The circular economy (CE) has become a popular concept for both the public and private sectors. Despite its huge recognition, the concept remains unclear and more than 100 academic publications in the world offer up their own competing interpretations of the term. Although the definitions offered by the Ellen MacArthur Foundation is most commonly used, the implementation of the concept widely varies in each business practices and policymaking.
Source: The 9R framework adopted from Kirchherr et al 2017
Within this discussion, there is one concerned topic in particular and that is the environmental rebound effect. The environmental rebound effect refers to the divergences between the actual environmental benefits and those expected from the technological advancement and the other efforts. Although technological advancement does allow for more efficient use of natural resources and energy, the benefits of those new technologies are effectively offset by the subsequent increase in the consumption of goods and services, thus the gains from technological advancement are either counterbalanced or completely wiped out.
CE is no exception to this. The environmental rebound effect is most likely to occur when: (1) refurbished products imperfectly substitute their new counterparts in the marketplace; or (2) lowering expenditure caused by the low price of refurbished products increases the effective income of consumers, which typically leads to additional purchases of products or services. Such cases, either directly or indirectly, could results in an increase in the use of natural resources Examples of this are described in the scenarios below.
・The used smartphone market (USA)
The discounted used phone is not necessarily taken as a replacement for their primary phone, but instead it is used as a secondary or tertiary device. Likewise, lower expenditure by purchasing a used phone typically leads to extra consumption. (Makov and Font Vivanco., 2018).
・The peer-to-peer boat-sharing platform (Finland)
Any reductions in resources used or in greenhouse gas (GHG) emissions were offset, either fully or partially, by the increased use of airplanes and/or the private use of the boats by the individual users on the platform (Warmington-Lundström, J., & Laurenti, R., 2020).
The fundamental aim of CE is to reduce the aggregate amount of natural resources and energy by realizing complete circularity throughout the product lifecycle. This especially holds true for sharing platforms, a concept which is burgeoning as a new business model. These platforms are expected to maximize economic efficiency and broadly reduce resource use by shifting from private-ownership to shared-ownership model. If we fail to account for the indirect energy costs incurred and changes in consumer behavior as a result of these new business models, that may lead to an increased environmental burden.
In order to prevent this, a quantitative evaluation of the entire product lifecycle must be done – which should span from the initial stages of production until the product reaches its end of life and either enters into reverse cycles or waste treatment. There are useful tools to conduct such analysis. While the most commonly used one would be based on life-cycle assessment (LCA), there are other methodologies as well, such as multi-criteria analysis (MCA) and life-cycle analysis of GHG emissions based on the international standards.
As third-party evaluators, international certifications have become available these days. For instance, one of the forerunners in CE is Cradle to Cradle®, and they use five independent criteria in their certification process (for more information, please see the interview that we conducted with the Founder here at Interview: Cradle to Cradle®, a new standard of quality).
If we want to reduce the damage to the environment while also maintaining societies that are vibrant with life, it is crucial that we utilize the right concepts and the best methods of evaluation so as not to undermine the benefits made by the CE implementation and technological advancement.
(Ayaka Okumura/ Researcher, Partner)