Design It Right: Policy Instruments for a Resilient and Competitive Circular Economy

Report by Ellen MacArthur Foundation (2026) | Conversions, Regeneration, Urban Planning

Curators: Ana-Mihaela Faciu and Alexandra Faciu

Westmount, Canada

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Why we recommend it: This report by the Ellen MacArthur Foundation covers three systems identified as particularly consequential to the circular economy transition: products, agricultural systems, and cities. Across all three, embedding circular principles delivers compounding economic, environmental, and social returns. Economically, circular design reduces consumer costs through longer-lasting products, lowers input costs for farmers, cuts municipal infrastructure expenditure, and creates local employment. Environmentally, it reduces reliance on virgin resources, limits waste generation, rebuilds natural capital, improves soil and water quality, and strengthens climate resilience. Socially, it improves access to green spaces, supports rural livelihoods, and promotes more inclusive, healthier communities. This summary focuses primarily on the urban planning dimension; readers interested in product and agricultural policies should refer to the full report.

Key takeaways:

- The global economy currently consumes approximately 100 billion tones of resources annually, three quarters of which are non-renewable. Without intervention, resource extraction could increase by 150% by 2060, compounding what the report describes as a triple planetary crisis of climate change, pollution, and biodiversity loss. Against this backdrop, the Ellen MacArthur Foundation argues that governments hold a decisive lever: the power to embed circular economy principles into the design of key systems before resource choices become locked in and costly to reverse. Three systems are identified as particularly consequential: products, agricultural systems, and cities.

- Product policies set the terms under which goods are designed, produced, and placed on the market. By establishing mandatory minimum requirements for durability, repairability, recyclability, and recycled content, governments can drive better material choices from the outset, reduce reliance on virgin resources, and create a level playing field that rewards circular innovation. The EU’s Ecodesign for Sustainable Products Regulation and France’s mandatory repairability index are profiled as leading examples.

- Agricultural policies shape how land is managed and whether natural capital is built or depleted over time. Well-designed policy can shift incentives away from input-intensive production toward regenerative practices that rebuild soils, cycle nutrients locally, and strengthen resilience to climate and market shocks. India’s National Mission on Natural Farming and California’s Healthy Soils Program illustrate both the potential and the limitations of public incentive instruments in driving systemic change.

- Urban planning policies determine how materials, energy, water, and nutrients flow through cities, and how people live, move, and interact within them. With the global urban population projected to reach 7 billion by 2050, the spatial decisions embedded in zoning, infrastructure planning, and land-use strategies today will shape resource demand for generations. The report argues that cities are simultaneously highly vulnerable to resource inefficiency and uniquely positioned to implement circular solutions with lasting impact.

- Integrating circular principles into urban planning can deliver across three dimensions: structural, environmental, and social. Structurally, prioritizing brownfield redevelopment, enabling mixed-use neighbourhoods, and protecting green and blue infrastructure reduces waste generation and material demand over decades while limiting urban sprawl. Environmentally, connected and resource-efficient urban design lowers industrial pollution, improves water management, reduces heat and flood risk, and supports biodiversity. Socially and economically, circular urban environments can reduce household costs, improve air quality, expand access to green space, and generate local employment, particularly in post-industrial cities where regeneration can redirect prosperity toward long-declining areas.

- Three design principles underpin effective urban planning policy. Place-based systems thinking requires that policies reflect the specific material, demographic, and ecological conditions of each city, including the recognition and integration of informal circular systems that already operate in many urban contexts. Long-term adaptive planning demands extended policy horizons, built-in review mechanisms, and the flexibility to respond to technological change and shifting climate risks without losing circular ambition. And policies must simultaneously address existing urban fabric and new development, given that most of the buildings and infrastructure that will exist in 2050 are already standing.

- China’s Zero-Waste Cities initiative and Japan’s Eco-Town Programme are the case studies profiled. China’s program targets 100% national city coverage by 2035, deploying circular principles down to the level of individual schools, factories, and residential communities, with total investment exceeding RMB 1 trillion. Japan’s decade-long program achieved measurable results across 26 towns, reducing waste sent to final disposal by approximately 960,000 tones per year. Both examples demonstrate that coordinated, long-horizon urban circular policy can deliver real outcomes, while illustrating the persistent risks of uneven implementation and prioritizing visible targets over genuine systemic change.

- The report closes with a clear message: circular design policies deliver their full potential only when combined into coherent, mutually reinforcing packages that include fiscal reform, enforcement capacity, public investment, and cross-ministerial coordination, and when they are explicitly designed to deliver tangible benefits for people.

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