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Circular economy

While there is no single accepted definition of a circular economy, it is generally understood that the “transition to a circular economy” entails a reduced demand for natural resources, and the materials that are derived from them (McCarthy and al., 2018). For example, for the European Commission, the circular economy means maintaining the value of products, materials and resources in the economy for as long as possible and minimising waste. Three main mechanisms for reduced demand are often highlighted. Creating material loops involves the substitution of secondary materials (i.e. those that have been used already in production processes and are derived from the recycling of industrial or household waste) and second-hand, repaired, or remanufactured products for their virgin or new equivalents. Slowing material flows involves the emergence of products which remain in the economy for longer, usually due to more durable product design. Narrowing material flows involves the more efficient use of natural resources, materials, and products, either through the development and diffusion of new production technologies, the increased utilisation of existing assets, or shifts in consumption behaviour away from material intensive goods and services.


Decoupling refers to breaking the link between “environmental bads” and “economic goods.” Decoupling occurs when the growth rate of an environmental pressure is less than that of its economic driving force over a given period. Decoupling can be either absolute or relative. Absolute decoupling is said to occur when the environmentally relevant variable is stable or decreasing while the variable reflecting the economic driving force is growing. Decoupling is said to be relative when the growth rate of the environmentally relevant variable is positive, but less than the growth rate of the variable reflecting the economic driving force.


Disposal of waste refers to waste elimination techniques comprising for example landfills, containment, underground disposal, incineration without energy recovery.

Domestic Material Consumption (DMC)

DMC measures the mass (weight) of the materials that are physically used in the consumption activities of the domestic economic system (i.e. the direct apparent consumption of materials, excluding indirect flows).

Material productivity

Material productivity makes reference to the effectiveness with which an economy or a production process is using materials extracted from natural resources. The term also designates an indicator that reflects the output or value added generated per unit of materials used. This is typically a macro-economic concept that can be presented alongside labour or capital productivity. It should be noted that the term “resource productivity” is often used to designate material productivity though the latter does not cover all resources (e.g. water is usually not included).

Materials or material resources

The term "materials" or "material resources" designates the usable materials or substances (raw materials, energy) produced from natural resources. These usable "materials" include energy carriers (gas, oil, coal), metal ores and metals, construction minerals and other minerals, soil and biomass.

Municipal solid waste

MSW (municipal solid waste) refers to waste collected by or on behalf of municipalities from households, commerce and trade, small businesses, office buildings and institutions (schools, hospitals, government buildings), and selected municipal services if managed as waste (e.g. waste from street cleaning, parks and garden maintenance). It includes waste from these sources collected door-to-door through traditional collection operations and fractions collected separately for recovery operations (door-to-door and/or voluntary deposits). MSW includes household and other similar waste, as well as bulky waste (e.g. old furniture, appliances), yard waste, leaves, grass clippings, street sweepings and the content of litter containers, if managed as waste.


Recycling is defined as any reprocessing of material in a production process that diverts it from the waste stream, except use as fuel. It includes both reprocessing as the same type of product, i.e. of an identical nature, and reprocessing as products of similar nature but for different purposes.

Resource efficiency

There is no commonly agreed upon definition of resource efficiency. It is understood to refer to the economic efficiency and the environmental effectiveness with which an economy or a production process is using natural resources. It is also understood to contain both a quantitative dimension (e.g. the quantity of output produced with a given input of natural resources) and a qualitative dimension (e.g. the environmental impacts per unit of output produced with a given natural resource input).

Resource productivity

Resource productivity refers to the effectiveness with which an economy or a production process is using natural resources. It can be defined with respect to:

  1. i. The economic-physical efficiency, i.e. the money value added of outputs per mass unit of resource inputs used. This is also the focus when the aim is to decouple value added and resource consumption.

  2. ii. The physical or technical efficiency, i.e. the amount of resources input required to produce a unit of output, both expressed in physical terms (e.g. iron ore inputs for crude steel production or raw material inputs for the production of a computer, a car, batteries). The focus is on maximising the output with a given set of inputs and a given technology or on minimising the inputs for a given output.

  3. iii. The economic efficiency, i.e. the money value of outputs relative to the money value of inputs. The focus is on minimising resource input costs.

The term also designates an indicator that reflects the output or value added generated per unit of resources used. This is typically a macro-economic concept that can be presented alongside labour or capital productivity. Resource productivity would ideally encompass all natural resources and ecosystem inputs that are used as factors of production in the economy. The term is however often used as a synonym for material productivity.


Waste refers to materials that are not prime products (i.e. products produced for the market) and for which the generator has no further use for his/her own purpose of production, transformation or consumption, and which he/she discards, intends to discard or is required to discard. Wastes may be generated during the extraction of raw materials during the processing of raw materials to intermediate and final products, during the consumption of final products, and during any other human activity. Waste does not include residuals directly recycled or reused at the place of generation (i.e. establishment) or waste materials that are directly discharged into ambient water or air.


OECD (2001), Decision of the Council concerning the Control of Transboundary Movements of Wastes Destined for Recovery Operations, 14 June 2001, C(2001)107/FINAL, OECD Publishing, Paris,

OECD (2008), Measuring material flows and resource productivity: The OECD Guide, OECD Publishing, Paris,

OECD (2015), Material Resources, Productivity and the Environment, OECD Green Growth Studies, OECD Publishing, Paris,

McCarthy, A., R. Dellink and R. Bibas (2018), "The Macroeconomics of the Circular Economy Transition: A Critical Review of Modelling Approaches", OECD Environment Working Papers, No. 130, OECD Publishing, Paris,

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