The circular economy concept emerged in response to resource shortages in the global economy. Its roots are found in mainstream environmental economics, although also ecological economics with its deterministic emphasis on the escalating entropy underpins the virtues of circularity. Environmental economic assessment and lifecycle analysis should be combined for analyzing the performance of novel circular technologies from a sustainability perspective. Estimates of the external costs related to the environmental burdens are required for the resulting welfare economic analysis of emerging green technologies. Once an elusive theoretical concept, externalities are nowadays routinely accounted for within the framework of impact pathway analysis. In this chapter an illustrative analysis of bio-based technologies, aimed at mobilizing domestic resources for cascading uses, provides an example of the insights that can be achieved from systematic environmental-economic analysis. The findings suggest that circularity is an ambiguous concept and its implementation calls for analytical scrutiny.
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