• Chile stands out in Latin America and the Caribbean for integrating circular economy principles directly into its national procurement system through a project supported by the Inter-American Development Bank (IDB).
• Public institutions can now transfer furniture in good condition but no longer in use to other public institutions, extending their useful life and maximizing the public value of each asset.
• This circular economy approach enables the state to generate significant savings in public procurement processes, promoting greater efficiency in public spending and expanding fiscal space.
What happens to the thousands of desks, chairs, and computers that the public sector declares obsolete each year? For decades, the public sector has operated under a pattern of indefinite storage or premature disposal of still-functional assets, fueling a cycle of systemic inefficiency in asset management.
However, in June 2025, Chile reached a turning point by breaking with the “buy and discard” logic through an innovation that is unprecedented in the region and still rare around the world. Chile is a pioneer in Latin America and the Caribbean in integrating circularity principles directly into its national procurement system, an initiative supported by the Inter-American Development Bank (IDB).
ChileCompra, the entity that manages the country’s electronic public procurement system, created a platform that establishes reuse as the first mandatory filter before any new acquisition by public entities. This approach contrasts with what is observed in other regions of the world, where public procurement has been used to promote the circular economy, but on a more limited scale.
What Sets Chile’s Approach Apart from Other Countries?
In Europe, for example, circular criteria have been incorporated and initiatives have been developed to promote reuse, mainly through sectoral or subnational programs.
In Asia, economies such as South Korea and Japan have advanced green public procurement by establishing requirements to purchase products with environmental certifications or recycled content.
In North America, Canada has integrated lifecycle criteria into its procurement policies and promotes asset reuse in a complementary manner, without making it a mandatory step within the procurement process.
These advances focus on improving purchasing decisions rather than establishing mechanisms that systematically require the reuse of existing assets before acquiring new ones. In this context, Chile goes a step further by incorporating this approach in a mandatory and comprehensive way within its national procurement system.
The Chilean system shifts asset management from a linear consumption model to a circular one, where institutions can transfer movable goods that are in good condition, extending their useful life and maximizing the public value of each asset. This model allows for optimizing state assets and increasing fiscal efficiency, generating significant savings for the state.
Circular Economy: A New Paradigm in Public Procurement Management
ChileCompra’s circular economy platform is more than a technological repository; it represents a paradigm shift in public management across the region, which in recent years has made progress in developing regulatory frameworks for waste management and recycling at the sectoral level.
This advancement substantially redefines the role of the state from a passive consumer of supplies to a an active manager of state-owned assets.
Making existing assets visible as a shared resource strengthens institutional planning and establishes a governance standard that transcends national borders, offering a clear roadmap for the evolution of public procurement systems across the continent.
Reusing Assets Saves Resources and Promotes Sustainability
The creation of this ecosystem, supported by Law 21.634 on the modernization of public procurement, is already showing tangible results and confirms that sustainability can also be a driver of fiscal savings. According to ChileCompra records, the impact can be quantified through specific milestones since its launch on June 12, 2025:
- More than 34,000 goods have been reused, effectively extending the useful life of critical assets.
- Seventy-eight public entities have benefited, integrating operational savings into their budget management.
- The platform has generated more than $1.1 million in direct savings, freeing up resources for other priorities.
The central mechanism of this tool is the transfer of goods between institutions, making it possible to avoid unnecessary purchases and optimize the use of public assets. Consolidating reuse as the norm reduces spending and mitigates budgetary pressures through intelligent lifecycle management of state assets.
Efficient Public Procurement Expands Fiscal Space
The circular economy thus represents a strategic instrument for achieving immediate gains in the national budget, allowing the state to maximize the value of every invested resource and increase its fiscal space.
Public procurement in Chile currently represents 5.3% of the country’s gross domestic product (GDP), which means that incremental improvements in procurement efficiency could generate significant impacts.
Benefits Across the Public Sector Value Chain
The use of the platform goes beyond nominal savings to generate structural benefits across the public sector value chain:
- Reduced budgetary pressures: by replacing purchases of new products with the use of existing inventories, liquidity demand in public agencies is reduced.
- Optimization of total cost of ownership: costs associated with prolonged storage and final disposal of unused assets are drastically reduced, freeing up physical space and streamlining administrative processes.
- Strategic alignment: visibility of available assets promotes coordinated decision-making, reducing duplicate purchases and strengthening medium-term expenditure planning.
Alignment with global standards: this model aligns with international principles of sustainability and state modernization, promoting practices that reduce emissions associated with manufacturing new goods.
Opportunities to Integrate Shared Services
The convergence of technological innovation, sustainability, and fiscal discipline is reshaping Chile’s public procurement system. As this model begins to incorporate shared services schemes among public agencies, its potential for scale and replication could help transform public markets across the region.
Ultimately, integrating the circular economy into public procurement not only strengthens environmental sustainability but also redefines the role of the state from a consumer of resources to a strategic manager of public value, capable of driving fiscal efficiency, innovation, and smarter use of goods and services for development.