Circular economy and the opportunity cost of not 'closing the loop' of water industry: the case of Jordan

The water industry is moving from an end-of-pipe approach consistent with the linear economic model to a circular approach consistent with the circular economy model. The economic dimension of wastewater circularity has not received the attention that other dimensions have; this study attempts to fill this research gap by studying the economic dimension, in order to estimate the net opportunity cost of a non-circular water industry The financial and environmental benefits of treating wastewater, along with the associated operating and capital costs, are calculated to arrive at the opportunity cost and the 'closing the loop charge'. The analytical results reveal an estimated net opportunity cost of 643 million Jordanian dinar (JOD) (907 million US$) if the option not to go circular is chosen, with JOD 212 million (US$ 299 million) of this amount currently squandered. Furthermore, this indicates an average 'closing the loop charge' of JOD0.70/m3 ($1.0/m3), which represents the average shadow price of the associated environmental externalities. Having thus shown a strong economic case for the circular model in the water industry, movements in all economic sectors to adhere to this model appear to be highly desirable.