Impact of the circular economy on ecological footprint: evidence from Germany.

ABSTRACT

The circular economy practices contribute to sustainable development by maximising efficiency, utilising renewable resources, extending product lifespans, and implementing waste reduction strategies. This study investigates the individual impacts of four sources of the circular economy on the ecological footprint in Germany, a country that is among the pioneers in establishing a comprehensive roadmap for the circular economy. The four sources examined are renewable energy consumption (REC), recycling, reuse, and repair of materials. Using time series data from 1990 to 2021, the study employed the dynamic autoregressive distributed lag (ARDL) simulation technique and also applied kernel-based linear regression (KRLS) to test the robustness of the results. The findings revealed that reuse practices significantly reduce the ecological footprint in both the short and long run. REC and repair also substantially decrease the ecological footprint, as shown by the simulation analysis. Conversely, while recycling is generally considered crucial for minimising environmental impact, in this study, it was found to contribute to environmental degradation. This paradox may be attributed to the nascent state of the recycling industry and data limitations. The results from KRLS confirm the findings of the dynamic ARDL. It is recommended that policymakers develop measures that are appropriate, efficient, and targeted to enhance the role of each source of the circular economy in reducing the ecological footprint in Germany. The major limitation of the study is its reliance on the indirect measures of circular economy attributed to the non-availability of data on direct measures.