Economic Instruments for a Resource-efficient Circular Economy

As countries transition to circular economies, this paper examines how economic instruments can drive sustainable behaviour across the product lifecycle – from design and production to consumption and disposal.

Price-based tools like taxes, subsidies, deposit-refund systems and disposal fees shift cost incentives, while performance-based instruments such as extended producer responsibility (EPR), green public procurement (GPP) and tradeable permits set environmental targets for businesses.

Applied strategically, these tools can encourage sustainable sourcing, responsible consumption and efficient waste recovery, reducing environmental harm and maximizing material value.