A circular economy (also referred to as circularity and CE) is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products for as long as possible. CE aims to tackle global challenges such as climate change, biodiversity loss, waste, and pollution by emphasizing the design-based implementation of the three base principles of the model. The three principles required for the transformation to a circular economy are: eliminating waste and pollution, circulating products and materials, and the regeneration of nature. CE is defined in contradistinction to the traditional linear economy. The idea and concepts of circular economy (CE) have been studied extensively in academia, business, and government over the past ten years. CE has been gaining popularity because it helps to minimize emissions and consumption of raw materials, open up new market prospects and principally, increase the sustainability of consumption and improve resource efficiency.

At a government level, CE is viewed as means of combating global warming as well as a facilitator of long-term growth. CE may geographically connect actors and resources to stop material loops at the regional level. In its core principle, the European Parliament defines CE as, “a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended.”

In a linear economy, natural resources are turned into products that are ultimately destined to become waste because of the way they have been designed and manufactured. This process is often summarized by "take, make, waste". By contrast, a circular economy employs reuse, sharing, repair, refurbishment, remanufacturing and recycling to create a closed-loop system, reducing the use of resource inputs and the creation of waste, pollution and carbon emissions. The circular economy aims to keep products, materials, equipment and infrastructure in use for longer, thus improving the productivity of these resources. Waste materials and energy should become input for other processes through waste valorization: either as a component for another industrial process or as regenerative resources for nature (e.g., compost). The Ellen MacArthur Foundation (EMF) defines the circular economy as an industrial economy that is restorative or regenerative by value and design.
How is a circular economy different than the USA's economy?
A circular economy focuses on the principles of eliminating waste and pollution, circulating products and materials, and the regeneration of nature. In contrast, most capitalistic economies are called "linear" in that raw materials are turned into products which are eventually discarded. While a circular economy focuses on sustainable consumption on an Earth with limited resources, linear economies like the USA's implicitly assume a never-ending supply of raw material inputs.