DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS • 61
Figure 15: Example of barrier analysis for opportunity ‘sharing and multi-purposing of buildings’ in Denmark pilot
BARRIER IMPORTANCE DESCRIPTION / COMMENTS
ECONOMICS
Not profitable for businesses 1 even if other barriers are overcome N/A
Capital intensive and/or uncertain payback times N/A
Technology not yet available at scale at a cost effective level N/A
MARKET
FAILURES
Externalities (true costs) not fully reflected in market prices N/A
Insufficient public goods / infrastructure 2 provided by the market or the state N/A
Insufficient competition / markets leading to lower quantity and higher prices than is socially desirable N/A
Imperfect information, for example asymmetric or high cost information, that negatively affects market
decisions
Not always clear to building owners and tenants whether sharing is
profitable net of costs (e.g. related to safety)
Split incentives (agency problem) when two parties to a transaction have different goals and levels of
information
N/A
Transaction costs such as the costs of finding and bargaining with customers or suppliers
It is costly (including in time) for building owners and tenants to find
other individuals or organisations to share their building with
REGULA-
TORY
FAILURES
Inadequately defined legal frameworks that govern areas such as the use of new technologies
Poorly defined targets and objectives which provide either insufficient or skewed direction to industry N/A
Unclear rules and regulations related to e.g. taxation, creating
uncertainty for parties that want to engage in sharing
Implementation and enforcement failures leading to the effects of regulations being diluted or altered N/A
Unintended consequences of existing regulations that hamper circular practices
Contractual restrictions exist on tenants sub-letting their houses or
flats for less than a year and there is concern that companies such as
Airbnb can start to turn residential areas into ‘hotel areas’
SOCIAL
FACTORS
Capabilities and skills lacking either in-house or in the market at reasonable cost N/A
Custom and habit: ingrained patterns of behaviour by consumers and businesses
There is an inherent resistance to change habits around housing, such
as sharing/renting out, and there are also deeply rooted norms and
traditions around the use of offices
Critical barrier (‘make or
break’)
Very important barrier
(to scale-up / acceleration
of lever)
Important barrier (to
scale-up / acceleration
of lever)
Limited or no barrier
1 At market prices excluding the full pricing of externalities such as greenhouse gas
emissions, ecosystem degradation and resource depletion
2 Infrastructure defined as fundamental physical and organizational structures and
facilities, such as transportation, communication, water and energy supplies and waste
treatment