New Dream in the News
Wharton and Rubicon: How Green Is the Sharing Economy?
December 11, 2015
According to a 2015 PricewaterhouseCoopers (PwC) study, 76% of U.S. adults familiar with the sharing economy believe it’s better for the environment. That makes intuitive sense, considering that much of what is being shared — everything from cars and bikes to vacant rooms and abandoned toys — is otherwise sitting idle, stranded assets that occupy space and are seldom used. But identifying and quantifying just how environmentally friendly the new peer-to-peer economy is can be difficult.
According to Nicolas Voisin, founder of TheAssets.co, which trades in business-related goods, “80% of the things in our homes are used less than once a month, and self-storage has increased by 1,000% over the past three decades.”
And underutilized goods don’t make us happy. A 2014 survey by the Center for a New American Dream reported that a whopping 91% of Americans believe that “the way we live produces too much waste,” and 70% agree that, “we [Americans] consume more resources and produce more waste compared to other countries.” Sixty-four percent agree that, “sharing lowers environmental impacts.”
Robin Chase, the co-founder of Zipcar, said that working with that company “really opened my eyes to the idea of excess capacity. I truly understood, and worked into the website and marketing materials, that people could only pay for what they used, and didn’t need to buy more than they wanted.”
Hard data is hard to come by. Many green claims are anecdotal. Airbnb cites several studies that highlight how much energy, water and greenhouse gas emissions people save by staying in its properties, but the company does not reveal how these studies reached their conclusions. According to a study conducted by the Cleantech Group, for example, Airbnb claims that, in a year, its guests avoided greenhouse gas emissions comparable to 33,000 cars on North American roads, and saved the equivalent of enough water to fill 270 Olympic-sized swimming pools.
One presumes that these savings are the result of traditional hotels operating less efficiently than individual homes. But Airbnb, which commissioned the study, has “refused to allow its full study to be published online,” according to VentureBeat. And it “has yet to explain why it does not want the entire study published.”
Identifying and quantifying just how environmentally friendly the new peer-to-peer economy is can be difficult.
There is some support for the argument that pay-for-use systems are more efficient and environmentally friendly than our current model, which maximizes individual purchases and the energy and resource use that is necessitated. In an Ecotrust paper titled “Online Platforms for Exchanging and Sharing Goods,” Anders Fremstad, an economics professor at Colorado State University, reports: ”There is significant environmental benefit to increasing the use of existing goods and reducing the demand for new goods. Although Americans discard about 40 million tons of durable goods each year, there is early evidence that Craigslist significantly decreased waste disposal as it expanded to more cities.”
Fremstad studied the Couchsurfing (“stay with locals instead of hotels”) and NeighborGoods (“save money and resources by sharing stuff with your friends”) sites, and concluded that their environmental impacts “are less clear, but increasing peer-to-peer sharing will probably reduce waste and environmental degradation.” Couchsurfing stays are 12 to 18% reciprocated, he said.
When it comes to the auto industry, several different studies support the idea that Zipcar is good for the environment, but the actual numbers they arrive at vary a good deal. Zipcar has said that “every Zipcar takes at least 20 personally owned vehicles off the road.” A Transportation Research Board study is somewhat more modest, however, reporting that, “at least five private vehicles are replaced by each shared car.” Yet another report, from the University of California Transportation Center, puts the number higher, at nine to 13 cars taken off the road.
“Eighty percent of the things in our homes are used less than once a month, and self-storage has increased by 1,000% over the past three decades.” — Nicolas Voisin, TheAsset.co
Numbers related to business-car use seem somewhat more reliable. The Transportation Sustainability Research Center (TSRC) estimated that 20% of users driving Zipcar vehicles for business (who joined through an employer) had sold a personal car after becoming a member, and another 20% avoided buying a car for the same reasons. The report said further that the business program as a whole had “eliminated the need for roughly 33,000 vehicles across North America.”
At this relatively early stage in the growth of the sharing economy, it is difficult to say whether this kind of progress will continue. The TSRC report notes that of the Zipcar members who eliminated car ownership entirely, 41% use public transit more often, 41% walk more and 22% use their bikes more often. This suggests that these early adopters may be more environmentally conscious than other ZipCar users will be in the future, assuming the company continues to reach a larger segment of the population.
Judging the environmental impact of taxi replacements such as Uber and Lyft is difficult, because there isn’t much data. The San Francisco Municipal Transportation Agency has reported a 50% drop in taxi use over several years, but the agency reported trouble getting data from Uber and Lyft to quantify whether those lost rides (with undoubted environmental benefits) were simply replaced with others from the services. Even if they were, there would likely be emission gains if the shared cars were newer than the cabs.
According to Marc Gunther in the environmental magazine Ensia, it is indeed challenging to measure the impact of ride-sharing services. “The point is,” he wrote, “the economy is such a ridiculously complex system that calculating the impact of any specific intervention is difficult — economists still disagree on what ended the Great Depression. And people need to think about all the possible outcomes of these things.”
One quantifiable way to benefit the environment is to reduce traffic congestion. A 2008 report by researchers at the University of California, “Traffic Congestion and Greenhouse Gases,” studied a segment of Interstate 110 in Los Angeles during rush hour and calculated that “the congested traffic for this one-hour time period on this segment of freeway emits approximately 166 metric tons of CO2 [carbon dioxide].” If the traffic flow were improved so that cars were able to travel 20 miles per hour faster, said the report, CO2 emissions would drop 12%, “resulting in a reduction of 21 metric tons of CO2.” Extrapolate that reduction to a full year, and easing congestion on just that one stretch of L.A. interstate would reduce CO2 emissions by 249,000 tons, the equivalent of taking 41,500 cars off the road.
One peer-to-peer company focuses in particular on relieving congestion. The Waze navigation app uses crowdsourcing to generate maps drivers can use to reduce travel time (and avoid speed traps, among other things). By reporting everything from a broken-down car to a mattress in the road, Waze users enable the app to reroute people around such bottlenecks. Waze already had 50 million users before Google acquired it in 2013 (Google does not give out statistics on the company).
Julie Mossler, head of global communications for Waze, reports that the service is particularly popular wherever there is heavy traffic congestion, including Brazil, Malaysia and Indonesia (where eight cities are reported to offer some of the world’s worst driving experiences).
Waze rapidly built up a user base in Los Angeles during the 2011 shutdown of the 405 highway known as “Carmaggedon.” By March 2015, says Mossler, “users contributed three million alerts to the maps in LA.” Those alerts not only reduced the time people spent stuck in traffic, they also significantly reduced CO2 emissions. Mossler notes: “When your car is not idling in traffic and when you’re on the road for less time, then we are reducing harmful emissions all over the world.”
Tapping the environmental potential of sharing technology. One interesting speculation is that by monetizing the untapped potential of under-utilized goods, the sharing economy may prompt consumers to purchase more expensive products that are more durable and possibly eco-friendly as well. Padden Guy Murphy, head of public policy and business development at car-sharing service Getaround, cites electric cars as an example. Sharing can be “a massive needle mover for adoption of electric cars,” he said, noting that a Tesla Model S, which might lease for $900 a month, becomes affordable for many more people when it also produces $2,000 to $3,000 in that same period through Getaround rentals.
Making better use of under-utilized products is probably the most obvious, if vaguely quantified, environmental benefit of the sharing economy. But companies large and small are putting peer-to-peer technology to use in other surprising ways that may well prove far greener in the long run.
Quirky, which bills itself as an “invention machine” that turns crowdsourced ideas into actual products, first began partnering with GE in 2011. In 2014, the two companies launched Wink, which is producing connected products for the home, wireless devices that communicate with each other and homeowners via the Internet. Among Wink’s products, some of which are customizable and built to order using 3-D printing, are a smart window and door sensor, a sensor to detect water leaks, a monitor and remote control for garage doors, a smart HVAC controller and thermostat to remotely monitor temperature in the home and a smart switch for one-touch control over smart bulbs.
The efficiency of Quirky’s crowdsourcing inventiveness and the marketing and distribution power of GE offer “an exceptional opportunity to make the connected home a reality for everyone — accessible, affordable and focused on the foundational elements of how a home works,” said Beth Comstock, GE’s chief marketing officer. “This includes lighting, energy management and safety. We have seen tremendous success working with Quirky and its community of inventors to find new ideas and bring them to market at remarkable speed.”
Crowdsourcing can also be the basis for innovative design. A startup company called Local Motors is building automobiles with open-source architecture, and has built a committed network of talented professionals to work on its cars. Local Motors, whose name is derived from its belief that auto manufacturing could be smaller, decentralized and modular, is also deeply committed to 3-D printing, and received a lot of attention for printing a car on stage at the Detroit Auto Show in 2015.
Greg Rucks, an expert in automotive lightweighting who contributed to the ahead-of-its-time Hypercar hybrid developed by the Rocky Mountain Institute in the 1990s, said he’s intrigued by the possibilities of crowdsourcing. “It’s an interesting idea to outsource the design,” Rucks said. “The Hypercar was developed internally, but with today’s ease of sharing data, something like that could really work. If everything is open-source, then protecting your intellectual property isn’t a huge concern — as it is with many suppliers today.”
”There is significant environmental benefit to increasing the use of existing goods and reducing the demand for new goods.” — Anders Fremstad, Colorado State University
At the other end of the consumption cycle, Rubicon Global is tapping into the data it collects through its platform to divert waste streams from landfills and turn them into revenue streams. For instance, food scraps can go into anaerobic digesters, to be made into fuel or fertilizer. “A digester with just a small food waste stream isn’t viable,” Rubicon founder Nate Morris said. “But if we can aggregate 50,000 tons per month, we can match supply and demand.”
Data can also be used to enable vast efficiencies in garbage pickup. Rubicon is launching a new model in which customers will use the company’s app to schedule a truck when their dumpster is actually full, rather than regularly scheduled pickups that might not be needed. Cameras can monitor the dumpster level, and sensors can indicate when pickups happen. The potential savings through avoided truck trips — measured in local emissions and greenhouse gas — is clearly enormous.