Analyzing the Economic Feasibility of Circular Economy Practices in Natural Resource Utilization
Keywords:
Circular Economy, Economic Feasibility, Natural Resources, Indonesia, Green Accounting.
Abstract
The transition from a linear, extractive economy to a circular economy is crucial for Indonesia, a resource-rich country, in maintaining long-term economic resilience. This study aims to analyze the economic feasibility of circular economy practices in natural resource utilization in Indonesia using a longitudinal approach over a decade (2014–2024). The methodology used is descriptive quantitative with Net Present Value (NPV) analysis, Internal Rate of Return (IRR), and the integration of Green Accounting to monetize environmental externalities. The results show that circular economy projects in the downstream mineral and plantation sectors reach break-even on average within 4.5-6 years, with an increase in operational efficiency of 18–25% through waste reduction and raw material substitution. The novelty of this study lies in the use of 10-year time-series data, which validates that circularity significantly reduces the company's financial risk profile to global commodity price volatility. The implications of this study emphasize the need to standardize secondary material prices and to implement more aggressive fiscal incentives to accelerate the national green economy transformation.
References
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Korhonen, J., et al. (2018). Circular economy: the concept and its limitations. Ecological Economics, 143, 37–46.
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Pearce, D. W., & Turner, R. K. (1990). Economics of Natural Resources and the Environment. Johns Hopkins University Press.
Sarja, J., et al. (2021). Circular economy business models: A case study of Finnish SMEs. Journal of Cleaner Production, 280(124354).
Sariatli, F. (2020). Linear Economy vs. Circular Economy: A Comparative and Comprehensive Study. Journal of Business and Management, 16(1).
Scarpellini, S. (2022). Social and economic accounting for the circular economy. Business Strategy and the Environment, 31(3), 984–998.
Sharma, R., et al. (2022). Adoption of circular economy practices in the era of fourth industrial revolution. Technological Forecasting and Social Change, 174(121254).
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Upadhyay, A., et al. (2021). Blockchain technology and the circular economy: A review. Business Strategy and the Environment, 30(7), 3106–3121.
Veleva, V., et al. (2023). Circular economy in developing countries: Challenges and opportunities. Circular Economy and Sustainability, 3(1).
Zhu, J., et al. (2022). Circular economy and its impact on economic growth in emerging economies. Journal of Environmental Management, 308(114620).
Alhawari, O., et al. (2021). Circular economy management model based on supply chain management and product lifestyle. Journal of Cleaner Production, 285(125371).
Bag, S., et al. (2021). Role of technological capability and agile supply chain management on circular economy practices. International Journal of Production Economics, 240(108236).
Bappenas. (2021). The Economic, Social and Environmental Benefits of a Circular Economy in Indonesia. Kementerian PPN/Bappenas.
Bocken, N. M., et al. (2016). Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 33(5), 308–320.
De Pascale, A., et al. (2021). A systematic review for measuring circular economy: The 6R framework. Journal of Cleaner Production, 280(124212).
Esmaeilian, B., et al. (2020). Blockchain for the future of sustainable supply chain management in Industry 4.0. Resources, Conservation and Recycling, 154(104573).
Fitch-Roy, O., et al. (2021). The governance of the circular economy: A comparative analysis. Environmental Politics, 30(1), 1–21.
Friant, M. C., et al. (2020). Analysing European Union circular economy policies: Words versus actions. Resources, Conservation and Recycling, 159(104832).
Geissdoerfer, M., et al. (2017). The Circular Economy – A new sustainability paradigm? Journal of Cleaner Production, 143, 757–768.
Geissdoerfer, M., et al. (2020). Circular business models: A review. Journal of Cleaner Production, 277(123281).
Ghisellini, P., et al. (2016). A review on circular economy: The expected transition to a balanced interplay of environmental and economic systems. Journal of Cleaner Production, 114, 11–32.
Hartley, K., et al. (2020). Policies for transitioning towards a circular economy. Resources, Conservation and Recycling, 160(104914).
Hazen, B. T., et al. (2021). Circular economy supply chains: From concept to practice. Int. J. of Phys. Dist. & Log. Mgmt, 51(8).
Hina, M., et al. (2022). Drivers, barriers and enablers of circular economy in developing countries. Business Strategy and the Environment, 31(1).
Hossain, M. U., et al. (2022). Financial evaluation of circular business models. Sustainable Production and Consumption, 29, 45–58.
Kemenperin. (2020). Circular Economy: Masa Depan Industri Indonesia. Kementerian Perindustrian Republik Indonesia.
Khan, S. A., et al. (2023). Regulatory frameworks and circular economy adoption in emerging markets. Journal of Environmental Management, 326(116766).
Kirchherr, J., et al. (2017). Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 127, 221–232.
Kirchherr, J., et al. (2023). The circular economy: Analysis of 114 definitions. Nature Reviews Earth & Environment, 4(1), 11–25.
Korhonen, J., et al. (2018). Circular economy: the concept and its limitations. Ecological Economics, 143, 37–46.
Kristoffersen, E., et al. (2020). The smart circular economy: A digital-enabled circular strategies framework. Resources, Conservation and Recycling, 161(104904).
Misener, J., et al. (2022). Local government and the circular economy: Policy and practice. Environmental Science & Policy, 136.
Morseletto, P. (2020). Targets for a circular economy. Journal of Cleaner Production, 243(118444).
Patwa, N., et al. (2021). The circular economy: An emerging paradigm for the retail industry. Journal of Retailing and Consumer Services, 62(102596).
Pearce, D. W., & Turner, R. K. (1990). Economics of Natural Resources and the Environment. Johns Hopkins University Press.
Sarja, J., et al. (2021). Circular economy business models: A case study of Finnish SMEs. Journal of Cleaner Production, 280(124354).
Sariatli, F. (2020). Linear Economy vs. Circular Economy: A Comparative and Comprehensive Study. Journal of Business and Management, 16(1).
Scarpellini, S. (2022). Social and economic accounting for the circular economy. Business Strategy and the Environment, 31(3), 984–998.
Sharma, R., et al. (2022). Adoption of circular economy practices in the era of fourth industrial revolution. Technological Forecasting and Social Change, 174(121254).
Stahel, W. R. (2016). The circular economy. Nature, 531(7595), 435–438.
Takcs, S., et al. (2022). Financial evaluation of circular business models: A life cycle perspective. Journal of Cleaner Production, 330(129881).
Upadhyay, A., et al. (2021). Blockchain technology and the circular economy: A review. Business Strategy and the Environment, 30(7), 3106–3121.
Veleva, V., et al. (2023). Circular economy in developing countries: Challenges and opportunities. Circular Economy and Sustainability, 3(1).
Zhu, J., et al. (2022). Circular economy and its impact on economic growth in emerging economies. Journal of Environmental Management, 308(114620).
Published
2026-05-24
How to Cite
Syamsu Rijal, Muhammad Nur Afiat, & Mustari. (2026). Analyzing the Economic Feasibility of Circular Economy Practices in Natural Resource Utilization. International Journal of Business and Quality Research, 4(02), 577-590. https://doi.org/10.63922/ijbqr.v4i02.3891
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