Despite its growing popularity among academics and businesses, the transition to a circular economy has many challenges, including:

• a generally weak and fragmented policy support system, with the largest barrier being the lack of a national circular economy strategy.
• lack of financial support to enable businesses to transition to a circular economy, and the financial incentives to remain in the current state.
• low levels of resident engagement and individual awareness contribute to a lack of understanding about CE and its impacts.

This paper analyzes the federal Smart Cities Challenge, which provided an opportunity to bring circular economy principles to the forefront of city building as it inspired communities across the country to define their future with the help of their residents through the use of a smart cities approach.²³ However, considering that only five applications discussed circular economy principles, highlights an opportunity for the federal government to encourage circular economy thinking, and for local governments to bring system change.

All levels of government have a key role to play in building thriving, livable, resilient communities that are regenerative by design.²⁴

One of the solutions recommended in this paper is for the federal government to implement a Canadian circular economy strategy, which would set a direction of travel for local governments and offer an invaluable opportunity to raise ambitions and engage stakeholders in undertaking circular economy transitions.²⁶

On the other hand, local decision-making is important as cities provide the space in which a circular economy can flourish. Cities amplify their impact through the proximity of people, materials and data which are all contained in a small geographic territory. Proximity to the everyday concerns and needs of urban residents and businesses, and the policy levers at their disposal, gives them a key role. Local governments see, experience and often manage the negative consequences of the current "takemake-waste" linear economy, which includes funds spent on solid waste management; costs incurred from structural waste; cost of underutilized buildings; economic costs of congestion; and health costs of air and noise pollution.²⁷