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  • Writer's pictureTamar Makov

Does the Circular Economy Grow the Pie?

The environmental benefits of the circular economy (CE) are often taken for granted. There are, however, reasons to believe that rebound effects may counteract such benefits by increasing overall consumption or ‘growing the pie’. In this study, we focus on two main rebound mechanisms: (1) imperfect substitution between ‘re-circulated’ (recycled, reused, etc.) and new products and (2) re-spending due to economic savings. We use the case study of smartphone reuse in the US to quantify, for the first time, rebound effects from reuse. Using a combination of life cycle assessment, sales statistics, consumer surveying, consumer demand modelling, and environmentally-extended input-output analysis, we quantify the magnitude of this rebound effect for life-cycle greenhouse gas emissions.

We find a rebound effect of 29% on average, with a range of 27% to 46% for specific smartphone models. Moreover, when exploring how rebound might play out in other regions and under different consumer behavior patterns, we find that rebound effects could be higher than 100% (backfire effect). In other words, we estimate that about one third, and potentially the entirety, of emission savings resulting from smartphone reuse could be lost due to the rebound effect. Our results thus suggest that there are grounds to challenge the premise that CE strategies, and reuse in particular, always reduce environmental burdens.

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Figure 1. Life cycle greenhouse gas (GHG) emissions (in CO2e, left axis) and environmental rebound effect (in %, right axis) for smartphone reuse, by iPhone model and substitution scenario (perfect vs. imperfect). Perfect substitution scenario assumes 1:1 substitution ratio between used and new phones of identical model and make. Imperfect substitution assumes a mix of alternative substitutes (including new and used smartphones as well as avoided purchases) weighted by our survey results. ‘Reuse’ emissions are those associated with reusing a smartphone, whereas ‘avoided’ emissions are those associated with its alternative(s). GHG emissions are broken down according to the production, transport, recycling, and use phases. Re-spending corresponds to emissions resulting from the economic savings of purchasing a used smartphone instead of its corresponding alternative(s). The ‘average’ model represents a weighted average of all four iPhone models by their eBay sales volume. The rebound effect is expressed as the % of GHG emission savings that are offset due to re-spending.

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