First, deriving is just pointer arithmetic and doesn't copy anything. Second, standard flat closure representations already involve copying parts of environments, with any sharing problems addressed by assignment conversion (turning variables that are assigned to into mutable cells, a reference to which can be copied into however many environments is necessary).
> standard flat closure representations already involve copying parts of environments, with any sharing problems addressed by assignment conversion (turning variables that are assigned to into mutable cells)
In fact, the simple assoc list representation of environments (whereby simple consing extends the environment) does this. It doesn't eliminate circularity.
If a function has a certain binding in scope, and that binding refers back to the function, you can shuffle that binding around between different environment vectors all you want. Wherever you stick that binding, as long as the binding is in scope of that function, you have circularity.
