Can we share our way to sustainability?

Sharing has been receiving a lot of attention recently, thanks to a wave of startups with alternative business models designed to deliver value to customers in new ways. In many cases, these models of collaborative consumption make more efficient use of existing resources.

Take, for example, Getaround, which aims to make better use of the 92 percent of the time that most cars sit idle, or Airbnb, which helps people rent out their apartments while out of town. These companies are using technology to bring scale and transactional efficiency to an old idea -- sharing -- that just might change the way we interact with physical goods and with each other.

One of the most exciting aspects of the collaborative consumption movement is its potential to create value for consumers and society at the same time. Renting your neighbor's car saves money and helps the environment at the same time by taking redundant vehicles off the road, right?

It turns out that determining the environmental impacts of these new business models isn't so straight-forward.

Challenges with assessing environmental impact

Environmental impact is typically assessed using the process of lifecycle assessment, or LCA. This works well when comparing products that are readily substituted, like paper and plastic bags. With collaborative consumption business models, though, it's not always safe to assume simple substitution.

Dr. Valerie Thomas of Georgia Tech looked into tradeoffs between new and used goods in the used book market. Her findings suggest that used goods do not replace new goods in a 1:1 ratio. In fact, the economic model that she used suggests that the more discounted the used good, the lesser the extent to which it substitutes for a new good.

This less-than-perfect substitution illustrates an economic concept called the "rebound effect." The availability of lower-cost used goods on eBay or Craigslist, for example, may encourage customers to buy more overall. While there may still be a net environmental benefit, quantifying that benefit requires a nuanced understanding of customer behavior.

Indirect environmental impacts add another level of complexity. Say, for example, that cheaper and more convenient rentals on Airbnb were to enable people to travel more on a given budget. That could increase the environmental impact of transportation. It's not hard to imagine a situation in which the indirect environmental impact from increased air travel could negate or even outweigh the direct environmental benefits associated with making more efficient use of existing space for accommodations. Again, a nuanced understanding of actual customer behavior is required to quantify the net environmental impact.

With these complications, it's not surprising that most companies in the collaborative consumption space have refrained from making direct and specific claims about environmental benefit. Rigorous assessment requires a detailed understanding of actual customer behavior, and with the industry still nascent, those data are scarce.