What is it about?
We often assume that recycling, reusing, and making products more efficient will automatically help the environment. In this study, we looked at the textile and clothing industry — the world’s second most polluting — to see if that’s always true. Using a global economic model, we found something surprising: when circular economy innovations (like better recycling or resource efficiency) make clothing cheaper to produce, people and businesses often respond by buying and making more. This “rebound effect” can completely cancel out, and even reverse, the environmental benefits. In our case, the rebound was so strong it actually made things worse, with a 155% increase in environmental pressure. This means the circular economy on its own is not enough to make the fashion industry sustainable. We tested adding a small tax on textile production, and found that even a modest rate of 1.25% could help reduce this rebound. But for real progress, we need wider policies that also reduce how much we produce and consume, especially in wealthier countries, while supporting fairness for low-income countries. In short, greener production methods must be combined with smarter policies to make sure they actually deliver on their environmental promise.
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Why is it important?
It’s important because it challenges the widely held belief that circular economy solutions will automatically make industries sustainable. If lower costs from recycling and efficiency lead to more production and consumption, the environmental damage can actually increase, as our study shows in the fashion sector. Understanding this helps policymakers, businesses, and consumers avoid unintended consequences, and design complementary measures, like targeted taxes or reduced consumption strategies, that ensure sustainability efforts truly work
Perspectives
This research matters to me because I have spent years studying the circular economy and advocating for it as a pathway to sustainability. But I’ve also seen, both in my academic work and in practice, that well-intentioned innovations can sometimes backfire if we ignore the bigger economic and social systems they operate in. By quantifying how the rebound effect can completely erase, and even reverse, the environmental benefits in the fashion sector, I want to spark an honest conversation: the circular economy alone is not a silver bullet. We need policies and cultural shifts that also tackle overproduction and overconsumption, so our sustainability efforts genuinely reduce environmental harm rather than just shifting it elsewhere.
Dr Krish Saha
Birmingham City University
Read the Original
This page is a summary of: How Circular Economy Innovation Can Backfire on the Environment: Quantifying the Rebound Effect of the Textiles and Clothing Sector, Business Strategy and the Environment, August 2025, Wiley,
DOI: 10.1002/bse.70135.
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