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Smol, M. Economic Indicators in Water Sector for Circular Economy. Encyclopedia. Available online: (accessed on 20 June 2024).
Smol M. Economic Indicators in Water Sector for Circular Economy. Encyclopedia. Available at: Accessed June 20, 2024.
Smol, Marzena. "Economic Indicators in Water Sector for Circular Economy" Encyclopedia, (accessed June 20, 2024).
Smol, M. (2021, December 21). Economic Indicators in Water Sector for Circular Economy. In Encyclopedia.
Smol, Marzena. "Economic Indicators in Water Sector for Circular Economy." Encyclopedia. Web. 21 December, 2021.
Economic Indicators in Water Sector for Circular Economy

Protection and sustainable management of water was indicated as one of the strategic tasks in the process of transformation towards a circular economy (CE) in the European Union (EU), therefore, the water and wastewater sector plays an important role in this process.

circular economy (CE) monitoring indicators economic indicators water

1. Introduction

A circular economy (CE) is defined as a regenerative system [1] where the value of materials, products and resources is maintained as long as possible in the economy and the production of waste is minimized [2]. The CE enables more efficient use of available resources, but also promotes a more sustainable management of waste. The integrated initiatives along the entire life cycle of raw materials [3], from extraction to the circular final processing are more and more often and successfully introduced in various industries [4]. It has to be underlined that the CE refers not only to raw materials ( such as animal, vegetable or mineral), but also to water [5], which is an irreplaceable resource with life-giving property for nature, people and the economy [6].
Water resources are currently under unprecedented pressure in most countries [7]. The problem of water stress (reaching the level above 70%) occurs mainly in the regions of the world such as Northern Africa, Middle East, Western, Central and Southern Asia [8]. However, this problem also affects the European Union (EU), as the water scarcity was estimated to have affected at least 17% of the EU territory and at least 11% of the European population [9]. Moreover, next to water scarcity, an important issue in water management in Europe is water pollution, from industry and agriculture. To minimize the effects of anthropogenic use of water, both in agriculture and in industry, the European Commission (EC) announced further initiatives focused on water management in the second CE Action Plan [10]. This new Action Plan is one of the main blocks of the European Green Deal (EGD)-new agenda for sustainable growth of the EU. The main goal of the EGD is to achieve climate neutrality in Europe by 2050 [11] by turning climate and environmental challenges into new opportunities across all policy areas, and ensuring that the transition is fair and inclusive. In the coming years, the EC plans to facilitate water reuse and efficiency in both industrial processes and agriculture [10].
The protection and sustainable management of water and water-based waste (as wastewater, sewage sludge or sewage sludge ash) are indicated as one of the strategic tasks in the transformation process towards CE [12]. In the White Paper “Water and the Circular Economy” [13], common characteristics, ideas and approaches between the CE initiatives being implemented by organizations and Water System Management were identified. The three key dimensions of water use were grouped into the three themes of: (i) water as service (consumptive use, production use, process use), (ii) water as source of energy (kinetic, thermal, bio-thermal), and (iii) water as carrier (nutrients, chemicals, minerals). The main areas of the transformation of water and wastewater sector to the CE model have been also indicated by the International Water Association (IWA) [14]. The IWA also proposed three pathways to support the water utility leaders in boosting their progress towards CE: (i) water pathways (upstream investments, rainwater harvesting, water recycling for non-potable use, water reuse for agriculture/aquaculture/industry), (ii) materials pathways (resource efficiency, used water sludge and products for agriculture, bioplastics, fertilizer and other materials), and (iii) energy pathways (energy saving, energy reduction and recovery, biosolids to energy production, renewable energy). In turn, the EC assumed that in applying the CE main principles—reduce, reuse and recycle—in the water and wastewater sector will accelerate the process of transition to the CE model in the EU. However, at the moment it is not possible to determine whether the subsequent actions are bringing the intended effects, whether environmental, social or economic. This is due to the lack of a dedicated CE monitoring framework for the water and wastewater sector, which would take into account indicators and measures allowing the assessment of the level of transformation towards CE in this sector. In 2018, the EC proposed the CE monitoring framework with ten CE indicators grouped in four thematic areas: production and consumption, waste management, secondary raw materials, competitiveness and innovation [15]. However, the potential application of these indicators in water and wastewater sector is limited, and does not evaluate all sector elements. Despite the fact that the EC underlined that the monitoring such important areas as production and consumption is essential for understanding progress towards the CE, the presented data does not take into account the water usage. Moreover, apart from the environmental benefits (resulting from the protection of water resources) and social benefits (securing drinking water supplies), the economic benefits of taking measures to implement CE in the water and wastewater sector should be also demonstrated [16]. In this area, the EC indicated that water savings in all sectors in the EU could lead up to 5% of reduced total primary energy consumption, which bring economic benefits for individual players [4]. To encourage companies to implement CE measures, which could generate greater value and commercial opportunity [13], economic indicators that allow for the assessment of the level of transformation towards the CE in different sectors should be identified.

2. Research Methods

In the first step, a detailed analysis of the published research was conducted with the use of the desk research method. This state of the art analysis was based on the review approaches used in [17][18] to conduct searching and eligibility screening of available literature while retaining the procedural scope of analysis, and ensuring that that the review process is objective, repeatable and. The objective of this step of research was to review the indicators (economic, social, technological and environmental) from national and international organizations. The analyzed indicators regarded different aspects related to the CE and sustainability. Moreover, from the list of identified CE-related indicators, the specific indicators that can be used in the water and wastewater sector were also analyzed. The following data sources were analyzed: international and European official documents related to the water and wastewater sector and circular economy, published in EUR-Lex ( and the official webpage of the EC ( The analysis also included the review of the statistical documents at the international and European levels (Organization for Economic Cooperation and Development—OECD, United Nations—UN, World Bank, European Investment Bank, Eurostat, European Environment Agency—EEA) and selected reviewed articles available in the scientific databases Elsevier Scopus, Elsevier Science Direct, Google Scholar and the Multidisciplinary Digital Publishing Institute (MDPI) database [19][20]. The selection of the articles was conducted based on the identified keywords “circular economy”, “CE”, “economic” “indicator”, “index”, “measurement”, “assessment”, “water”, and “wastewater”.
In the second step of the research, identified indicators, measures and indices have been analyzed and grouped according to the CE model for the water and wastewater sector, developed under the MonGOS project [14]. The objective of this step of research was to propose a set of economic indicators that could be used in water and wastewater management. At the beginning, the economic indicators were selected from the list of indicators analyzed in the first step of the research. Social and environmental indicators have been rejected as they are not the subject of the current research. Then, these indicators that are directly or indirectly related to the measurement of economic efficiency were analyzed and grouped in the following actions of the CE model in the water and wastewater sector: reduction, reclamation (removal), reuse, recycling, recovery and rethink [14]. Finally, new economic indicators have been proposed for each action of this model. The round table discussion which included the consultation in the group of internal and external experts was used for this purpose. The research group consisted of 6 experts-three representatives of enterprises operating in the water and wastewater sector, and three specialists (scientists) dealing with economics and environmental technologies. The criterion for the selection of experts from enterprises was to have at least a master’s degree and a minimum of 10 years of experience in a managerial position in a company using water or/and dealing with wastewater treatment. In turn, the criterion for selecting scientific experts was to have a doctoral degree in the economic and environmental sciences, taking into account experience in the water and wastewater sector. The indicators were analyzed and discussed during three meetings with these experts: (1) consultation online with industry experts, (2) consultation online with scientific experts; (3) consultation online during joint meeting of the MonGOS project. The final results of this step of the research was the list of economic indicators that can be used for the evaluation of the level of the transformation toward the CE in water and wastewater sector.
The third step of the research includes the discussion of the possibility of the usage of the identified economic indicators at the microeconomic levels. The synthesis method, that is, formulating generalizations based on recognized partial theorems, was used to interpret the obtained results. Moreover, the desk research was used to compare obtained results from the perspective of previous studies and other authors.

3. Current Discussion

The transformation process towards the CE requires more rational use of resources and waste management practices in all sectors of the economy [21]. This also applies to the water and wastewater sector and its key elements, i.e., water, sewage, sewage sludge, other waste, and by-products arising from water purification and wastewater treatment [14]. In practice, the implementation of the CE assumptions in various sectors of the economy is often supported by the use of various methods of rational management of raw materials, products and resources, as well as sustainable waste management [22].
The process of transformation towards the circular economy in the water and wastewater sector [23] requires the involvement of all stakeholder groups, both experts working for innovative and pro-ecological solutions, and the society, which should reduce water waste in households. In addition, the implementation of circular economy principles in water and wastewater management is important for enterprises dependent on water (e.g., the cosmetics industry) and wastewater treatment plants, because their environmentally conscious decisions regarding the implementation of sustainable and circular solutions in the management of water and wastewater may accelerate the transformation process towards the CE. in the given country.
In the recent years, some significant progress has been made in the area of the assessment of circularity of products [24][25][26], companies [27][28][29], and regions [30][31]. The CE indicators are created to assess the progress of transformation towards CE at the micro, meso and macro levels. They are an important element of new business models for CE, which are systematically improved and introduced into the activities of enterprises, including those operating in the water and wastewater sector. The EC clearly indicates that the transition to the CE model brings economic benefits for those involved in the transformation process [10]. In order to assess the economic benefits of implementing CE solutions, specific financial data on the operation of the company and introduced changes must be reported. Therefore, the indicators developed in this research can be used by the enterprises to assess the level of transformation towards CE in the water and wastewater sector. The proposed indicators refer to the CE model for the sector developed in the MonGOS project [14], thus providing a broader perspective of the sector. In addition, they require reporting of information that is collected by the enterprise anyway, therefore its collection and processing should not pose a significant challenge to individual entities.
The added value of the presented economic indicators is the possibility of their application in various enterprises operating in the wastewater sector, i.e., supplying water to the public, WWTPs, and other companies (public and private) that use water in their production processes and create an innovations for the water and wastewater sector (e.g., Schwander [23], Veolia [32] or Outotec [33]). The proposed economic indicators could measure the CE-related activities in water and wastewater management, as minimization of water consumption, water and wastewater treatment, water reuse (for non-consumption purposes), water recycling (for consumption purposes) and the recovery of water, energy and raw materials produced in the water and wastewater treatment processes. The implementation of those activities may bring significant environmental benefits, resulting from the reduction of water consumption and the reduction of the impact of wastewater discharge on the quality of the aquatic environment. In the following years, further technological progress and new investments should be expected to reduce the consumption of water, raw materials and energy, in line with the CE model. Therefore, the proposed economic indicators can be widely applied in the sector and can complement new business models for CE.
Moreover, the usage of the proposed set of economic indicators at multiple levels would facilitate policy development, measuring economic performance, sector benchmarking, and improving business investment decisions. Such a framework should provide meaningful answers to decision-makers questions covering all relevant dimensions of the CE transition: resource consumption and material flows, economic parameters, financial flows and policy effectiveness. The presented set of economic indicators is flexible, allowing the adaptation of indicators and areas of interest to maintain effectiveness throughout the transition period. Further work on testing the developed indicators in the individual companies is undertaken as part of the MonGOS project.


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  2. European Commission. Communication from the Commission. Closing the Loop—An EU Action Plan for the Circular Economy; COM 614; European Commission: Brussels, Belgium, 2015.
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