The Financial Impact of Circular Economy Transition on Municipal Governance: An Empirical Analysis from the Slovak Republic

The transition to a circular economy (CE) presents both opportunities and financial challenges for municipal governance, particularly in countries navigating post-industrial and sustainability transitions. This study investigates the financial impact of CE implementation at the municipal level in the Slovak Republic between 2013 and 2023. Employing a comprehensive econometric approach, we integrate multivariate regression analysis with a combined dataset derived from national statistics, municipal financial records, and technical reports. The model includes twelve independent variables such as revenue from secondary raw materials, investments in CE infrastructure, waste generation per capita, recycling rates, and environmental expenditure, to estimate their influence on municipal waste management costs. The results reveal that capital investments in circular infrastructure and per capita environmental investments significantly increase municipal expenditures, whereas higher rates of waste recovery and efficiency in separated waste collection yield cost-saving effects. The findings underscore the dual fiscal nature of CE transition: while initial costs rise due to infrastructural and operational requirements, long-term financial benefits are attainable through effective resource recovery and governance mechanisms. This study contributes to the policy discourse on sustainable urban finance by providing empirical evidence on the budgetary dynamics of CE at the municipal scale.