Necessity-driven circular economy in low-income contexts: How informal sector practices retain value for circularity

Abstract

Low-income informal sector contexts are rife in practices that retain value of materials and goods, but in the academic literature and policy debates these practices are seldom considered as part of the circular economy (CE). This is a major omission in CE discourse, as over 60 percent of the world’s employed population is in the informal sector and many of them make their living from circularity practices. Hence, our paper advances a globally covering understanding of CE by focusing on local practices constituting CE in the overlooked contexts of low-income informal markets of emerging economies, and on the motives behind the practices. To that end we introduce the notion of Necessity-Driven Circular Economy, defined as a set of locally embedded and interlinked formal and informal practices aimed at restoring and retaining the value of goods and materials for as long as possible, based on economic necessity and opportunities for income generation. We substantiate this conceptual work with our empirical findings from low-income urban communities in Brazil, India, and Tanzania. This allows us to capture the essential characteristics of necessity-driven circular economy. These characteristics draw attention to the social and cultural embeddedness and the interweaving of consumption and production in necessity-driven circular economy, as opposed to the dominant techno-economic and industry-focused circular economy conceptualizations that are typical in academic discourse and portray developed country contexts. Finally, we discuss conceptual and practical relevance of necessity-driven circular economy and point out its system-level implications for policymakers and businesses.