended Input-Output model to simulate four scenarios on a) increasing product demand, b) implementing circular business models, c) implementing government regulations, and d) promoting service sectors. GDP growth, material intensity, and regulatory constraints of each scenario are analyzed. Results show a potential of up to 10.05% increase in GDP and 62.51% decrease in material footprint relative to business-as-usual. Policy implications on the Philippines' transition to a Circular Economy are discussed.