Getting Hold of the Key Concepts

WE MAKE, BUY AND SELL STUFF, and the stuff has to come from somewhere. Everything we use is either grown or mined, and everything tracks back to the physical sources of these raw materials – be they food, timber, fibres, metals, minerals, or the oil that gives us fuel, plastics and chemicals.

No. 2: Resources are becoming less 'secure' for a variety of reasons

These are the converging trends and concerns that have helped to increase interest in the circular economy:

• A reversal in the trend of the last four decades of declining resource prices. The prices of food, metals and plastics of have risen in the last eight years faster than background inflation, and continued rising through a recession.

• Not only are prices rising, they are more volatile, with bigger spikes and troughs. This uncertainty is a big problem for businesses, stifling investment and inhibiting confident forward planning.

• Underlying these price trends are environmental pressures – although the basic metals, for instance, will not 'run out' any time soon, the increasing energy and water needed to access more dilute sources drives up costs.

• One of the factors underlying food price rises and limiting a shift to using more bio-based or 'renewable' materials is the competition for high quality agricultural land (for food, fuels and materials).

• On top of this, there are fears of restrictions on access to key resources by political decisions – for instance, the Chinese Government restricting export of 'rare earth' minerals to keep them for their own use.

• As demand for resources rises, and prices become more volatile and strained, we may see more resource nationalism – an effort to stop flows of key resources outside a country under stress.

• At the same time, the world is facing increasing demand for resources as global population rises, and the affluence of that population increases.

• Climate change may mean a less predictable climate, disrupting access to raw materials and water. In response there are moves in several countries to regulate or price carbon emissions, which would have further impacts on energy and resource prices.

• These aren't just abstract risks – putting a proper price on carbon (i.e. around &8364;75 per tonne) would cause the price of primary aluminium to rise by 70 percent, chromium to rise by 240 percent and nylon to rise by 40 percent.

• Companies are subject to increasing scrutiny of their supply chains by consumers and by campaigning groups, and their reputations are at risk in the event that environmental or