Assessing the Socio-Economic and Environmental Impacts of Circularity Interventions: A Country-Level Analysis in Latin America

Abstract

The transition from a linear to a circular economy is essential to confront pressing environmental challenges in Latin American (LATAM) countries, including resource depletion, pollution, deforestation, and biodiversity loss. While circular economy principles have advanced in developed nations, LATAM countries are at an early stage of adoption, facing unique socio-economic and environmental contexts that demand tailored policy approaches. This study focuses on Costa Rica and Uruguay as representative cases, selected for their medium-high income status and their advancement in developing national circular economy strategies. The research evaluates the socio-economic and environmental impacts of nine CIs outlined within these circular strategies, aiming to inform broader regional strategies for sustainable development. This research addresses critical knowledge gaps by evaluating national circular strategies and their broader regional and global implications.
The study applies a mixed-methods approach combining qualitative analysis with a quantitative multi-regional environmentally extended input-output analysis (MR-EEIOA) to evaluate key CIs selected from Costa Rica and Uruguay’s circular national strategies.
This thesis employs a qualitative analysis framed by the DE lens, a conceptual model that defines a "safe and just space" for sustainable development by integrating planetary boundaries ceilings with social foundations. This holistic framework complements circular economy principles by emphasizing the need to reduce environmental impacts and to ensure equitable socio-economic outcomes. This integrated methodology provides a comprehensive evaluation of CIs, capturing environmental benefits, such as decreased Greenhouse Gas (GHG) emissions, and their associated socio-economic trade-offs. To elaborate, the analysis measures the economic dimension of the transition by examining the interplay between job creation in new circular sectors and job displacement in traditional linear industries. It also assesses the social dimension by evaluating how these initiatives generate social value-added through the creation of new skills and enhanced local economic resilience.
Out of all circular interventions qualitatively analysed through the Doughnut Economy lens, two are quantitatively modelled using MR-EEIOA. This is done to demonstrate the modelling process and to explore the strengths and limitations of MR-EEIOA as a tool supporting qualitative analysis.
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This comparison of quantitative results with qualitative insights generates new understandings of the potential impacts of circular economy interventions in the LATAM region.
Key findings reveal that CIs in Costa Rica and Uruguay yield environmental gains, particularly in climate change mitigation and resource efficiency, and promote socio-economic benefits like job creation and social equity. However, these results are constrained by data limitations - especially concerning social impacts - and structural challenges, such as low recycling infrastructure and unclear policy targets. The results of the MR-EEIOA modelling reveal unexpected trade-offs between environmental and socio-economic impacts of the analysed CIs. This analysis highlights a complex reality where an environmental gain (e.g., lower GHG emissions) can coincide with a socio-economic cost (e.g., job displacement). This finding underscores the need for a more holistic assessment of these initiatives by collecting more qualitative data on the micro- and meso-level impacts of CIs on specific sectors, using methods such as semi-structured interviews and surveys.
This research contributes to Industrial Ecology by assessing the impacts of CIs in underrepresented regions and addressing social dimensions that are often neglected in traditional analyses. Specifically, this research highlights the importance of improving mixed-methods data collection by integrating sector-specific qualitative insights and quantitative metrics on key sectors projected to undergo significant change from the analysed CIs.
These insights provide crucial support for national governments and regional institutions like ECLAC (Economic Commission for Latin America and the Caribbean) in designing effective, inclusive circular economy transitions. This work helps advance sustainable development across the region by applying the DE model, which seeks to meet social foundations while respecting planetary boundaries.