5 ways to cash in on the circular economy

Buy a product or material, use it, then figure out a way to reuse it — or hand it off to someone who will.

This type of multiple use value chain sounds good in theory, and has propelled buzzy concepts like the circular economy or closed loop systems, thanks to the desire to realize dual economic and environmental upsides.

The issue is that several barriers still exist when it comes to executing on both of those fronts. For a circular economic model to truly function, vendors must shift away from a linear make, use and dispose model, instead maximizing the lifecycle of materials and then repurposing them once they have reached end of life.

One obstacle in this transition can be the material at hand. In particular, certain types of plastic and metal (particularly those used in electronics) can prove challenging to re-purpose.

But even if you have something that seems less complicated — a large number of cardboard boxes, desks from an old office or organic material like coffee grounds — it isn't always easy to give that thing a new life. Obvious questions such as, "Why would anyone even want these gross coffee grounds?" often make the conversation a non-starter.

Squeamishness aside, more businesses are starting to pick up the mantle of these nouveau recycling concepts, thanks largely to new kinds of online and mobile platforms that make it easier to broadcast goods up for grabs to a much broader audience.

"The increasing pressure on our natural resources sends a clear message: we need to find value in discarded materials," said Andrew Mangan, executive director of the U.S. Business Council for Sustainable Development, in a recent statement on the topic. "This opens up new business opportunities while creating economic, environmental and societal benefits."

And make no mistake, this isn't all about altruism in the face of still-abysmal recycling rates in the U.S. and many other parts of the world. There are billions of dollars to be made off of waste, recyclable products and scrap materials that end up stashed in warehouses or cast off in landfills.

Both consumer audiences and businesses now have more options than ever when it comes to monetizing junk that could help someone else make money. Here's a rundown of five primary circular economy business models:

1. Make bank on B2B markets

Getting someone to plunk down a few bucks for your old stereo instead of trashing it is one thing, but getting companies like Nike and GM to agree to start swapping operational waste for the allure of some extra revenue is quite another.

Still, that's exactly what the U.S. Business Council for Sustainable Development and Corporate EcoForum have done with the recently-announced National Materials Marketplace (PDF).

The pilot program is a scaled-up version of already operational business-to-business materials marketplaces up and running in locations including Austin. As I have reported, the program works with the help of a central online marketplace where businesses can list available and desired materials along with prices.

While the program will still have to be tested at scale, at most prices won't really make a dent on balance sheets, the effort is bolstered by new regulatory pressure to comply with increasingly ambitious zero waste targets (not to mention a company's internal waste reduction goals).

2. Capitalize on the "sharing" craze

Craigslist may now be synonymous with getting other people's stuff on the cheap, but a new generation of online companies explicitly focused on reused goods are also emerging in tandem with the cultural explosion around the sharing economy.

Yerdle, a San Francisco startup bankrolled in part by Patagonia, offers a mobile app or browser version of a peer-to-peer marketplace for users to offload everything from tank tops to tiny clay pinch pots. The platform is somewhat unique in that transactions are based on credits rather than cash value, meaning that "sellers" who earn points from listing their items are actually paid in items that they "purchase" from other users with those points.

The question for Yerdle and others in the space, like many sharing economy companies, is whether they (or their investors) will push for more clear-cut monetization strategies.   

3. Get crafty

Before there was the concept of the sharing economy, there was the allure of becoming your own boss through e-commerce. Add recycled products and materials to the list, and you get the entrepreneurs who have set up shop on retail sites like Etsy and eBay.

A quaint, hipster mom-and-pop aesthetic may have propelled Etsy to a $267 million IPO earlier this year, but the online marketplace featuring handmade or independently-produced goods — many of them advertising recycled materials — also illustrates the growing pains that can occur when those concepts are exploited.

The company's share prices have suffered amid reports that 5 percent of products sold on the site, about 2 million items, could be counterfeit. While much of the backlash focuses on illegimate "designer" goods, it's no stretch to wonder about the authenticity of products that claim to be made from reclaimed wood or other recycled materials.

4. Think social

More recently, new entrants to the Etsy-inspired reclaimed goods space, like repurposed product vendor UpcyclePost, have tried to more explicitly associate themselves with social media platforms like Pinterest.

With Pinterest and other businesses profiting off of the do-it-yourself mantra, like Brit & Co., re-purposed (or "upgraded") objects have been re-branded as possessions to emulate and admire — preferably through the lens of a filtered Instagram photo.

5. Go old school

It wasn't always called the circular economy, but middle men have been collected and selling discarded recycled materials for decades.

Above and beyond enterprising individual can collectors who cash in their finds at recycling centers, larger companies like Recology are contracted by municipalities to collect and sort waste, recyclables and compost, then sell them.

While the field of "resource recovery" is clearly financially rewarding for third party operators, a slower-to-evolve area has been the commercial arm of these operations. Moving forward, one area to watch would be whether big corporate customers begin amassing enough sway to demand a cut of those profits.