Consumer behavior in circular business models: Unveiling conservation and rebound effects

Abstract

Consumer engagement with circular business models can either foster sustainable consumption or drive circular economy rebound effects. Many studies assessing the environmental benefits of circular business models rely on assumptions about consumer behavior or do not explicitly address rebound effects. Consequently, the environmental benefits of circular business models might be overestimated. To consolidate current knowledge, we revisit 30 empirical case studies of business-to-consumer and consumer-to-consumer circular business models. To critically evaluate the overlap between circular and sustainable consumption, we assess consumer behavior from the perspective of conservation and rebound effects accounting for the contextual factors influencing consumer behavior, and we appraise the environmental impacts of circular consumption. We identify seven rebound mechanisms (consumption accumulation, income rebound, direct and indirect motivational rebound, respending, substitution rebound, and product care rebound) and four conservation mechanisms (consumption reduction, demand displacement, substitution, and product lifetime extension). The results of the environmental impact assessments are aligned with observations about consumer behavior, revealing cases in which circular consumption, compared to linear consumption, leads to both lower impacts despite rebound effects and higher impacts because of backfire effects. Rebound effects seem likely when the value proposition entails convenience or enables new forms of consumption, while conservation effects seem likely when business models promote sufficiency. Our findings emphasize that circular consumption is not inherently sustainable, highlighting the influence of the context of consumption and business model design on consumer behavior. We argue that the mitigation of consumer-level rebound effects should entail a user-centric business model design integrating sustainability principles, as well as consideration of potential rebound effects in a circular economy policy design. This study sheds light on the challenges and opportunities in achieving circular and sustainable consumption. We derive directions for future studies, calling for interdisciplinary approaches integrating psychological and sociological explanations of consumer behavior to identify and quantify rebound effects.