Local economies drive circular transformation

A perspective published in Local Economy journal introduces the concept of Locally Embedded Circular Economy Systems (LECES), a framework that places cities, regions, and communities at the centre of efforts to redesign production, consumption, and resource flows. According to the author, Cali Nuur head of INDEK at KTH, locally grounded approaches create inclusive, resilient, and economically beneficial pathways to sustainability.

A key insight of the perspective is that circular economy initiatives can support not only environmental goals but also local economic revitalisation. It highlights the value of place-based capabilities, including local knowledge, traditional practices, innovation networks, and collaboration among businesses. Building on these strengths enables communities to develop circular solutions tailored to their specific social, economic, and environmental contexts.

What local factors are key?

“There is no single recipe. Circular economy transitions depend on the characteristics of the place. Local institutions, industrial structures, skills and capabilities, trust between actors, infrastructure and access to material flows all matter. My main argument is that we should build on what already exists locally rather than assume that the same circular solutions will work everywhere.”

How can municipalities facilitate circular collaboration?

“Municipalities and regions can play an important coordinating role. They can bring firms together, create arenas for collaboration and help identify opportunities where one firm's waste or residual materials can become another firm's resource. They can also support shared infrastructure, local experimentation and procurement that favours circular solutions. In many cases, the municipality does not need to provide the solution. It can act as a facilitator and connector.”

Three important pillars

• Institutional anchoring
  Local governments, civic organisations, and communities shape the policies, regulations, and norms that support circular practices.
• Industrial integration
  Collaboration among firms enables resource sharing, by-product exchanges, and closed-loop production systems.
• Cultural and material embeddedness
  Local traditions, identities, and resource conditions influence how circular practices emerge and evolve.

What barriers are there?

Cali Nuur, Head of INDEK

​​​​​​​In perspective: Rejuvenating local economies through locally embedded circular economy systems  ​​​​​​​

“A major barrier is that circularity rarely depends on one company alone. Firms may need other companies, infrastructure, knowledge, regulations and viable markets to change at the same time. Small and medium sized firms can also lack the resources and capabilities needed to make this transition. Existing linear value chains and established ways of doing business can therefore make local circular collaboration difficult.”

The paper represents a shift in circular economy thinking, moving beyond technology-focused and one-size-fits-all approaches. Instead, it emphasises the importance of local governance, business cooperation, and cultural heritage in shaping successful transitions. Cali Nuur means that empowering local actors is essential for building circular economies that are environmentally sustainable, socially inclusive, and economically resilient.

“ I am not a geographer but I am interested in the mechanisms that facilitate or hinder transformation processes. Right now the circular economy is presented as a transformative model. It is often discussed as if the same solutions can simply be scaled up and applied everywhere. My argument is almost the opposite: successful circular transitions have to start from the place itself, its industries, capabilities, institutions and people, Cali Nuur concludes.”

Text: Rita Nõu