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A shift in mindset and approach to how and why the economy works – a necessary present in the Balkans

Current landscape in the Balkans

In several researches we have done in recent years, we are sure that further embeddedness of knowledge (cultural, general and technical) needs to be vastly disseminated quickly, as the right decisions must be taken. I have been in round tables where the answer to the opening question “How much do you know about the circular economy” was answered rather poorly, yet these were the round tables about the future strategies or policies to be made, or read it differently – decisions of a future development of circularity were to be made for companies, regions, cities and countries. We need to know about the full scope of a circular economy and about the systemic nature of a circular economy, to get to the right decisions that will not be siloed, or that will not serve as a patchwork to the current linear economy.

Policy steps in several countries were made (such as Serbia, BiH, Montenegro, Romania and Bulgaria) that have brought their versions of plans towards circularity. Still, most of them look more like an education playbook, than the plan of how to systemically move forward. There is a real reason behind it. To plan the roadmap action plan or a programme, one needs to have a multidisciplinary team to get planning onboard. Then, a consensus on goals in these multifunctional teams needs to be made to proactively and effectively move forward. Thirdly, a new set of enabling policies (comprehensive motivating policy packages including tax corrections, innovation products and materials positive market regulation and regulation implementation effectiveness) need to come in place to enable these three axes of circularity:

  1. innovative business creation and uptake;
  2. social benefits effectiveness and social acceptance;
  3. resource and nature conservation and regeneration.

To be blunt and repeat my words from the research title we wrote (authored by my most respected colleague and a doyen in the environmental protection of Serbia- Mr Siniša Mitrović and myself) – “We (on the Balkans) have two roads ahead regarding circularity.”

Road number one follows a traditional waste management/recycling road, where we will need to invest in the industry twice. Once in incineration and landfill infrastructure and sporadically recycling centres, but also in a more efficient industry that works with the same input-output linear logic. The other investment wave would be towards a complete industry overhaul that will tend to reduce waste creation, resource depletion and environmental harm, by following new market and regulatory circular rules.

Road number two is innovation and economy-driven, where we can leapfrog the traditional ways and jump right into the new era of circular, innovative, ecosystem economy where new logic, new business approaches and new societal demands are the governing rules of development. Yes, this is the harder way and the one with seemingly more investments required at the beginning.

However, the goals of Road one and Road two conflict with each other, thus preventing the second one from being fully developed in the next 25-30 years. Why? Road number one requires waste generation to economically justify recycling, landfilling and incineration ROIs, while Road number two is designed to reduce waste generation and create an economic system without waste. To be brutally honest, if we go down the first path, the Balkans may transform into a recycling plant or a landfill for the EU.

Now, I will place a writing angle on the position of development of Road number two and place the needs assessment forward for it to become a reality. I have done a roadmap of transformation towards circularity of Serbia up until 2035 and honestly, I am only following this trajectory. Everything, more or less, falls into the development pathway created back in 2016. What comes to be true and now even more evident is that the region lacks skilled workers that have different but also similar skills to skew the development towards a circular economy. We lack engineers who also have a systems perspective, that connects industries rather than just perfect their production plant, but to do that, we also miss the right decision-making capacity that will see the benefits of joint development (for example, the industrial symbiosis), that will connect different value chains (for example, agriculture, food, forestry and IT) and maybe most importantly now, that will be able to approve experimentation and piloting of new models and approaches.

The second point is that innovation support is necessary to be developed to create “a new IT boom”, or so to call it. We do have innovation and development centres and programmes, yet it seems that nobody still knows how to define what circular innovation is and what it is not, which prevents the shift in investments towards circular and green innovation. The other side of the coin is the ROI of this innovation or the inconvenient question to be asked: “When will my investment ripe?”

Thirdly, in all that confusion about what is and what circular economy is not, how to avoid “deliberately circular-ish” development and “circular washing”? Well, I am afraid that these two questions need to be asked in every attempt where circular economy change is mentioned. What we need, are truly systemic solutions that will cover all three principles of circularity (proposed by the Ellen MacArthur Foundation) and not only current but also future lifecycles of product systems.

Finally, the chicken-and-the-egg challenge. Do we create policies and regulations before development or during development? We still lack a fully functional regulatory framework for materials to be reused again on the market as (secondary) resources. Therefore, we lack the incentive to put the real price of secondary materials, circular services or products on the market (imagine that the local government cannot issue a procurement requirement for used or (re)used furniture, or it cannot rent vehicles, because the regulation is missing, while, by the way, public procurement can take up from 5 per cent to 20 per cent of the GDP of a country). The policy question seems to be very much connected with the information availability (primarily regarding the local, regional or industrial metabolisms; flows and stocks of materials and energy; and the environmental impact of planned or conducted initiatives and projects). This constatation brings us to the beginning of the story where we need to go in rounds of improvement to enable a healthy and prosperous, but above all – a complete circular economy.

The Need for a shift

Now, I’ve promised I will have a suggestion for areas of improvement. Firstly, we need to boost knowledge dissemination, but a complete one and in parallel- to many people. We have to use various channels for that (information, education, training, culture and so on), so the citizens, among which also the decision-makers are aware of the benefits, constraints and potential risks of bringing the circular economic development to the forefront of national strives.

Then, we need to create an (open) innovation support and an investment system for systemic circular solutions. We need to facilitate changes in financial organisations, investment organisations and investor individuals, but also in support programmes that will create circular innovation, directly for the market articulated needs.

And finally, the most pertinent, perhaps also the most difficult and the most long-term, but with an immediate requirement to start to work on, would be the need to shift the mindset to new business models, the new design that will approve producers’ liability for products and services placed on the market, together with a cultural spring where we value people and our humane capacity to develop, before creating a sheer pile of profits on various bank accounts. That is: we need a new generation of responsible and humane users of our product-services.

With these preconditions, but also while we are working towards achieving these preconditions, we will be able to start to comprehend why we need circular economy heroes in the Balkans and these heroes will start to become visible, honoured and dignified as they deserve.

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