The circular economy is a new buzzword for designing out waste and getting value from every stage in the life of raw materials. How can cities become more efficient and derive economic value from this sustainable objective?

It's estimated that businesses in the UK could save over £29 billion a year if they employed the correct techniques, and cities can benefit too, in a number of ways.

The circular economy is defined as a model whereby products are repaired, reused or upgraded instead of being thrown away and recovered waste materials are reprocessed for remanufacture. Benefits include:

• it reduces the cost of raw materials used (which are becoming increasingly more expensive and scarce);
• it obtains extra value from waste that would otherwise be lost;
• it reduces the cost of landfill, and it provides employment;
• more economic value is kept within the city, where it works to create more wealth, rather than leaving it to benefit elsewhere;
• it does not rot in the ground causing pollution and greenhouse gas emissions.

For those authorities struggling to see how to apply the principles of the circular economy, a set of 30 helpful indicators for assessing the use of natural resources in the EU and for monitoring progress towards a resource efficient and circular economy, has been published by the European Commission. This is part of the Resource-efficient Europe initiative, one of seven flagship initiatives of the Europe 2020 strategy for smart, sustainable and inclusive growth.

Amongst these indicators are several that can be used by cities:

• the productivity of built-up areas*;
• the landfill rate of wasting excluding major mineral wastes;
• the recycling rate of municipal waste;
• the recycling rate of electronic waste;
• greenhouse gas emissions per unit of GDP;
• total environmental tax revenues as a share of total tax revenues;
• energy productivity in terms of value per megawatt hour.

Obtaining greater productivity from built-up areas

* Land productivity is defined as the gross domestic product (GDP) divided by the area of the land. The indicator presents the productivity of built-up artificial areas and non built-up artificial areas.

Built-up areas are covered with buildings and greenhouses, whereas non built-up areas include streets and sealed surfaces. Land productivity shows whether these areas are efficiently used to generate added economic value.

For the calculation of productivity of built-up and non built-up areas, Eurostat uses GDP in millions of PPS (Purchasing Power Standard) per square kilometre - m PPS per km². This unit allows comparison of countries/areas for the same year. More information can be found here: http://epp.eurostat.ec.europa.eu

Right, image of London's hippest area, Hoxton and Shoreditch by Jack Torcel.

Which European countries have the most productive cities?

This indicator allows us to compare the productivity of European cities (defined as the total of built-up areas within the country) in different countries. In 2009 this was highest in Luxembourg, although it declined due to the recent recession. The latest figures, for 2012, show that Luxembourg followed by the Netherlands top the European list.

• Luxembourg topped the league in 2009 with 818.8m PPS per km², falling dramatically to 517.2m PPS per km² in 2012;
• The Netherlands, well known for efficient land use already, was 397.8 (2009) falling to 312.3m PPS per km²;
• The German figure for 2009 was 286.4m PPS per km², declining to 280.8m PPS per km² in 2012.
• The average for the whole of the EU (27 countries) in 2012 was 198.3m PPS per km².
• In fact all Western European cities saw a decline between those years with the exception of the United Kingdom, which rose from 267.1 to 292.3m PPS per km²;
• Naturally, the biggest decline has been in Greece, from 215.6 to 155.3m PPS per km².
• Cities on the Baltic coast joining the EU-27 experienced a rapid rise in productivity between 2009 and 2012: in Latvia it has shot up from 75.7 to 176.3m PPS per km², in Lithuania from 68.6 to 14 4.6m PPS per km², and in Estonia from 98.6 to 125.2m PPS per km².

Productivity of European built up areas by country (click on the image to bring up a larger version).

Interestingly, another indicator for resource efficiency is the amount of built-up area in a country, and the records show that the United Kingdom's land area defined as built up declined between 2009 and 2012 from 6080 to 5832km² (The data refers to the land use/cover area frame survey (LUCAS)). Germany's records show an increase from 7700 to 9184km².

The conclusion to be drawn is that it is beneficial for cities to extract more value from their existing built-up areas rather than increasing the amount of sprawl, since this produces more value while using less more materials and saving valuable agricultural land.

This is one way in which cities can move towards a circular economy of zero waste.

Setting a zero waste target

Other ways have been highlighted by Ben Shaw, Senior Research Fellow, Environment Group, Policy Studies Institute. He believes that waste reduction needs to be tackled higher up the chain of production and consumption.

He produced a report in 2007 which gives examples of zero waste initiatives which have been tried - from the high-tech, large-scale waste management systems of consumerist San Francisco, to the locally based, small-scale initiatives in the Philippines.

He says that there are lessons to be learnt by critically considering the achievements of existing practice, wherever in the world that may be found, and two of the most useful targets to set are:

1. a per capita residual waste target, which can drive both recycling and waste prevention, backed up by variable charging of householders and businesses.
2. for developing 'closed loop' systems for organic wastes, for instance by returning composted food waste to the land as fertiliser, rather than losing this valuable resource, having treated it with anaerobic digestion in order to extract energy.

Zero Waste International Alliance has produced a list of communities which have adopted zero waste policies already.

Although slightly out of date, it finds 18 in California alone, 10 in the rest of the USA, nine in Canada, one in South America, six in Australia, while in New Zealand the whole country has a zero waste goal, as to Scotland. Italy comes top in the Europe with 33 cities or towns having declared a zero waste goal. In Asia eight cities have done so, most of which are in the Philippines.

The key message is that setting a zero waste goal focuses the mind of everybody in the city towards that the eventual aim.