Renting or buying? Analyzing the Environmental Impacts of Product-Service-Systems for Outdoor Equipment

Peter Friedrich¹

¹Utrecht University

*[email protected]

Extended abstract

Introduction

Linear consumption patterns cause various negative environmental impacts, including global warming, water and air pollution, or resource depletion (Ellen MacArthur Foundation, 2013; UNEP, 2019). Circular business models (CBMs) have the potential to break conventional consumption patterns (Tukker, 2015). They enable companies to re-design their operations for a better alignment with the principles of circularity, involving new approaches to product design, production, distribution, and consumption that are more resource-efficient and restorative (Bocken et al., 2014; Geissdoerfer et al., 2017; Ellen MacArthur Foundation, 2014). Consequently, CBMs are often associated with improved environmental sustainability compared to conventional, linear models (Kjaer et al., 2016). For product-service-systems (PSSs), a higher utilization of the products promises a decline in consumption and primary production (Mont, 2004; Tukker, 2015). PSSs can play out their potential on the consumer side by altering consumption behavior, while on corporate side they can optimize value chains and product design (Hänsch Beuren et al., 2013; Johnson & Plepys, 2021). However, in practice PSSs do not necessarily entail sustainable practices, but depend very much on the context of application (Chen & Huang, 2019). As rebound effects and problem shifting can offset the environmental gains from reduced production, a consensus from literature has been arising, emphasizing the need to quantitatively assess the environmental performance of PSSs by exploring them with the methodology of life-cycle assessment (LCA) (Kjaer et al., 2018; Chen & Huang, 2019; Zamani et al., 2017). So far, a poor understanding of the environmental benefits of PSSs faces an increasing interest from businesses to assess, learn, and report on the environmental performance of such circular measures (André & Björklund, 2022).

Existing literature shows a limited number of studies exploring PSSs or collaborative consumption through an LCA lens. Most studies focus on the textile industry, such as Zamani et al. (2017), Johnson & Plepys (2021), or Levänen et al. (2021). Those studies recognize the importance of the use phase for analyzing business models (BMs) through LCA. They reveal that the set-up of the BM itself and the consumer behavior related to the BM have significant influence on the environmental outcomes (of PSSs and their linear opponents). Due to the complexity of PSSs’ multiple product and service elements, additional life-cycle stages, which are related to the product exchange among multiple users (e.g., product transportation, or cleaning), need to be considered in the life-cycle inventory (Martin et. al, 2021). Modelling and analyzing the consumer behavior is crucial to investigate the uncertainties in the use phase of PSSs (Chen & Huang, 2019; Hazen et al., 2017; Levänen et al., 2018). Parameters associated with the consumer behavior such as rental duration or use frequency play a major role, as each user change is associated with additional environmental impacts (Johnson & Plepys, 2021). André & Björklund (2022) also give consideration to the role of the replacement rate, indicating whether the rental products substitute linear consumption or even lead to additional consumption. However, parameters like these vary for different consumer types and depend on the product type itself, as the different results from e.g., the study of casual wear (Zamani et al., 2017) or the study of formal dresses (Johnson & Plepys, 2021) underline. To gain a more comprehensive understanding of the criteria that lead to “true environmental benefits”, an extension to additional cases is seen as promising (Kjaer et al., 2016, p. 104).

Therefore, this study aims at applying the LCA methodology to new product types, an unexplored BM set-up, and to evaluate the consumer behavior accordingly. A German outdoor company, offering an online rental service for hardware in the segments of camping, skiing, hiking and biking, will function as case company. The case study aims to further explore the causal mechanisms and contextual factors that determine the environmental outcomes of PSSs. For this purpose, a comparative cradle-to-grave LCA will be conducted investigating the following research question: How do variations in the set-up of the BM and in consumer behavior affect the environmental impacts of a PSS in the case of hardware outdoor equipment?

This work provides criteria and recommendations for decision-making in the ex-ante design of PSSs as well as for the optimization of existing systems. Moreover, insights on how the consumer can be incorporated to realize the full potential of PSSs in their function to lower environmental impacts are given. As there is still a lack of guidelines for analyzing PSS via LCA, the empirical results of this work contribute to a more comprehensive methodological framework.

Research design

The methodology follows a case study design in order to assess cause-and-effect relationships between different BMs and their associated environmental impacts (Yin, 2014; Johnson & Plepys, 2021). The data for the case study will be collected through a triangulation of methods. Primary data on the production is provided by the case company. Secondary data will be used from literature where primary data lacks or proves insufficient. Consumer behavior data will be gathered through a quantitative survey. Qualitative data on the set-up of the BMs will be gathered in the form of interviews to the case company and partners.

The LCA methodology is used as its scope enables a comprehensive perspective on the potentials and risks along the entire value chain, enabling the assessment of the BM model configuration and consumer behavior alike (Chen & Huang, 2019). To ensure harmonization with existing studies, the LCA is based on the ISO 14040 standard. Based on Kjaer et al. (2016, p. 99), this study compromises two scopes, “PSS comparison” and “PSS consequences”. First, the PSS comparison evaluates two alternative BMs, the linear BM and the PSS, while providing the same function. Second, the PSS consequences assesses the actual consequences of implementing a PSS for the consumption behavior, such as rebound effects. A scenario approach will be necessary in order to test and compare variables and assumptions of both scopes (Kjaer et al., 2016). For emerging systems such as the company’s rental-service, it is important to ensure that many potential “what-if-scenarios” are considered in order to improve the design of the system (Martin et al., 2021, p. 3). Accordingly, different consumption scenarios will be developed and compared with each other to test the influence of relevant consumer-related variables and variables for the BM set-up, such as use and rental frequency, use and rental duration, lifetime of the products, number of customers, replacement rate, logistics distance, or cleaning type and frequency. A sensitivity analysis examines the influence of the variables on the environmental outcome while a dominance analysis identifies the life-cycle stages that contribute the most according to the impact categories. The life-cycle inventory considers all inputs and outputs for each life-cycle stage of the product and service life-cycle including production phase, use phase, and end-of-life handling. The environmental impacts are examined for the categories freshwater ecotoxicity, human carcinogenic toxicity, and global warming potential.

Contribution

This study contributes to the NBM 2023 in the way that it helps to better understand the ecological impacts of circular business models and how to optimize them. The work shows how sustainability assessment can be performed following an LCA approach, going beyond the organizational level and considering all relevant life-cycle stages with special notion to the consumer role.

Keywords 

Circular Business Models, Product-Service Systems, Life-Cycle Assessment, Environmental Impact, Consumer behavior

References 

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