The Adoption of the Circular Economy by Small and Medium Sized Enterprises in the Pakistan Construction Sector

Circular economy (CE) provides an alternative paradigm to the take, make, and dispose approach focusing on the use of resources for an unlimited period. The CE is being propounded by all nations, but it has been devised by the developed economies with a lack of focus on the developing economies. For CE to be successfully implemented on a global scale, there is a need to understand and incorporate the dynamics of the developing economies for CE implementation. Pakistan is among developing economies where there is a need to adopt circular economy practices. The Pakistan construction sector is important, but there is insufficient regard for sustainability practices during design and construction, creating large amounts of construction waste for disposal. The sector wants to engage in adopting CE, but they are operating in a competitive environment where the lowest cost dominates procurement policy. Large enterprises have awareness of CE, but small and medium-sized enterprises (SMEs) constitute the major portion of the construction sector where there is lack of CE awareness. The challenge is in the adoption of CE in SMEs. There is a need for incentivization if CE is to be adopted by large contractors and SMEs. Twelve factors were shortlisted using Pareto analysis for the development of a causal loop diagram (CLD). The CLD led to the development of a system dynamics (SD) model. The SD model depicts increase in the SME CE adoption, thereby unravelling complexity in the adoption of CE in the SMEs in Pakistan’s construction sector.