The Circular Economy (OEC) is presented as a promising solution to pressing environmental challenges, offering an alternative to the linear “take, make, use, dispose” model. Its principles include reuse, recycling, and efficient use. resources to reduce environmental damage. The aim is to extend the life of products, increase recycling rates and reduce overconsumption, thereby promoting a more sustainable economic system. While OEC strategies promise to reduce emissions and energy consumption, there is growing concern that OEC innovations may inadvertently create so-called reverse effect (RE), which paradoxically negates sustainability gains and exacerbates environmental pressures, including climate change.

Backlash: When efficiency leads to higher consumption

The backlash occurs when increased efficiency inadvertently leads to increased overall consumption and production. This paradox, first formulated by Jevons in 1865, arises when improved efficiency – often through increased recycling or upcycling – reduces production costs, making goods cheaper and perceived as more sustainable. The result can be increased consumer demand, leading to higher resource use and waste production. For example, in the textile and clothing (TC) sector, the second most polluting sector after energy, OEC innovation can reduce the cost of producing clothes. However, this can lead to consumers buying more clothes, which does not reduce the overall environmental impact, but rather intensifies it.

The consequences for climate change are significantThe TC sector annually emits 1.7 billion tons of CO2, which represents 10 % of global emissionsIf OEC innovations lead to a feedback effect greater than 100 %, this means an increase in production and thus a corresponding increase in carbon equivalent emissions, which threatens global sustainability efforts and potentially exceeds carbon budgets.

Study applying a multi-regional dynamic computable general equilibrium (DCGE) model to the TC sector revealed 155 % back effect. This means that OEC innovations in this sector may exacerbate environmental pressures rather than alleviate them, challenging the assumption that OEC alone can lead to sustainability. Regional differences are also significant; East Asia and the Pacific, Latin America and the Caribbean, and Europe and Central Asia are the largest contributors to the global feedback effect.

Solutions and Challenges: Beyond Recycling

Complementary policies are needed to mitigate the rebound effect. One of the proposed conventional solutions is uniform Pigouvian production tax OECQuantification showed that a minimum rate is needed to limit the feedback effect to a “full return” (RE=1), where clothing consumption does not change despite the innovation. 1,25 %The model also suggests that higher profits from innovation require correspondingly higher tax rates to maintain constant returns. Other approaches include production caps, resource extraction quotas, and production volume restrictions.

However, for true sustainability, the study highlights the need for mineral concepts that explicitly focus on reducing overall production and consumptionThis approach requires cultural shifts towards minimalism, reuse and value-driven consumption. However, implementing such policies is challenging, especially in low-income countries where the TC sector is vital for economic stability and employment.

Achieving sustainability will require a combination of conventional environmental policies and mineral strategies, coupled with robust social protection (e.g. income support and skills development) to ensure fairness during transitions. Promoting international cooperation, reshaping consumption patterns and integrating non-renewable principles into trade frameworks are also key. Only through a comprehensive approach that recognises and addresses the systemic and behavioural factors influencing resource use can we achieve a future that balances environmental goals with social justice and effectively combats climate change. JRi

The study was published in the journal onlinelibrary.wiley.com