The impact of converting waste into resources on the regional economy, evidence from Poland

Abstract

Recently, growing interest in the Circular Economy (CE) concept can be observed among scholars and practitioners globally. One CE goal is to increase resource efficiency by converting more waste into resources. The introduction of such changes in the long-term perspective will have an impact on regionals economies. But the exact consequences of these changes are largely unknown and require a specific modelling approach. In this paper, a Dynamic Stochastic General Equilibrium (DSGE) model designed to simulate the expected impact of increased resource efficiency on a regional economy is applied to a regional case study. The model is built on the assumption that a portion of current consumption is returned to producers in the form of supplies later re-used in the production process. The structural parameters of the proposed model were calibrated for Malopolska, a region in southern Poland, and the study used the Bayesian estimation method in this process. Computer simulation confirms the positive impact on the economy by the increase in resource efficiency, which will eventually improve the quality of life of the region's population. According to this study, in the long run, one additional unit of material resulting from recycling is a substitute for four units of raw material. The article proposes to measure the recycling rates as a portion of recovered materials’ value rather than their mass. With this methodology, recycling estimates for the Malopolska region of Poland in 2017 amounts to 48.1%.