Modeling the circular economy in food production: insights from a dynamic stochastic general equilibrium analysis

This study explores the impact of circular economy practices on the sustainability and productivity of the food sector through a Dynamic Stochastic General Equilibrium (DSGE) model. The model includes specific blocks for recycling, waste management, and the adoption of circular technologies, providing a comprehensive analysis of their effects on key economic and environmental indicators.Simulation scenarios examine the influence of recycling rates, food waste taxes, circular technology adoption, shifts in consumer demand for sustainable products, and public policies supporting the circular economy. Results show that higher recycling rates, driven by subsidies, significantly enhance food production, increase household satisfaction, and reduce production costs. Elevated food waste taxes effectively reduce waste generation and improve waste valorization, contributing to overall well-being. The adoption of circular technologies reduces production costs and initially boosts productivity, though long-term gains diminish, indicating the need for ongoing innovation. Changes in consumer demand for sustainable products positively affect food production and the integration of recycled materials, highlighting the critical role of consumer preferences in advancing sustainable practices.Finally, public policies, particularly recycling subsidies, are essential in promoting circular economy practices, reducing costs, and enhancing productivity in the food sector. The findings underscore the importance of robust public policies, continuous innovation, and consumer engagement in driving the transition to a circular economy. This research demonstrates the significant potential of circular economy practices to transform the food sector toward greater sustainability and efficiency, offering valuable insights for policymakers and industry stakeholders.