Closed Loop: Integrated Water, Nutrient, and Energy Recovery Systems for Sustainable Dairy Production (Case: Dairy Farming)

The dairy industry is very important to the economy, but it has big problems with sustainability since it doesn't use resources well and doesn't handle waste well. Eco-Efficiency (13.1%) and Technical Efficiency (58.7%) are still very low in Serbia because of ongoing structural inefficiencies. In Indonesia, where 90% of dairy farms are operated by smallholders, an estimated 84% of manure is discharged untreated, contributing to greenhouse gas emissions and eutrophication. To solve these problems, we need to use Circular Economy ideas, such as closed-loop nutrient, energy, and water flows and integrated resource recovery. This review evaluates opportunities, sustainability gains, and barriers to implementing closed-loop systems across the dairy supply chain. The objectives include assessing farm-level efficiency, quantifying environmental and economic benefits of manure-derived resource recovery, evaluating circular feed substitution, and analysing biogas adoption barriers among smallholders. The research integrates findings from Stochastic Frontier Analysis, Life Cycle Assessment and Costing, Multi-regional Input–Output analysis, membrane-based water reuse models, and system dynamics, complemented by qualitative surveys of Indonesian farmers. Integrated recovery systems yielded carbon-negative results (up to –1790 kg CO₂ eq/year) and significant economic advantages ($825–$1,056/year). Biogas cut down on the consumption of LPG by about 45%. Circular feeds made more milk and had less of an effect, while treating whey membranes slashed the need for fresh water by 67–90%. Closed-loop solutions make dairy farming much more sustainable, but they need help from policymakers to be able to grow because of high investment costs and ongoing structural inefficiencies.