Building back better circular economy policies in South Asia

While the first lockdown imposed in 2020 across South Asia temporarily delayed the spread of the virus, it produced economic devastation. One year on, the World Bank has reported on how the first lockdown increased extreme and mid-level poverty, particularly among the region’s vast informal sector, where more than 80 per cent of all of South Asia's workers engage in informal activities, and over 90 per cent of the region's businesses are believed to be informal.

High population density, combined with poorly developed public health and sanitation systems, has impaired South Asia’s capacity to reduce its transmission rates of the virus so far. Across the region, informal workers carry out waste recovery, recycling and sanitation work under extremely challenging circumstances and the recent surge in infections in India has disproven claims that poor hygiene conditions are beneficial for developing immunity against the virus.

But, while the pandemic has exacerbated existing vulnerabilities in informal work, it also holds lessons on the importance of developing robust infrastructures for health, clean water, sanitation and well-being.

Here, a just circular economy transition, that combines livelihood protection, social security with infrastructure development, could be vital for South Asian economies to build back better from the pandemic – and also necessary to prevent future health-environment crises affecting the region too.

But, in order to make this happen, it will require sustained political commitment and the right set of policies to make the needed investments in public health services.

We conducted analysis of circular economy policies of the region which suggests that, while more countries are adopting policies that promote waste recovery and recycling, and some even emphasize inclusion of the informal sector, current policies over-emphasize market-based mechanisms and corporate responsibility in place of public investment. But, in the absence of public investment and specific mechanisms for participation, informal waste economies will remain fragile.

For example, the plastic waste management rules issued in India in 2016, and amended in 2018, fail to provide guidance on the implementation of Extended Producer Responsibility rules. In the absence of guidelines or a framework, informal waste pickers remain in a position where they have to sort through mixed garbage to extract recyclable materials, exposing them to toxicity and health risks.

In addition, a draft EPR framework has been roundly criticized by activists for creating loopholes for plastic producers and encouraging the entry of new players who can displace the informal sector. One of these includes a controversial idea to set up a system of plastic credits but, as research into carbon markets shows, there is a lot of scope for leakage in credit-based systems.

Fundamentally, these policies assume that market-based mechanisms and private sector participation alone can reduce waste burdens and enhance resource recovery. But, the informal sector currently operates under these market rules, and the only reason waste recovery is cost-effective is because of its labour-intensive and self-exploitative nature. Improving incomes and quality of livelihoods, therefore, requires policies to see waste management as a foundation stone in infrastructure.

In the current situation, informal workers are heavily exposed to COVID-19 contaminated waste, such as single-use masks, gloves and medical waste, and in many cases they even lack access to the most basic protective equipment when handling medical waste that is, not only necessary to keep workers safe, but also prevent spreading the coronavirus.

Furthermore, our mapping reveals that most policies regarding recycling focus on post-consumer urban waste but not resource conservation and other upstream policies that promote cross-sectoral coordination of industry sectors reprocessing secondary resources.

Nevertheless, positive steps towards industrial circular economy policies can be seen in Bangladesh’s Ship Recycling Act, updated in 2018, which stipulates that ships must be recycled only in specific zones and that employers must provide workers with life insurances and other social protection.

Indeed, the lack of social security protection renders informal workers vulnerable to market-fluctuations while, many people engaged in waste work, come from vulnerable social groups within their national contexts, often oppressed along lines of race, ethnicity, caste, religion and gender.

In cities across India, and more widely across South Asia, grassroots recyclers have built functioning value chains for recyclables, generating income for themselves, materials for other markets and diverting waste from landfills.

Beyond the waste sector, circular economy practices such as repair services, refurbishment, composting and regenerative agricultural systems are ubiquitous in South Asia too. Indeed, millions of South Asians make their living by extracting value through closing material loops or extending the lifetimes of products. These circular actors, working mostly in the informal economy, include community micro-enterprises and small businesses that aggregate, dismantle, repair and refurbish everything from discarded electronics to old jeans.

Success stories where environmental practices and social inclusivity exist include Khaloom, a Indian social enterprise operating in the country’s weaving industry, which produces sustainable fabric made from recycled textiles using traditional Indian hand-spinning and hand-weaving techniques and paying weavers two to three times India’s minimum wage.

However, limited access to finance is a main barrier that prevents scaling most businesses like Khaloom up. Furthermore, there are no policies on sustainable agriculture or the valorization of biowaste and, as the ongoing pandemic continues to disrupt global food supply chains and impact smallholder farmers, there is a greater need for localized food supply chains that could be achieved by circular and regenerative agricultural practices.

What is urgently needed is a comprehensive agenda addressing circular business models, inclusive waste management infrastructure clean water and sanitation as well as social protection in order to guarantee public health and community resilience and wellbeing. But this will require strong national commitments and financing to helping the informal sector transition to sustainable business development models.

Shifting to a just circular economy that prioritizes social goals could provide the framework needed to enable South Asian countries to leverage the strengths of their large workforces, vernacular knowledge and existing resource conservation practices to tackle poverty alleviation and human wellbeing once and for all.