Influence of Reduced Ownership on the Environmental Benefits of the Circular Economy

The circular economy has become a popular concept, suggesting economic growth with fewer emissions and reduced ownership as one of its key parameters. Based on the literature, however, it appears that the concept has not been sufficiently contested empirically. This study evaluates the carbon and material footprint implications of reduced ownership in the context of household consumption. We found that the reduced ownership does not automatically reduce the environmental impact of the production-consumption system in the context of households. Reduced ownership in the study did not have any noticeable influence on material footprint, and in the case of carbon footprint, it only had a mild positive influence in low-income households. The result is surprising, since both intuitively as well as based on the literature, moving from ownership to services should increase resource efficiency and reduce environmental impact. In the context of households, actual consumption and investment behavior seem to override the theoretical benefits of reduced ownership. In our study, the circular economy rebound and the willingness to invest in green products seems to explain quite well why the environmental impact of consumption is not reduced when households move from ownership to services. Households appear to spend the money saved from reduced ownership on carbon-intensive services; when they own the products themselves, they invest a more-than-average amount in the life cycle performance of the products. The paper's implications for the circular economy as a concept for decoupling economic growth from environmental pressure is that one of its primary qualities, sharing and renting services instead of owning things, seems to offer only a partial solution for the dilemma. In order to fully benefit from reduced ownership, the circular economy should emphasize simultaneous change in both the production and consumption of services, as it seems that simply offering products for rent does not automatically reduce the environmental impact of the final demand.