A new global assessment has revealed that the world is losing an estimated €25.4 trillion in economic value every year due to inefficient use of materials, wasteful production systems, and premature disposal of products. The findings highlight a massive gap in how economies manage resources and point to urgent reforms needed to build a more sustainable and resilient future.
The latest Circularity Gap Report 2026 released by Circle Economy in collaboration with Deloitte Netherlands, introduces the concept of a “Value Gap” a measure of avoidable economic losses caused by today’s largely linear economic systems.
According to the report, the scale of these losses is staggering when compared to the global Gross Domestic Product, which stands at approximately €82.6 trillion. This means that for every €3 of economic value created worldwide, about €1 is lost due to inefficiencies in how materials are produced, used, and discarded.
Researchers emphasise that these losses are not inevitable. Instead, they represent missed opportunities to recover value, reduce waste, and improve long-term economic stability through circular practices that reuse and recycle resources.
The report identifies several key areas where value is lost across the global economy. One of the largest contributors is end-of-life waste, accounting for €10 trillion annually. This reflects the loss of value from products that are discarded instead of being reused, repaired, or recycled.
Energy inefficiency is another major factor, contributing €8.7 trillion in losses. This includes wasted energy during extraction, production, and consumption processes. Mismanagement of materials during manufacturing also plays a role, with processing losses estimated at €904.2 billion.
Food loss and waste account for €650.7 billion each year, representing edible food that is never consumed due to inefficiencies in storage, transport, retail, and household use. In addition, the deterioration of infrastructure and machinery referred to as the consumption of fixed capital results in €5.2 trillion in economic losses annually.
The report further explains that these losses are driven by four major mechanisms. Poor management of materials and products contributes €6.2 trillion, while premature obsolescence where products are designed to have shorter lifespans accounts for €6.5 trillion in losses. Environmental and social costs, often referred to as “shadow costs,” add another €7.5 trillion, reflecting the hidden impacts of pollution and resource depletion. The gradual deterioration of long-term assets contributes the remaining €5.2 trillion.
When analysed across different stages of the value chain, the study shows that losses are widespread. Upstream activities such as resource extraction and production account for €5.3 trillion in losses, mainly due to energy inefficiencies. The use phase, where products are consumed, contributes €10.1 trillion due to wasted energy and asset degradation. Downstream activities, including disposal, add another €10 trillion in losses.
Experts behind the report stress that addressing this Value Gap requires a fundamental shift in how economies operate. Businesses are encouraged to adopt circular models that prioritise durability, reuse, and recycling. Financial institutions are urged to support long-term, sustainable investments, while policymakers are called upon to introduce regulations that reflect the true environmental costs of production and consumption.
The report argues that transitioning to a circular economy is not just an environmental necessity but also an economic opportunity. By reducing waste and improving resource efficiency, countries can recover lost value, strengthen supply chains, and create more resilient economic systems.
As global challenges such as climate change, resource scarcity, and supply chain disruptions intensify, the findings serve as a clear warning. Continuing with current linear models of production and consumption will lead to further economic losses, while embracing circularity could unlock trillions in value and drive sustainable growth in the years ahead.