The Municipality of Leeuwarden, in partnership with Alba Concepts, developed a method to incorporate residual value into circular investments, enabling financial recognition of the future value of circular materials. By applying circular depreciation, the municipality creates financial room for more circular projects, encourages reuse of materials, and reduces barriers to sustainable investments.

Linear market dynamics are not compatible with circular initiatives and business models. They tend to follow short term profits and do not account for factors beyond economic growth. Traditional financial rules thus do not consider the future value of circular materials, limiting the ability to invest in circularity. Circular investments often appear more expensive due to higher upfront costs or maintenance complexity, which discourages adoption despite their long-term potential environmental, social and other benefits.

The Municipality of Leeuwarden introduced "circular depreciation," which assigns a residual value (5-20%) to circular investments based on data from Alba Concepts. This approach acknowledges the future reuse potential of materials and reduces the financial burden of initial investments. By annually recalibrating residual value percentages and involving auditors for verification, the municipality establishes a clear, scalable framework for measuring the value of circular investments. Circular depreciation lowers costs, opens financial space for more circular investments, and accelerates the transition to a circular economy.

The introduction of circular depreciation in Leeuwarden has created a practical framework for integrating circularity into financial systems, making circular investments more accessible and financially viable. By reducing barriers such as higher upfront costs, the municipality created potential for increased adoption of circular practices in public investments. This approach not only supports sustainable development within Leeuwarden but also serves as an example for other municipalities to follow, demonstrating how financial innovation can accelerate the transition to a circular economy. Lack of financing has been cited as a reason for insufficient (even regressing) development towards a global circular economy therefore a framework to shift market conditions towards more favourable conditions for circular investments could have a significant positive influence.