Blockchain for the circular economy, implications for public governance

• Date: 07 August 2024
• Pages: 30-52
• DOI: https://doi.org/10.1108/IJPSM-12-2023-0365
• Published date: 07 August 2024
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management
• Author: Eduardo Acosta Llano,Pia Hurmelinna-Laukkanen,Lauri Haapanen

Blockchain for the circular

economy, implications for

public governance

Eduardo Acosta Llano

University of Oulu, Oulu, Finland, and

Pia Hurmelinna-Laukkanen and Lauri Haapanen

Department of Marketing, Management and International Business,

Oulu Business School, University of Oulu, Oulu, Finland

Abstract

Purpose –This study examines the intricate interplay of blockchain, public governance and the circular

economy(CE), aiming to assess the potential of blockchain technology (BT) in addressing challenges associated

with the adoption of CE principles, particularly in the public sector.

Design/methodology/approach–Focused on public governance, the research employs in-depth interviews

with Finnish policymakers actively engaged in CE initiatives. Qualitative analysis is applied to derive insights

and patterns from the gathered data, providing a nuanced understanding of blockchain’s transformative role.

Findings –The study uncovers key dimensions for leveraging blockchain in the CE within the public sector.

Notable findings include the significance of contextual transparency, the use of incentivization as a regulatory

tool, the role of standardization through strategic autonomy and the importance of public engagement and

participation.

Originality/value –This research contributes a unique framework that illuminates the transformative

potential of blockchain within the CE, emphasizing its relevance to public governance. The identified

dimensions offer practical insights for policymakers and practitioners seeking to navigate the complexities of

circular transitions in the public sector.

Keywords Blockchain technology, Governance, Circular economy, Decision-makers, Innovation

Paper type Research paper

1. Introduction

Fifteen years have passed since a person –or persons –under the pseudonym of Satoshi

Nakamoto published blockchain technology (BT) in 2008. In its inception, this technology

sought to reshape the financial landscape with the Bitcoin cryptocurrency (Nakamoto, 2008).

Anchored in its decentralized architecture, the technology aimed to supplant the conventional

necessity of centralized entities for transaction verification; thereby mitigating

vulnerabilities, tampering risks and the entrenchment of corruption within transactions

(Swan, 2015). The innovative paradigm of an open, immutable, universally shared ledger with

peer-to-peer validation sought to bring transparency to what its creator(s) perceived as a

complex and ethically compromised financial sector (Bratspies, 2018).

Since these developments, blockchain’s democratic grounding has grown and spread

across multiple sectors, embracing areas as diverse as supply chain management, healthcare,

marketing, logistics and the sphere of art (Abou Jaoude and Saade, 2019). The expanding

IJPSM

38,1

30

© Eduardo Acosta Llano, Pia Hurmelinna-Laukkanen and Lauri Haapanen. Published by Emerald

Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0)

licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both

commercial and non-commercial purposes), subject to full attribution to the original publication and

authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/

legalcode

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0951-3558.htm

Received 15 December 2023

Revised 22 February 2024

23 April 2024

Accepted 20 June 2024

International Journal of Public

Sector Management

Vol. 38 No. 1, 2025

pp. 30-52

Emerald Publishing Limited

0951-3558

DOI 10.1108/IJPSM-12-2023-0365

usage highlights the technology’s flexible application and significant ability to transcend

sectoral barriers (Chen et al., 2018). Within the public sector, blockchain’s benefits have begun

to be explored in public processes such as identity management (Sung and Park, 2021),

reduction of public costs (Rodr

ıguez Bol



ıvar and Scholl, 2019), e-voting (Kshetri and Voas,

2018) and bureaucracy optimization (Allessie et al., 2019). Thanks to its capacity to speed up

official activities, eliminate duplications and improve registration validity, blockchain has the

potential to remove public inefficiencies and pave the way for higher operational precision

(Warkentin and Orgeron, 2020).

Despite the acknowledged potential, BT is still developing and its implementation is so far

limited (Sung and Park, 2021). Considering sustainability and public governance, the

complexities and opportunities of blockchain hinder harnessing its capacity to address

various challenges concerning public budgeting and accountability (Berryhill et al., 2018),

such as having a transparent record of public budgeting. This need is reinforced by the

current global political context marked by volatile uncertainty and skepticism (Ahir et al.,

2022), as well as the importance of a long-term and strong commitment to attain

sustainability goals in policy formulation (Colglazier, 2015).

Considering that sustainability is one of the most pressing concerns confronting countries

today, it is not surprising that the need for responsible natural resource management has

propelled models like the circular economy (CE) to the forefront of policy discussion

(McDowall et al., 2017;Friant et al., 2021). The central goals of the CE revolve around waste

elimination and extending product lifecycles. Achieving these goals requires collaborative

efforts among multiple stakeholders, focusing on shared actions involving recycling, reuse

and reduction (Geissdoerfer et al., 2017).

As the circular model is considered to offer various advantages to society, the

environment and the economy, governments are progressively adopting its principles. This

adoption holds the promise of promoting sustainable growth, creating new employment

opportunities, and attracting investments and income, all in alignment with long-term

environmental and societal objectives (MacArthur, 2013). In 2050, improved resource

efficiency could add $2tn to the global economy annually, (Ekins et al., 2017). In the CE, this

could be realized by increasing revenue through new circular activities and maximizing

functionality from existing resources.

BT’s core characteristics—transparency, traceability and immutability—naturally align

with the foundational principles of the CE: collaboration, cooperation and shared objectives,

all of which promote optimizing the use of scarce resources. This alignment has piqued the

interest of scholars and practitioners in the private sector seeking to explicitly integrate

blockchain and circularity. This interest has grown, particularly with the development of

more energy-efficient blockchain types that consume significantly less energy compared to

fully public blockchains like Bitcoin, which made meeting the environmental goals

problematic.

Exploration of the integration of BT is advancing rapidly also within the public sector.

Governments are actively engaged in over two hundred blockchain initiatives, with at least

forty-six countries globally either implementing or planning to implement blockchain-based

solutions for governance. These applications span various areas, including land registry,

knowledge sharing, cross-border inter-bank payments, tax collection and public hackathons

(Berryhill et al., 2018).

The intersection of the three domains –BT, the CE and public governance –presents an

intriguing, yet underexplored area of research. Prior studies have linked blockchain with the

CE, shedding light on aspects like sustainability, social responsibility and ethical

considerations (Upadhyay et al., 2021). These studies have also contributed to bridging the

gap between research and practice more broadly (B€

ockel et al., 2021) and have conducted

analyses of case studies involving blockchain applications in various industries, including

International

Journal of Public

Sector

Management

31