A High Uptake of Sustainable Consumption and Production and Circular Economy Policies in LAC. LAC countries consider Sustainable Consumption and Production (SCP) and circular economy (CE) policies as valuable tools to address their environmental, social, and economic development needs and priorities.
In recent years, at least 19 LAC countries have addressed SCP issues through national policies and several countries have formulated, or are planning, new policy instruments and roadmaps linked to the Circular Economy.
COVID-19 Challenges. The transition to the circular economy during COVID-19 poses unprecedented challenges. The pandemic is impacting the LAC region with the worst economic contraction since records began in 1900. In this context, governments face the challenge of closing the social and economic gaps and addressing environmental liabilities while reactivating the economy with emphasis on social inclusion. In the midst of this dire situation, there is a strong demand for a “green recovery” and moving from a “business as usual” model towards more inclusive, resilient and low-carbon circular economies. The COVID-19 pandemic has revealed the limitations of existing policies and economies and in particular the linear economic model which is associated with degradation of ecosystems, environmental pollution and social inequality. The pandemic is challenging the LAC region to turn the crisis into opportunities and the region’s leading role in introducing SCP policies will be vital for the green recovery post-COVID-19.
LAC Countries Pioneers in Developing a Regional Strategy for SCP. The LAC region was the first region to develop a SCP Regional Strategy back in 2003, together with the establishment of a Regional Council of Government Experts on SCP. Both the Regional Strategy and Council have provided institutional support to the Forum of Ministers of Environment of Latin America and the Caribbean. In 2015, the Regional Strategy was updated to reflect the links to the UN Sustainable Development Goals (SDGs) and re-emphasize the regional support to the implementation of the 10 Year Framework of Programmes on SCP Patterns (10YFP) and the One Planet Network. UNEP and the 10YFP have supported 12 countries in developing their National SCP strategies and projects on relevant topics, such as eco-innovation, sustainable public procurement, eco-labelling, sustainable tourism, sustainable cities and sustainable lifestyles.
A Participatory Approach to SCP and CE Policy Development. In most LAC countries, policy instruments for SCP and CE are formulated through comprehensive multi-stakeholder and multi-sector processes. This participatory approach helps address different priorities and reach consensus for the long-term implementation of agreed measures.
For instance, the Sustainability Plan of El Salvador was launched following 2 years of consultations, it includes measures agreed between public and private entities. The development of the Sustainability Plan was led by the National Council of Environmental Sustainability and Vulnerability.
Another example is the National Policy on Sustainable Production and Consumption of Costa Rica which is being implemented through public-private working groups. The working groups carry out strategic actions in 6 sectors: industry, tourism, agri-food, sustainable public procurement, construction and lifestyles.
In addition, the 2018 National Environment Policy of Trinidad and Tobago prepared by the Environment National Authority is the result of stakeholder engagement including representatives from the public, the government, and NGOs.
A Mix of Regulatory Instruments and Incentives. Existing SCP and CE policy packages generally combine regulatory instruments and incentives. For example, the Colombian National Strategy for Circular Economy and the National Policy on Sustainable Production and Consumption of Costa Rica include steps to develop new regulations on different types of waste, using circular approaches. Both Colombia and Costa Rica are raising awareness on sustainable consumption and awarding companies that comply with their regulations.
As part of the National Policy on Sustainable Production, Colombia is planning a CE approach for regulations on packaging through the following initiatives:
- Eco-design, which drives innovation towards more efficient use of materials.
- Industrial symbiosis between consumers who exchange materials that maintain their value in the value chain.
- Regulatory harmonization, incorporating measures and economic instruments that encourage closed-loop supply chains, such as by limiting or prohibiting final disposal, amongst others.
The Colombian National Strategy for Circular Economy also includes a communication and cultural strategy, to encourage sustainable lifestyles and ensure that information on the environmental impacts of products is correct and accessible to consumers at the time of purchase (e.g. information on avoiding unnecessary plastics and information on how to dispose of packaging).
Costa Rica is implementing legal instruments to introduce sustainability in the life cycle of the construction of public buildings.
New public structures have to be designed considering 9 sustainability criteria, as outlined in Guideline 050-2019, covering the use of natural light, water and energy efficiency, use of recyclable construction materials, and reduction of landscape impacts, among others.
Costa Rica’s national SCP policy also includes incentives such as awards and recognitions of voluntary sustainable construction initiatives of the private sector. For example, the Sustainable Construction Award of the Costa Rican Chamber of Construction is given to real estate companies that demonstrate the integration of the three pillars of sustainability (environmental, social, and economic) in their operations. Likewise, construction companies can obtain the Blue Flag Ecological Program award, which rewards voluntary contribution in several sustainability areas, including climate change.
Enhancing Competitiveness of LAC Countries through SCP and CE. SCP and CE policies are currently at the forefront of the competitiveness agenda in various sectors and countries. Such policies can be beneficial to the environment and economies while also improving the competitiveness of state-owned and private companies.
LAC countries have used systemic SCP and CE approaches as entry points to enhance the competitiveness of businesses. The most common approaches involve mixed policies including Extended Producer Responsibility (EPR), Voluntary Cleaner Production Agreements (APLs), Sustainable Public Procurement (SPP) and the regulation of plastics and their waste. These policy instruments provide opportunities for continuous business improvements and competitiveness.
The Peruvian National Competitiveness and Productivity Plan 2019-2030 has a strategic goal to create enabling conditions for the transition to the circular economy. To a large extent, the achievement of this goal is supported by the implementation of the Peruvian Roadmap on Circular Economy for Industry approved in 2020.
In Colombia, SPP technical guidance reward suppliers who manufacture the packaging of products such as books, magazines and other printed material, with agro-industrial waste, recycled fibers or wood from sustainable sources, while avoiding single-use plastic, which is being eliminated as a result of plastic regulations.
Other LAC countries
A study was recently published on the positive impacts of SPP in the micro, small and medium-sized enterprises (MSMEs) sector in the Dominican Republic, Paraguay, Argentina and Chile. In these countries, experiments have been made with preferential purchases from SMEs, encouraging partnerships (Dominican Republic), purchases from family agriculture (Paraguay), B companies (Argentina) and women-owned or women-managed enterprises (Chile).
In Chile there is a positive correlation between gender equity, increased economic competitiveness and a higher ranking in the Human Development Index (see 2018 Global Gender Gap Report).
Integration of Territorial Planning in SCP and CE Policies. In a few cases, SCP and CE policies explicitly integrate territorial planning considerations to prevent land use conflicts and to take advantage of the competitive strengths of certain urban areas (e.g. access to energy, water supply, connectivity and labour).
For example, an Eco Industrial Park (EIP) policy and roadmap is being developed in Peru, with new industries being authorized jointly by the central and local governments. This joint approach speeds up the permitting and regulatory process, as it requires participation from both national authorities (e.g. for environmental impact assessments, water source use authorizations etc.) and local municipalities (e.g. for land use authorization, operating license etc.). Duplication of efforts and high administrative costs are thereby avoided.
The CE Roadmap for Chile is another example. It has a specific section on circular territories, as it aims to promote local CE solutions and high employment initiatives on topics such as organic nutrients cycles (e.g. compost in farms), sustainable forestry systems and local territorial economic recovery.
Focus on Solid Waste Management. In the LAC region, solid waste management and reduction remains a priority concern of public policies, due to the inadequacy of waste related service and infrastructure, as well as extended informality in the recycling sector. LAC countries have started to address the management of specific types of waste such as organic waste (50% of waste in LAC) which poses specific challenges.
It is estimated that food waste represents 14% of all food produced in LAC, equivalent to 220 million tons of food lost per year, at a cost of approximately 150 billion USD. One of the priorities for many countries is to reduce this food waste along the value chain. Argentina, Chile, Mexico, Brazil, Colombia, El Salvador, Panama and Peru have already approved legal instruments for food donations that partially address the food waste issue.
A number of LAC countries have recently started adopting more systemic approaches to SCP and CE, with initiatives that consider the whole life cycle of products and materials. For example, the Biovalor Program of Uruguay promotes policies and solutions to close the loops in livestock and agricultural waste under an approach of “nutrients circularity in farms” The Program is run jointly by the Ministry of Industry, Energy and Mining, Ministry of Housing and Territorial Planning and Ministry of Livestock, Agriculture and Fishing.
In Argentina, flexible regulations for waste imports have been revoked, to give way to an industrial solid waste management policy that favours CE practices such as recycling and industrial symbiosis through a Circular Economy Technical Working Table. The CE Strategy of Colombia includes a metal value chain approach based on increasing the scrap collected as raw material, as well as fostering industrial symbiosis processes with sectors such as the metal industry and the construction sector, and reintegrating the slag produced in steel mills as raw material for the production of new metals.
Formalisation of Informal Recyclers. In urban areas of LAC countries, promoting formalisation and decent work for waste recyclers contributes to resource efficiency in the waste cycle and a fairer transition towards SCP and CE models. This is especially relevant in the context of COVID-19 where recyclers are amongst the most vulnerable and exposed social groups. Such formalisation strategies typically include simplifying administrative requirements so that recyclers can become registered cooperatives or authorised waste collectors, with access to health services and training programs.
For example, in English speaking Caribbean countries a consensus was reached to include decent working conditions and plans to formalise informal recyclers when designing new disposal facilities. In Peru, more than 3,000 waste pickers have been formalised thanks to financial support from the central government to municipalities, to meet recycling and recyclers formalisation requirements. Colombia foresees the development of a program for the formalisation and certification of scrap metal recyclers, linking them with steel companies.
Plastic Waste Policies and Regulations. Plastic waste policies and regulations in LAC deserve special mention as they can provide inspiration for other materials and waste streams. Fifteen countries in the region have regulations on plastic waste and recycling. The countries are Argentina, Barbados, Brazil, Chile, Colombia, Costa Rica, Ecuador, Grenada, Guyana, Honduras, Panama, Peru, Dominican Republic, Saint Lucia and Uruguay. Most regulations focus on plastic bags and, in some cases, they cover other specific products, such as food and beverage packaging or polystyrene. The regulations include taxes, bans and restrictions on the manufacture, distribution, use and trade of plastic bags. The most common measure is the restriction of free distribution of single use plastic bags in retail.
The Plastic Law of Peru
The comprehensive Plastic Law of Peru from 2018 regulates plastic products at different stages. The Plastic Law prohibits manufacturing of plastic for domestic consumption, importation, exportation, distribution, marketing and consumption of plastic products including those produced from oxo-degradable plastic and polystyrene. The Law applies to single use bags, food containers and utensils, beverage straws and food packaging among others. Some exceptions apply to plastics used for medical and pharmaceutical purposes, storage of wet food and food or supplies, which for reasons of asepsis or safety require a single-use plastic bag.
International Cooperation for Capacity Building. In the LAC region there are countries with relatively small recycling markets and industries that cannot adequately manage their waste at the national level. In these countries international trade in waste can play an important role in closing material loops between countries and regions. International cooperation can contribute to international trade and the circular economy, e.g. by promoting the development of trade policies favorable to international waste flows.
International cooperation can also help harmonize definitions and technical standards between export and import countries. The harmonization can help regulate waste flows in countries such as Jamaica, Belize, Barbados, the Dominican Republic, Grenada, Trinidad and Tobago and the Bahamas. These countries are making progress in banning the import and use of single-use plastic products and polystyrene. In Central American countries, the Secretariat for Central American Economic Integration recommends strengthening waste processing and transformation capacities for export purposes.
A Need for Sustained Political Support and Technical Evidence. There is a need for further research on SCP and CE policies, such as sectoral diagnostics, baselines, indicators, benchmarks, economic impacts in the local LAC context, etc. Such studies will reduce information gaps, enable informed policy decisions and the formulation of targets and indicators. Also, this will help ensure that the transition to a fair and inclusive circular economy is guided by comprehensive and coherent policies underpinned by science produced by regional, national and local stakeholders.
International trade and CE policies need to be harmonized to ensure the circularity of material flows and the economies of scale (e.g. regional electronic and electrical equipment waste treatment facilities to recover precious metals). There are still several barriers to be overcome in terms of taxation which hampers the commercialization of materials for recovery.
Integrating SCP and CE policies with urban planning is a major challenge in LAC cities that have poorly planned urbanization, insufficient infrastructure and weak social cohesion. Unplanned urbanization and industrial expansion in most LAC cities have created conflicts between residential and industrial land uses. Emerging policies on Eco Industrial Parks (EIP) in LAC provide opportunities to harmonize industrial development with urbanisation processes, avoiding social conflicts with local residents and increasing local tax collection.
Insufficient Research and Development for SCP and CE. Sustainable Consumption and Production and the Circular Economy are relatively new fields of research, which have seen a significant growth and popularity in the last 15 years. It is clear that the move from linear to circular value chains, including designing innovative business, new materials and cleaner technologies, requires increased levels of investment in research and development (R&D). Currently, investment in science and technology in LAC does not exceed 0.66% of the region’s GDP. This contrasts with the most advanced countries in the EU, which have R&D investment rates above 2% of GDP.
Despite the low level of R&D investments to support the transition to CE and a wider application of SCP policies, especially for SMEs, public entities and private financial agencies have in recent years been channelling funds for circular innovation in the LAC region. Funds are primarily aimed at initiatives that promote productive transformation through the development of new products created from eco-design (which stimulates the development of different products and sub-products) and/or that install sustainable and resource-efficient production processes and cleaner technologies.
For instance, competitive public funds are available in Paraguay for R&D, where projects such as construction bricks with plastics and cement and production of fuel from out of use tyres have been funded.
In Chile, the Ministry of Environment, the Ministry of Economy and Development and CORFO launched the Circular Economy Innovation Prototypes programme with private companies as the main recipients.
In the financial sector, Peru promoted a Green Credit Line that used funds from commercial banks to finance SME migration towards low carbon and cleaner technologies, stimulating companies to comply and go beyond legal environmental standards. Fifty SMEs benefitted from a reimbursement of up to 25% of the loan with the contribution of the Swiss Cooperation, SECO. However, lack of systematic evaluation of impacts on supporting SCP and CE policies is common in LAC countries.
Reduction of Environmental and Social Impacts with CE and SCP Policy Packages. The LAC region has the highest capacity to renew its biomass (bio-capacity) per capita in the world, since it includes 6 of the 17 megadiverse countries and 57% of the primary forest of the planet. CE and SCP policy packages offer an important source of opportunities to reduce the environmental and social impacts of economic activities and, at the same time, reduce pressure on natural ecosystems and increase human well-being.
However, these opportunities are nuanced by challenges, such as how to achieve a just transition towards the circular economy, where no one is left behind. The latter is particularly relevant given that as a result of the COVID-19 pandemic, an estimated 28 million people in LAC will fall into poverty. This would increase the number of people living in poverty to 215 million, or about 35% of the LAC population.
A fair transition approach is required to achieve greater social justice and decent work in the recycling systems currently in use in LAC. Recycling in LAC is largely informal with waste pickers working in unacceptable health and hygiene conditions. In addition, approximately 90% of waste in LAC is not utilised and goes to final disposal.
In this context, the solid waste sector offers a wide range of SCP and CE policies application, from formalization of recyclers to waste avoidance through sustainable product design and the implementation of models for zero waste cities.
Combining Industry 4.0 and CE to Advance Sustainable Development. The fourth industrial revolution (Industry 4.0) and the circular economy are two sides of the same coin, in combination they offer great potential for industrial sustainable development. Industry 4.0 is about the merging of physical and digital worlds to gain data insights providing companies with new means to improve productivity and create new opportunities, such as circular business.
The term “Industry 4.0” comprises Internet of Things (IoT), automatization and robotics as well as 3D printing, among others. By taking advantage of IoT, manufacturers can monitor and analyse remotely the specific performance of each production process, enabling resource and energy efficiency. The growing applications of automated processes and robots, are associated with higher yields and reduced waste and scrap in factories. The use of 3D printing for the design of new circular products and on-demand production of spare parts improves profitability, extends the life cycle of products and facilitates new business opportunities.
In the LAC region, most of the transformation efforts associated with Industry 4.0 are focused on factories and individual companies without considering the wider value chain, and they are largely linked with private initiatives. For the LAC region to take advantage of Industry 4.0 opportunities, deployment of 4.0 public policies is needed. Governments should explore opportunities to articulate Industry 4.0 and CE as an essential part of productive transformation in the LAC region.
Leveraging South-South Cooperation on SCP and CE. There is a strong potential for South-South cooperation on SCP and CE, given the prevalent common language, cultural codes and similar needs. Joint work experiences within the framework of regional cooperation projects have demonstrated the great potential to harmonize public policies, indicators, technical standards, etc. between countries.
For example, as part of an international project, the Dominican Republic developed a Roadmap for Low Carbon and Resource Efficient Accommodation building on the experience obtained from Mauritius and St. Lucia. Additionally, a recent initiative which contributes to regional cooperation, is the Circular Economy Coalition for Latin America and the Caribbean launched in February 2021. The main objectives of the coalition are to create a common vision and perspective on CE for the Region; build a platform for sharing knowledge and tools; and support the transition to the circular economy with a life-cycle approach.
Transitioning to an Inclusive and Resilient Circular Economy. The CE transition provides a unique opportunity to ensure that the future of the LAC region is more inclusive and resilient. The post-COVID-19 era is expected to see a “green recovery” with transformation of value chains for a global CE transition. This will undoubtedly be driven by the need to adopt new approaches to create more resilient production and consumption patterns.
The green recovery is seen as an opportunity for a transition into circular economy models with social inclusion. Estimations made by ILO show a potential to generate 4 million new jobs by 2030 with the expansion of reuse, repair, recycling, remanufacturing and increased durability of goods. This projection covers only “downstream solutions”. The potential is even greater if other dimensions of CE are included such as new circular business, sustainable products design, cleaner production technologies, etc.
Regional Cooperation for Decoupling Economic Growth and Environmental Degradation. Despite evidence of the need for a green recovery, national and regional policy commitments in LAC countries still need to be implemented. Regional initiatives will be relevant to encourage governments to move towards a green recovery. In this sense, the previously mentioned Circular Economy Coalition represents a renewed effort to enhance regional, multi-sectoral and multi-stakeholder cooperation, to accelerate the transition to a circular economy. This regional platform provides an excellent opportunity to LAC countries to move towards decoupling economic growth from environmental degradation and resource use and pursue prosperity for all.
Literature review, regional analysis and consultations as well as interviews were conducted by Grupo GEA, with the support of the United Nations Environment Programme.