Rapid urbanization and the expansion of economic activities have made municipal solid waste management one of the key challenges of sustainable development in cities of developing countries. Inadequate infrastructure and low levels of public awareness have further increased the complexity of waste management, highlighting the need for integrated and sustainable solutions. The aim of this study is to analyze the role of advertising and the reinvestment of recycling revenues in improving the performance of household waste management in the city of Bushehr, within the framework of the circular economy and using a system dynamics approach. In this study, a conceptual model was developed using causal loop diagrams based on empirical literature and expert opinions and was designed and visualized in the Vensim software environment. Analysis of the feedback loops indicates that targeted advertising increases public awareness and citizen participation, improves source separation rates, and enhances recycling volumes. Furthermore, reallocating a portion of recycling-generated revenues to infrastructure development and public awareness campaigns creates reinforcing feedback loops that strengthen the economic and environmental sustainability of the system. The findings suggest that the simultaneous integration of advertising policies and reinvestment mechanisms, as a circular economy–oriented strategy, can be an effective approach to reducing landfilling and improving sustainable household solid waste management in the city of Bushehr.