The circular economy – the idea of “reduce, reuse and recycle” – has long been promoted as one solution to the environmental crisis. Instead of the old “take, make, use, throw away” model, it aims to keep materials in play for as long as possible.

In fashion, this means going well beyond traditional repair habits and shopping secondhand. It entails innovations such as clothing rental platforms, fibre-to-fibre recycling, and AI tools that cut waste in supply chains and sort textiles for recycling.

This sounds like a win-win: less waste, fewer raw materials used, and a lighter footprint on the planet. But in fact, these innovations could end up making things worse.

In our recent study, we found that innovations in the circular economy – especially in the textiles and clothing industry – can trigger what’s called a “backfire rebound effect”. This is where the production and consumption of clothing rises, potentially wiping out any environmental gains. It happens when efficiency improvements lower costs and make products seem more sustainable, tempting consumers to buy more.

The rebound effect is an index measuring how innovation affects production – ranging from below zero (“super conservation”: the best outcome for the environment) to above one (“backfire”: the worst), with a range of outcomes in between.

It’s not a new concept. In 1865, British economist William Stanley Jevons observed that improvements in coal efficiency actually led to more coal being burned. Today, the same dynamics can occur in fashion.

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