ECONOMICS OF SMART CITIES

Circular growth for human development

- Naman Mishra and Dr. Swati Agrawal

Imagine a city where trash isn’t trash, energy isn’t wasted, and economic prosperity isn’t achieved at the cost of human well-being.

A city where every rupee invested in infrastructure yields returns not just in roads and buildings, but in health, jobs, equality, and dignity. Smart city projects promise exactly that. But all too often, their economic potential remains half-realized because they continue to rely on linear models of “take, make, waste.” Without integrating a circular economy, smart growth becomes extractive, unequal, and environmentally costly. India stands at a crossroads: its Smart Cities Mission, with hundreds of projects and Rs 150,000+ crore already committed, can become a laboratory of circular growth that redefines human development.

Green growth

Considerable savings are envisaged through a smart city founded on circular economy principles. The opportunity on a global scale is gigantic: The World Economic Forum estimates that by 2030, circular business models could add USD 4.5 trillion to the global economic output by cutting waste, better using resources, and introducing new markets.

Take Amsterdamis circular transition for example: it has managed an ~18% decline in the use of nonrenewable materials from 2016 to 2022; recycling rates are estimated at 60%, with a near-term target of 65% by 2025 (PIB, 2025; WEF 2025). Procurement is turning circular, with an increasing requirement that any new public project must minimize use of virgin materials and eventually aim for 100% circular procurement by 2030.

These interventions translate directly into genuine savings in levels of raw material, energy, carbon emissions, and maintenance at a municipal level. For example, Amsterdam's public spaces budget of ~85 million Euro per annum involves substantial use of materials; shifting to circular maintenance and reuse has already begun cutting costs and emissions.