Rural regions in eastern and western European countries are shrinking. Shrinking phenomena can be found in Estonia, Latvia, Lithuania, Portugal, and other countries and regions. The shrinking region is considered as untoward and gone territory for economic growth, particularly from the perspective of policy makers. This is because shrinking regions require specific tools for development.

This paper explores the potential benefits provided by the application of principles of CE in these regions. The paper reviews policy planning documents on CE and regional development at the EU level, specifically in Latvia, which has lost a dramatic proportion of inhabitants in the last few decades. The findings of the paper show that national policy and EU policy do not accept the phenomena of shrinking regions and that principles of CE are applicable to shrinking regions. There are such challenges as cooperation, philosophy of consumption and values, willingness and availability to pay for services. The paper opened a discussion about shrinking rural regions and CE from another perspective, as until its publication CE was mostly related with the zero-waste concept.

The paper covers multiple sectors in shrinking regions where improvements can be made with the aim to move towards a CE. It highlights the role and integration of different stakeholders in order to implement these improvements. This may be interesting for regions that experience this shrinking phenomenon and want to develop and implement Circular Systemic Solutions.