Paraguay’s economy is highly vulnerable to climate change and biodiversity loss due to its heavy reliance on agriculture, livestock raising, and hydroelectricity for both domestic consumption and export.

Though the country has one of the lowest levels of greenhouse gas emissions in the region, the per-capita CO2 emissions are higher than those of other countries. Biomass (primarily fuelwood) accounts for around half of domestic energy consumption.

Deforestation remains a major challenge, at a current rate of 240,000 ha/year. Most (93%) forest loss in Paraguay is driven by the agricultural and livestock raising sector to augment the production of beef, soybean, and wood.

Although industry still plays a minor role in the economy, its impacts on water, soil, and air have been poorly controlled and are already significant. The “polluter pays” principle fails to be enforced, and government incentives for environmentally friendly behaviours are lacking.

Thus, aiming for a more sustainable socio-economic development path that reduces or prevents the depletion of the country’s natural resources, has lower impacts on the environment, and reduces environmental degradation is crucial.

However, Paraguay’s resources and capacities are insufficient to tackle existing challenges. While environmental and climate action policies exist, implementation and enforcement remain challenging. There is also low environmental awareness among citizens and the private sector.


The main barriers and challenges for transitioning towards a circular economy in Paraguay include political, financial, and technological issues.

Political challenges include: a lack of encouragement and support from governments to drive the transition to the Circular Economy; no tax incentives for circular goods and services; no public offices that encourage, support and boost circular entrepreneurship; and the lack of laws and regulations that relate to the efficient use of raw materials, and the reduction and disposal of waste in production processes. 

Financial challenges include: investments for the transition and innovation of already-operational ventures are high, and there is no obligation on the government to support; and the lack of alternative financing models for circular businesses. 

Technological barriers include: the absence of industrial symbiosis, companies work individually and do not interrelate to seek cost-effective alternatives for the reuse of waste; the lack of technical information to better understand new business models proposed by the Circular Economy and the benefits of their long-term implementation; a dependence on imported products, as there are few local industries to meet the country's needs, especially for packaged and electronic products; and no segregation of materials, the lack of a selective collection system makes it difficult to recover materials for new use.


Key policies and governance approach

No policies, institutions, or regulations specifically devoted to green or circular economy seem to be in place yet.


Initiatives and Development Plans

Paraguay has a National Platform for Sustainable Commodities. According to this, the agricultural sector forms a main focus of the new "National Forest Strategy for Sustainable Growth" (ENBCS), a guiding document, based on national and sectoral policies, for the reduction of greenhouse gas emissions (GHG).

  • Recycling might offer significant opportunities to start the transition towards a circular economy. Statistics on recycled materials and the import and export of recovered materials show that over 200,000 tonnes of aluminium, steel, copper, iron, and bronze were recovered in various parts of the country for export, with a value higher than USD 102 million in just one year. The main markets for ferrous and non-ferrous metals are Brazil, China, Spain, and India. Also, being a labour-intensive, mostly informal sector, it offers opportunities for job creation with high growth potential. This is in addition to the large volume of various materials that is informally recovered and traded in local markets.
  • Another opportunity lies in the Waste from Electrical and Electronic Equipment (WEEE) sector. Several assessments of sustainable management of WEEE in Latin America show that Paraguay generated 4.9 kg/person/year of WEEE in 2014 and this volume grew to 6.8 kg/person/year in 2017. Based on this rate, the 2019 population of Paraguay of 7,152,703 inhabitants would generate an estimated total volume of about 49 thousand tonnes of WEEE each year, the potential value of which — just as raw material —would amount to some USD65 million.