Can we share our way to sustainability?


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.

The one area in which detailed customer research has already been done is carsharing, which has been around in various forms for the past decade. In a series of papers published over the past couple of years (here and here), a group of researchers from UC Davis and UC Berkeley, led by Dr. Martin Elliot and Dr. Susan Shaheen, used an extensive survey of households participating in carsharing programs to assess the implications for vehicle ownership and greenhouse gas emissions. Their findings are highly relevant to emerging peer-to-peer carsharing platforms, while their survey methodology can serve as an example for others that want to understand the implications of their own business models.

A carsharing example

Studies on the environmental impact of carsharing were based on over 6,200 surveys from active carsharing members across the U.S. and Canada. To start, researchers looked into the customer motivations and tradeoffs associated with joining a carsharing program. Over half of responding households did not own a car and joined a carsharing program to access vehicles for personal mobility. Almost 40 percent joined to shed a vehicle or defer purchasing a new vehicle.

Overall, carsharing reduced the number of personal cars approximately 50 percent, including those that were actually shed and those that would have been purchased in the absence of a carsharing program. Extrapolated across the full active carsharing community, the authors estimate that the service has enabled 90,000 -- 130,000 vehicles to be taken off the road in North America, equivalent to 9 - 13 personal vehicles displaced by each shared vehicle.

The researchers also found that, while zero-car households that joined carsharing for additional freedom of mobility increased their vehicle miles traveled (VMT), they were more than offset by significant reductions in VMT among households that shed a vehicle or deferred the purchase of a new vehicle. Compounding this net reduction in VMT, researchers found that the vehicles driven within carsharing programs were, on average, approximately 10 mpg more fuel efficient than the private vehicles that they replaced.

The result, comparing carsharing participation to "business as usual projections," is an average reduction of 0.84 t greenhouse gas (GHG) per year among active households.

While carsharing companies will be encouraged to see a quantified environmental benefit associated with their industry, these results should be used with caution. The sample included households that increased their environmental impact as well as those that decreased their environmental impact by participating in a carsharing program. Without a good understanding of actual customer behavior within any one particular program, it's impossible to know which way the balance of impacts would tip.

The importance of understanding customer behavior applies to companies across the collaborative consumption space. Not only does it enable honest and precise assessment of environmental impact, but it also provides the insight needed to design offerings that create greater value for customers and society at large.

The broader implications of collaborative consumption

So can we really share our way to sustainability? I don't know. Startups will continue to iterate on business models. Larger, more established players will jump into the fray, as we've already begun to see from companies like GM and BMW, bringing scale and credibility to the space. Some approaches will have clear environmental benefits and others will be more ambiguous.

The larger potential of collaborative consumption, however, might not be in the environmental impact of any given business model, but in the strengthening of community that comes with sharing. Some economists (e.g., Witt, 2001; Briceno & Stagl, 2006) have suggested that current levels of hyper-consumption can be explained as a Sisyphean attempt to fulfill basic human desires, such as those for social status or personal connections, with physical goods. A system of collaborative consumption that can more fully satiate these basic desires with less of the physical trappings of consumerism might just provide a glimpse of a more rewarding and sustainable future.

Photo collage includes green field photo and sharing hands photo from Shutterstock.