FOSTERING THE CIRCULAR ECONOMY THROUGH FISCAL POLICY: INSIGHTS FROM ALBANIA AND THE WESTERN BALKANS

The circular economy (CE) provides a revolutionary economic model for sustainable development by reducing waste, reusing resources, and encouraging eco-friendly practices. Fiscal policy plays a crucial role in shaping consumer behavior within the circular economy by using taxes, subsidies, and incentives to stimulate sustainable consumption. This study examines the relationship between fiscal tools and circular economy principles, focusing on their implementation in the Western Balkans, with a main focus on Albania. Fiscal policy tools, such as environmental taxes, subsidies for green innovations, and incentives for reducing waste, can potentially shape consumer behavior by promoting sustainable consumption and production practices. However, the Western Balkans region faces distinct socio-economic and institutional obstacles that hinder the adoption of circular practices. In Albania, recent initiatives, such as waste management reforms and tax incentives for eco-friendly businesses, demonstrate initial efforts toward CE integration. Despite these efforts, limited public awareness, fragile institutional structures, and lack of enforcement mechanisms remain significant barriers to progress. In this context, this paper points out major challenges in Albania in promoting circular practices. By addressing these challenges, Albania and its neighboring countries can accelerate their transition to a circular economy, paving the way for sustainable economic development and increased environmental resilience. In conclusion, the main recommendations of this paper involve implementing a more integrated fiscal policy framework aimed at both producers and consumers, enhancing public awareness initiatives to advance circular economy principles, and fostering stronger collaboration between government, businesses, and civil society. Additionally, it is recommended that coordinated regional strategies be developed in the Western Balkans to ensure alignment with European Union objectives and global sustainability goals.