Change in value definition
- from financial cost & benefit to societal added value
Circular and reversible building solutions are often perceived as too expensive compared to the conventional solutions, which have been optimised for decades. This reflects a short-term perspective, in which the financial investment cost is considered a principal decision criterion, not looking at potential financial gains and the individual or societal added value that circular and reversible building solutions could deliver over their entire service life. Having a great impact on the environment and society, the current building industry needs innovative business and financial models with a long-term perspective.
Current ‘one-time sales’ mechanisms are already challenged with ‘long-term service agreements’, in which building products can be used and reused within the built environment or repurposed for alternative applications. Such circular business models provide a continuous revenue stream for the producer, while improving affordability for the end user.
What is the reward in the long term?
- A non-amortised building stock. By making building components reusable and buildings adaptable, their value is better conserved through time, strengthening the business case for long-term investors.
- Buildings that have an overall positive impact. By balancing long-term financial, environmental and social value with short-term investments, we aim to create buildings that are affordable (for the building client, users, as well as building professionals), lead to zero construction and demolition waste, produce energy, purify water and air, and make management of future transformations easy.
- Safeguarding the future use of Earth’s resources for the next generations through business development. Knowing that cities, buildings and building products only make temporary use of (critical) materials, water, energy and land, business developers will create alternatives to the dominant ‘sell-own’ model, through which they provide services instead of products and recover resources for the next service.
Why isn’t it so easy to initiate change today?
- There is a lack of overall management and monitoring related to the use of resources in view of fair access and affordability for all. Without any control, large private companies could have a monopoly on certain product services, increasing the risk for price-fixing and the supply of inferior products/services, losing any incentive to innovate.
- In some EU countries, such as Belgium, private ownership of houses is financially stimulated by the government, as a kind of pension/retirement investment plan.
- There is a lack of judicial assistance and policy regulation to initiate circular product service systems. It is often unclear how responsibilities should be shared between users and service providers.
- There is a lack of knowledge and expertise on circular business models within the built environment. Although there are already some some success stories using circular business models, such as product service systems, experiences within the built environment are still limited.
- Leaving ownership of building products/systems to the manufacturer or supplier might require major upfront capital financing, as the investment is only paid back during the use period (or even only in a second or third use cycle) and not before. Convincing financial institutions to provide financial capital might be difficult due to inherent uncertainties related to the return on investment (period).
- Lack of decision-making support to take into account financial costs/gains, societal impacts/benefits and added value/burden for the end users regarding the life cycle of (circular and reversible) building (product) solutions.