By Will Van Der Byl
TL;DR: At its core, the sharing economy is a system built around the utilisation of unused or under-used resources and has emerged as one of the ways in which we humans can reduce our environmental footprint. There are, amongst numerous others, three trends which are helping drive the sharing economy forward: (1) consumer attitudes, (2) technological development and (3) the rise of X as a service. Whilst it is easy to be bullish about the sharing economy, one must be aware that it is a relatively new concept and there is much work and development needing to be done. Despite this, we should all be excited about the potential for the sharing economy to positively impact our lives and planet.
The sharing economy has emerged as one of the ways in which we humans can reduce our environmental footprint through improved resource utilisation. The idea generated a large amount of hype when it first came onto the scene and, with the rise of companies such a Uber (think UberPool as a more relevant example), Zipcar and Airbnb who have embraced the sharing economy, it continues to be viewed as a promising idea. In this post I will provide a brief definition of the sharing economy and then discuss how it can result in improved resource utilisation and why I think the sharing economy will become increasingly prominent moving forward.
The sharing economy can be used as a somewhat umbrella term; but for the purpose of this post it can be described as a way of making resources owned by one individual accessible to many individuals thereby enabling people to utilise an item or service without having to own it. In other words, it is a business model where goods and services are traded on the basis of access rather than ownership. This definition leads me to believe that a more accurate term, for the purpose of this piece, is access economy rather than sharing economy (see here for a more in-depth explanation). A heart-warming example to put flesh on this definition is Hello Tractor, which is an agricultural-technology social enterprise that connects tractor owners and smallhold farmers in Sub-Saharan Africa through a digital tractor sharing application, thereby providing farmers with easily accessible tractor services to improve farming productivity.
How can the access economy help reduce our environmental footprint?
At its core, the access economy is a system built around the utilisation of unused or under-used resources. Therefore, at a high level, the access economy should result in improved resource utilisation and efficiency, thereby minimising the demand for materials and, in turn, reducing our environmental footprint. A study published in Ecological Economics confirms this thought process. The study looked at, among other things, the environmental impact of shrinking household sizes (i.e. a smaller number of people per household) in the U.S and found that historically, large households in which everyone shares appliances have helped limit emissions. Adding another person to a household reduces everyone else's personal emissions by about 6%.
Based on the above, the access economy involves making more of what is already available e.g. homes, cars, tools etc. In doing so, our activities generate less waste and reduce our environmental footprint. In other words, we reduce our environmental footprint not by reducing our emissions per activity but rather by performing our daily activities in a less wasteful way - by using what is already available and which can be accessed (i.e. instead of owning appliances, we can access appliances through PeerBy or instead of owning clothes we can access clothes through Rent the Runway). For example, a study by the Transportation Sustainability Research Center (TSRC) stated that the Zipcar business program as a whole ‘had eliminated the need for roughly 33,000 vehicles across North America’.
Why will the access economy become increasingly prominent moving forward?
There are, amongst numerous others, three trends which are helping drive the access economy forward:
1. Consumer attitudes – the idea of ownership is changing and it is becoming increasingly less important to individuals. This is especially true for the younger generation who do not have the legacy idea of ownership always being an asset and in certain circumstances view ownership as a burden. We are moving away from a world prioritised around ownership to one prioritised around access to goods and services.
2. Technological development – matching individuals who need something with individuals who have something to offer is central to the access economy. The internet (the vast majority of access economy businesses – Bla Bla Car, Airbnb, etc. - use digitally enabled platforms), especially through smart phones, is the most powerful mechanism to matchmake. Thus, as internet access and smart phone penetration increases, we can expect the access economy to become more prominent. Furthermore, improved technological development such as blockchain (think smart contracts), Big Data and AI will improve efficiencies and reduce transaction costs which is central to the marketplace operations of the access economy.
3. X as a Service – the rise of the access economy is not isolated and non-traditional rental (e.g. subscription and service) arrangements are gaining prominence in the mainstream economy. In a previous blog post, my colleague Roxanne Pieterse discussed energy as a service and the success of companies such as Uber (mobility as a service), Spotify (music as a service), Netflix (entertainment as a service) and Dropbox (computer storage as a service) indicate a growing trend towards consumers avoiding ownership and only paying for what they use.
I believe that these three trends will grow with time and should all positively influence the development of the access economy.
Whilst it is easy to be bullish about the access economy, one must be aware that it is a relatively new concept and most companies and technologies participating are nascent with much work and development needing to be done. And, as with all things in life, the access economy is not all positive and issues such as consumer protection and unintended consequences (e.g. UberPool resulting in people using vehicles instead of public transport) still need to be resolved. Policy in particular needs to evolve as existing laws were developed without consideration for some of the issues presented by this less formal, more dynamic model of production and consumption and consequently there is no strong regulatory framework to govern the access economy. Despite these challenges, any form of consumption that enables use while reducing resource depletion is a contribution to the development of a renewable, sustainable economy and we should all be excited about the potential for the access economy to positively impact our lives and planet.