Draft circular economy strategy: strategic environmental assessment

4 Environmental Benefits and related PPS

4.1 Environmental Baseline

Schedule 3 of the 2005 Act requires information to be provided on:

• The relevant aspects of the current state of the environment and the likely evolution thereof without implementation of the plan or programme.
• The environmental characteristics of areas likely to be significantly affected.
• Any existing environmental problems which are relevant to the plan or programme.

The following sections set out baseline information against each of the relevant environmental topics and how they are currently affected by circular economy practices.

4.2 Biodiversity

Scotland’s biodiversity is of global significance, encompassing a wide range of terrestrial, freshwater, and marine ecosystems that support thousands of species^[9]. This natural wealth is not only central to Scotland’s ecological identity but also underpins essential ecosystem services including pollination, soil formation, water purification, and carbon sequestration^[10]. However, biodiversity in Scotland is under sustained pressure from human activity, land use change, climate change, pollution, and invasive non-native species^[11].

The circular economy transition has important implications for biodiversity. Many of the most significant pressures on Scotland’s biodiversity stem from the extraction, production, and disposal of goods and materials. Globally, the extraction and processing of natural resources account for over 90% of biodiversity loss^[12]. In Scotland, approximately 80% of our carbon footprint is embedded in the products and services we consume^[13]. By reducing demand for virgin materials and promoting sustainable resource use, the circular economy can significantly reduce pressures on habitats and ecosystems.

Scotland’s natural environment includes over 240 Special Areas of Conservation (SACs), 160 Special Protection Areas (SPAs), more than 1,400 Sites of Special Scientific Interest (SSSIs)^[14], and a network of Marine Protected Areas (MPAs)^[15]. These designated sites cover a broad range of habitats, from upland moors and peatlands to freshwater lochs and coastal waters. The Scottish Biodiversity List identifies over 2,100 priority species and habitats considered of principal importance for conservation^[16].

Despite these protections, biodiversity continues to decline. As of May 2024, only 75.6% of designated features on protected nature sites were reported as being in favourable condition^[17]. Trends in bird, mammal, and invertebrate populations show continued long-term declines^[18]. Waste management practices, product design, and material flows all contribute to this trend^[19].

Circular economy interventions, particularly those targeting material efficiency, reuse, and reduced consumption, can improve biodiversity outcomes^[20]. For example, reducing demand for construction aggregates or fossil fuel-based plastics can limit habitat destruction linked to quarrying and petrochemical development^[21]. Diverting materials from landfill through reuse and recycling reduces pressures on land and water environments.

The circular economy must also align with wider land use and biodiversity strategies to ensure that interventions do not displace impacts to other regions or ecosystems, such as through increased demand for bio-based materials. In summary, while the Strategy is not a biodiversity policy, it offers significant potential to support nature recovery by addressing the upstream causes of ecological degradation.

4.3 Human Health

Human health in Scotland is influenced by a complex interplay of environmental, social, and economic factors. Environmental quality, including clean air and water, healthy housing, and access to green space, plays a significant role in shaping public health outcomes, alongside socioeconomic conditions and individual behaviours^[22].

Health inequalities remain a persistent challenge, with significant disparities in life expectancy and disease burden across different regions and demographic groups^[23]. Scotland’s Public Health Priorities highlight the need for preventative approaches and systemic change to reduce these inequalities, improve wellbeing, and promote healthier environments.

Human health further afield is also impacted by Scotland’s activities, for example, in the countries to which we export our waste. The main health issue from waste exports is exposure to hazardous substances such as those present in electronic waste. This is a particular concern if waste is exported to places with minimal safety regulations, where employees and children are put at risk from exposure to these substances^[24].

The circular economy supports these priorities by reducing environmental harm and creating social and economic opportunities. Circular practices can reduce exposure to pollution and waste-related hazards by improving material management, reducing landfilling, and minimising emissions from incineration and transport^[25],[26].

Communities located near landfill sites or waste treatment facilities can experience negative health outcomes due to air and water pollution, odour, and noise. The transition to a circular economy, emphasising reuse, repair, and localised material loops, can reduce reliance on these facilities and thereby lessen associated impacts^[27].

The circular economy can also promote active lifestyles and social cohesion. Community-based repair cafés, tool libraries, and reuse hubs foster social interaction, skills development, and empowerment. These initiatives contribute to mental wellbeing, reduce social isolation, and create accessible entry points for employment and volunteering^[28].

Poor housing conditions, including damp, inefficient heating systems, and high energy bills, have direct consequences for physical and mental health^[29]. Circular economy measures that improve the fabric of buildings via retrofitting, extend the lifespan of fixtures, and reduce material waste in housing upgrades can help deliver healthier homes^[30].

Health benefits may also arise from changes in the food system. Reducing food waste, shortening supply chains, and promoting local production can enhance food security, reduce diet-related health risks, and create opportunities for sustainable local enterprise. However, these benefits are dependent on equitable access and participation^[31].

The just transition principle is particularly relevant to health. Ensuring that new green jobs and skills are accessible to disadvantaged groups and that circular infrastructure is equitably distributed will be key to realising positive health outcomes. Conversely, failure to manage the transition inclusively could exacerbate existing inequalities^[32].

In summary, the circular economy can support improved health outcomes by reducing pollution, creating healthier environments, improving housing quality, and supporting community wellbeing. Realising these benefits will depend on integrated policy design, community engagement, and a strong focus on equity and inclusion.

4.4 Soil

Soils are a fundamental natural resource that provide multiple ecosystem services, including food production, water regulation, carbon storage, and support for biodiversity. Scotland’s soils are diverse, ranging from high carbon peatlands and brown earths to mineral-rich alluvial soils. They play a crucial role in regulating greenhouse gas emissions, filtering pollutants, and underpinning agricultural productivity^[33].

However, soils in Scotland face a number of pressures, including erosion, compaction, sealing, contamination, and loss of organic matter^[34]. Urban development, intensive agriculture, forestry practices, and extractive industries can all lead to degradation. Soil sealing, covering land with impermeable materials such as asphalt or concrete, is a particular concern in expanding urban and peri-urban areas.

Peatlands are one of Scotland’s most important soil-related assets. They cover more than 20% of the land area and store over 1.6 billion tonnes of carbon^[35]. However, it is estimated that over 80% of peatlands are degraded due to drainage, extraction, or inappropriate land use^[36]. Peatland restoration is a national priority due to its significance for both climate and biodiversity policy^[37].

The circular economy can help reduce soil degradation by minimising the need for greenfield development through prioritisation of brownfield and existing built assets. Retrofitting buildings, repurposing infrastructure, and intensifying use of existing land reduces the pressure to convert agricultural or semi-natural land to development.

Reducing material extraction, particularly for aggregates, also reduces pressure on soils associated with quarrying. Substituting virgin materials with recycled or reused construction and demolition waste can reduce land take and limit soil disturbance^[38]. In agriculture, circular practices such as organic waste composting, regenerative farming, and localised nutrient cycles can improve soil health and structure.

Bio-based circular products (such as biodegradable packaging or biofuels) may have indirect effects on soil through increased land use for biomass production. It is important that such interventions are assessed to avoid unintended consequences such as soil depletion, deforestation, or monocultures that reduce soil biodiversity^[39].

The reuse of dredged material, industrial by-products, and compost in land reclamation or soil improvement also raises potential benefits and risks for soils^[40]. Regulatory oversight is needed to ensure that such reuse maintains or improves soil function without introducing contaminants.

In summary, soils are a vital and vulnerable environmental asset. The circular economy can contribute positively by reducing land take, improving organic matter recycling, and reducing harmful extraction practices. Integration with land use planning and sustainable agriculture policies will be critical to delivering long-term soil health outcomes.

4.5 Water

Scotland is internationally recognised for the quantity and quality of its freshwater and marine water resources. These include rivers, lochs, estuaries, wetlands, groundwater bodies, and coastal waters. The water environment supports biodiversity, provides drinking water, underpins agriculture and industry, and contributes to recreation, cultural identity, and spiritual value^[41].

Water quality in Scotland has generally improved over recent decades, supported by investment in treatment infrastructure and tighter regulation. As of 2023, 66% of Scotland’s water bodies were in good or better condition under the Water Framework Directive classification^[42]. However, pressures remain from diffuse agricultural pollution, urban development, waste discharges, and climate change.

The circular economy has direct implications for water quality and quantity. Reducing consumption of water-intensive products and raw materials can help reduce stress on aquatic ecosystems, while preventing pollution at source can reduce the burden on treatment systems^[43]. Wastewater from industrial processes, particularly in textiles, chemicals, and food manufacturing, can contain hazardous pollutants if not adequately managed^[44].

Water abstraction for energy production, agriculture, and industry must be carefully balanced against ecological needs. By encouraging closed-loop systems and the reuse of greywater, the circular economy supports more sustainable water use patterns. Infrastructure improvements to reduce leakage and losses in water supply networks also align with circular efficiency principles^[45]. Materials and products that contribute to microplastic pollution pose particular risks to water quality. Circular design strategies that reduce synthetic fibres or increase filtration in laundry appliances can help address these emerging challenges^[46]. Similarly, policies aimed at phasing out harmful chemicals from products (e.g. PFAS) support both circularity and water protection.

Flood risk is another area of interaction. Land use changes that promote impermeable surfaces increase runoff, while loss of wetlands and vegetation reduces natural water retention^[47]. Circular approaches that reuse brownfield land, reduce construction sprawl, and integrate green infrastructure can help mitigate these risks. Sustainable Drainage Systems (SuDS), green roofs, and rain gardens are examples of circular-friendly infrastructure that benefit the water environment^[48].

The marine environment is particularly vulnerable to litter and contamination from poorly managed product lifecycles. Fishing gear, packaging, and tyres are key contributors to marine litter^[49]. Extended producer responsibility and improved end-of-life management of these products can reduce marine pollution and protect aquatic ecosystems.

In summary, Scotland’s water resources are essential to both people and nature. The Strategy can support better water outcomes by preventing pollution, reducing extraction, and integrating water-smart design into products and infrastructure. Close coordination with water management, agricultural, and planning policies will be necessary to realise these benefits.

4.6 Air

Air quality is a critical determinant of environmental and human health. While Scotland generally enjoys better air quality than many other parts of the UK and Europe, there are persistent issues in urban areas, particularly with nitrogen dioxide (NO₂) and fine particulate matter (PM2.5). These pollutants are associated with road traffic, domestic combustion, and some industrial activities^[50].

Poor air quality disproportionately affects vulnerable populations, including children, older people, and those with respiratory or cardiovascular conditions. Long-term exposure to air pollution is linked to a wide range of health problems, including asthma, heart disease, stroke, and cognitive decline^[51].

Circular economy interventions can support improved air quality in several ways. Reducing reliance on virgin material extraction and long-distance transport can lower emissions of pollutants associated with combustion engines and industrial processes. Encouraging reuse and local repair reduces the need for frequent replacement and associated transport emissions^[52],[53].

One of the most direct links between circularity and air quality is waste management. Landfilling of biodegradable materials produces methane, while energy-from-waste facilities can emit NOx and particulates if not properly controlled^[54]. A reduction in overall waste generation, combined with greater emphasis on recycling and material recovery, can help avoid these emissions at source.

Product design also influences air quality outcomes. For example, low-emission materials in construction and furniture reduce the release of volatile organic compounds (VOCs) indoors. Likewise, restricting harmful additives in manufacturing helps minimise emissions during use and disposal^[55].

There are also important connections with transport. The shift to circular models of consumption, such as product-as-a-service, leasing, and sharing, can reduce the volume of goods transported and encourage more localised supply chains. These changes can contribute to lower vehicle emissions and congestion^[56].

Wood burning for heat is a notable example where circular economy goals (e.g. using waste biomass) must be balanced with air quality concerns. Policies must ensure that biomass is used efficiently and with proper emissions controls to avoid negative health impacts^[57].

In summary, circular economy policies can contribute to cleaner air by reducing material throughput, promoting cleaner production, supporting active and shared transport, and encouraging sustainable waste management. These actions also support climate goals and reduce health inequalities linked to pollution exposure.

4.7 Climatic Factors

Climate change is one of the most significant environmental challenges facing Scotland. Rising temperatures, changing rainfall patterns, and more frequent extreme weather events are already affecting communities, infrastructure, ecosystems, and economic sectors across the country^[58]. Scotland’s climate commitments are set out in the Climate Change (Scotland) Act 2009^[59], which includes a legally binding target to reach net zero emissions by 2045.

The transition to a circular economy is a core component of climate mitigation. Globally, over 50% of greenhouse gas emissions are linked to material extraction, processing, and production^[60]. Reducing resource consumption, increasing product longevity, and maximising reuse and recycling all contribute to lowering carbon emissions across supply chains.

Scotland’s carbon footprint is around four times larger than its territorial emissions, reflecting the embedded emissions in imported goods and services^[61]. The Strategy can help address this by shifting towards more localised, circular production systems that reduce reliance on high-carbon imports^[62].

Circular interventions are particularly important in high-emission sectors such as construction, food, textiles, and plastics. Improving material efficiency in buildings, reducing food waste, and promoting reuse of textiles can significantly reduce emissions. Product stewardship policies and extended producer responsibility can incentivise design changes that support decarbonisation.

There are also important adaptation benefits. Circular infrastructure, such as modular buildings, decentralised energy systems, and nature-based solutions, can improve climate resilience and reduce vulnerability to disruption^[63],[64]. Reuse of materials after extreme weather events can reduce demand for virgin resources during recovery.

Peatland restoration, sustainable forestry, and soil carbon management are additional areas where circular and climate objectives align. These land-based carbon sinks are critical to achieving net zero and benefit from circular land use practices that prioritise regeneration and longevity^[65].

In summary, the circular economy supports Scotland’s climate ambitions by reducing emissions, managing resources efficiently, and building resilience. Coordinated action across sectors, supported by robust data and life cycle analysis, will be needed to maximise the climate benefits of circular policies.

4.8 Material Assets

Material assets include Scotland’s physical infrastructure, natural resources, and capital goods such as buildings, energy networks, transport systems, and equipment. These assets underpin economic activity and social wellbeing but also represent significant environmental pressures in terms of material extraction, energy use, land take, and waste generation.

The construction sector is a major consumer of material assets, accounting for around 50% of all extracted materials and at least 50% of Scotland’s waste^[66]. Buildings and infrastructure are long-lived assets with embedded environmental impacts throughout their lifecycle, from raw material sourcing to demolition. Improving the efficiency and lifespan of built assets is central to a circular approach.

The circular economy promotes better stewardship of material assets through design for durability, modularity, and disassembly. Retrofitting existing buildings rather than demolishing and rebuilding reduces both waste and embodied carbon. Similarly, reusing components from decommissioned infrastructure reduces demand for virgin materials.

Scotland’s energy infrastructure is also undergoing transformation. The shift to renewables, electrification, and decentralised energy systems presents opportunities for circular design, including remanufacturing of wind turbine components, reuse of cables and transformers, and material recovery from decommissioned assets. Planning for end-of-life reuse at the design stage will be critical.

Transport infrastructure, including roads, rail, ports, and depots, also requires circular consideration. Reuse of materials from resurfacing, maintenance of rolling stock, and design for modular upgrades can extend asset life and reduce material throughput. Electrification of transport systems also brings new challenges for battery lifecycle management and rare earth material use.

Natural resources, including forests, fisheries, and mineral reserves, are also key material assets. Circular practices such as sustainable forestry certification, fish stock management, and resource-efficient mining can support long-term asset value while reducing environmental degradation.

Public procurement plays a major role in determining the life cycle of material assets. Integrating circular economy criteria into capital investment decisions, such as those related to schools, hospitals, and housing, can mainstream circular design and management principles. Maintenance, refurbishment, and whole-life costing approaches are key tools for this.

In summary, the Strategy can significantly influence the way material assets are created, maintained, and decommissioned. Prioritising reuse, efficient design, and value retention over time will deliver environmental, social, and economic benefits.

4.9 Cultural Heritage and the Historic Environment

Scotland’s cultural heritage and historic environment are vital elements of its identity, economy, and sense of place. They encompass built heritage such as listed buildings, monuments, and historic townscapes, as well as intangible heritage like traditions, languages, and cultural practices. The historic environment also includes landscapes shaped by centuries of human activity.

The historic environment is a finite resource. Once lost, heritage assets cannot be replaced with their fully original authenticity. Physical degradation, climate change, development pressures, and neglect pose ongoing threats. Conservation efforts are supported through designations such as Listed Buildings, Conservation Areas, Scheduled Monuments and World Heritage Sites.

The circular economy aligns closely with heritage conservation. Repair, maintenance, and adaptive reuse of existing buildings are central to both circular and heritage objectives. Retaining historic fabric avoids demolition waste, reduces demand for new materials, and preserves cultural value. Building conservation is often inherently circular, relying on local trades, traditional materials, and longevity.

Planning policy in Scotland supports the reuse of historic buildings, provided interventions are sensitive to character and context. Circular economy initiatives can reinforce this by creating markets for reclaimed materials, supporting specialist skills, and incentivising low-impact retrofitting.

Some circular interventions can have unintended consequences if not managed carefully. For example, replacement of traditional windows with energy-efficient alternatives can affect historic character if poorly designed. It is important that circular retrofit approaches are tailored to heritage contexts and informed by conservation principles.

Intangible heritage also benefits from circular thinking. Repair cultures, craft skills, and local knowledge are integral to both cultural continuity and circular practices. Supporting intergenerational learning, community-led restoration projects, and traditional material use fosters cultural sustainability alongside material efficiency.

In summary, Scotland’s cultural heritage and historic environment are both supported by and contributors to the circular economy. With appropriate design, policy integration, and community engagement, circular strategies can enhance conservation outcomes and protect Scotland’s unique sense of place.

4.10 Landscape and Visual Impacts

Scotland’s landscapes are a defining feature of its natural and cultural identity. From rugged coasts and mountainous highlands to lowland farmland and urban greenspace, landscapes offer ecological, aesthetic, recreational, and economic value. They contribute to tourism, wellbeing, and quality of life, and are protected through mechanisms such as National Scenic Areas and Regional Parks.

Landscapes are dynamic and shaped by human intervention. The visual impact of development, land use change, and infrastructure can affect landscape character and public perceptions of place. The cumulative effect of dispersed development, industrial activity, and infrastructure expansion has been an increasing concern in many parts of Scotland.

The circular economy offers opportunities to reduce landscape impacts by minimising the need for new development and material extraction. Repurposing existing buildings, infrastructure, and brownfield land reduces land take and visual disruption. Compact, adaptable design approaches help reduce the spatial footprint of new developments.

Extractive industries, including mining, quarrying, and peat cutting, can have significant landscape effects. Circular strategies that reduce demand for virgin materials, such as use of secondary aggregates or recycled construction materials, can reduce the need for new extraction sites.

Energy infrastructure is another area of concern. While renewable energy supports climate goals, the siting of wind farms, solar arrays, and associated infrastructure must consider landscape sensitivity. Circular design of energy assets, and responsible decommissioning practices, can help reduce long-term visual and ecological impacts.

Waste infrastructure, including landfills and incinerators, can also affect landscape quality. Circular economy measures that reduce residual waste and increase local reuse can reduce the need for large-scale waste facilities and their associated landscape intrusion.

Landscape and visual impacts must also be considered at the community level. Localised repair, reuse, and circular retail spaces can enhance townscape quality and bring activity back into underused areas. Vacant and derelict land can be transformed into circular innovation hubs, green spaces, or community assets through thoughtful design.

In summary, circular economy principles support more sustainable landscape management by reducing development pressure, promoting efficient land use, and enhancing the visual quality of built and natural environments. Landscape considerations should be integrated into circular planning and investment decisions to ensure that the transition enhances rather than detracts from Scotland’s valued places.

4.11 Related plans, programmes, and strategies

The Circular Economy (Scotland) Act 2024^[67]

The Act introduces measures that require primary legislation in Scotland’s transition towards a circular economy. The Act requires Scottish Ministers to publish a Circular Economy Strategy for Scotland every 5 years as well as create new circular economy targets.

Climate Change Plan (2020 update)^[68]

The Scottish Government publishes a statutory strategic delivery plan (the Climate Change Plan) at least every 5 years. The 2018 Climate Change Plan was updated in December 2020 in response to the global climate emergency. The current Climate Change Plan update^[69] sets out a pathway to reduce Scotland’s emissions over the period to 2032.

A new Climate Change Plan is forthcoming, for the period 2026 to 2040.

Scotland's National Strategy for Economic Transformation (NSET)^[70]

Scotland’s NSET sets out the priorities for Scotland’s economy as well as the actions needed to maximise the opportunities to 2032 to achieve the vision of a wellbeing economy. The NSET contains a vision for a Wellbeing Economy, ‘thriving across economic, social and environmental dimensions’, is supported by three ambitions, including ‘Greener: Demonstrating global leadership in delivering a just transition to a net zero, nature-positive economy, and rebuilding natural capital’. A number of priorities across the Strategy support the NSET.

Just Transition – A Fairer, Greener Scotland: Scottish Government response^[71]

In 2021, the Scottish Government published our response to the findings of the first Just Transition Commission. The response also comprised our National Just Transition Planning Framework, which was designed to ensure an ambitious and consistent to planning for a just transition. The framework continues to underpin the production of Just Transition Plans for different sectors and sites, all of which will support the aims of NSET.

The Good Food Nation Plan^[72]

In 2025 the Scottish Government published a proposed national Good Food Nation Plan (GFNP) which aims to bring greater consistency to food policy across Scotland and achieve the Good Food Nation vision for Scotland to be “a Good Food Nation, where people from every walk of life take pride and pleasure in, and benefit from, the food they produce, buy, cook, serve, and eat each day”. The proposed national Good Food Nation Plan was laid before the Scottish Parliament on 27th June 2025. The final version of the first Plan will be published at the end of 2025.

Scotland’s Biodiversity Strategy to 2045: tackling the nature emergency^[73]

Scotland’s Biodiversity Strategy and associated delivery plan recognises the need to ensure the range of actions we are undertaking are both complementary and coordinated as part of our overall efforts to tackle the twin crises of climate change and biodiversity loss.

Environment Strategy^[74]

The Environment Strategy creates an overarching framework for Scotland’s strategies and plans for the environment and climate change. Its 2045 vision and supporting outcomes describe our guiding ambitions for restoring Scotland’s natural environment and playing our full role in tackling the global climate and nature crises. In turn, this will help to build a stronger, more resilient economy and improve the health and wellbeing of Scotland’s people. It will help to ensure we live within the planet’s sustainable limits as responsible global citizens.

Green Industrial Strategy^[75]

The Green Industrial Strategy publication identifies areas of strength and opportunity for Scotland to grow globally competitive industries in the transition to net zero. It outlines what government and partners will do to support stakeholders to create an enabling environment for investment and growth. The Green Industrial Strategy’s mission is to ensure that Scotland realises the maximum possible economic benefit from the opportunities created by the global transition to net zero.

Litter and Flytipping Strategy^[76]

The National Litter and Flytipping Strategy sets out our approach to tackling litter and flytipping in order to protect and enhance Scotland’s environment; ensure safer and cleaner communities; and contribute to a thriving circular economy for Scotland. Litter and flytipping are losses of material from the economy, so reducing litter and flytipping will also help accelerate Scotland’s transition from a ‘linear’ economy, which is environmentally unsustainable and energy and resource intensive, to a more resource efficient and sustainable circular economy.

Extended producer responsibility (EPR) and ongoing reforms

The Scottish Government has committed to reforming the existing four nation Producer Responsibility schemes:

• Packaging Producer Responsibility Scheme^[77]
• Waste Electrical and Electronics Producer Responsibility Scheme^[78]
• Batteries and Accumulators Producer Responsibility Scheme^[79]

Reforms to the existing Producer Responsibility schemes will result in changes to how end of life products are managed, how local authorities may be funded to manage that waste and how reuse and repair are championed across the three schemes.

Deposit Return Scheme

The Scottish Government is also committed to introducing a deposit return scheme (DRS) for single-use drinks containers in Scotland to help increase recycling, reduce litter and meet our climate change targets. We continue to work closely with the UK Government, Welsh Government and DAERA to launch schemes across the UK in October 2027.

Single-use vape ban

The ban on the sale and supply of single-use vapes came into force on 1st June 2025 using powers under the Environmental Protection Act 1990. This approach has been used in the past to ban other items such as microbeads, cotton buds and single-use plastics. The UK-wide ban has been introduced to prevent the environmental damage disposable vapes cause and also to address health concerns associated with vaping as Scotland moves towards a tobacco-free generation by 2034.