Us before me: a group level approach to the circular economy

A more efficient use of natural resources is considered a necessary condition for their sustainable use. When firms use resources circularly they aim to contribute to using resources more eco-efficiently, and thus in a more sustainable way than when adopting more linear systems. Eco-efficiency in linear systems can be determined by aggregating each individual instance of resource use. However, in circular systems this approach is problematic, as it cannot capture the dynamics of resource use that unfurl between firms that contribute to eco-efficiency. In other words, we argue that in circular systems, eco-efficiency overall is more than the sum of the eco-efficiencies of individual firms. Moreover, we counterintuitively suggest that within circular economy systems, selecting only highly eco-efficient firms can actually reduce rather than increase the degree of eco-efficiency overall. Using a lens of multi-level selection theory, we build our argument through a series of numerical examples, and in conclusion show how the assessment and management of resources must be moved from the individual to the group level.