How the PQS may foster the
circular economy
T
he term ‘circular economy’ is appearing more and more in the corporate nomenclature, but what does it mean? As we search for understanding, it helps if we contrast the circular economy with the economic model that it aims to replace: the linear economy. For centuries now, humans have participated in an economic model that pulls resources from the earth and manipulates them to add value. These transformed resources are then traded among participants in the economy and once they are no longer useful, they are disposed of. This process is very linear for the resources in question and they typically have only one dedicated use throughout their lifecycle. Supporters of the circular economy feel as though there is a better way. In a circular economy, resources will have multiple uses throughout their lifecycle through longer-term use, reuse, and recycling. In this model resources can be re-introduced into the economy through multiple pathways. This is the concept of circularity and amongst other positive effects for business, it has the potential to reduce waste, reduce input cost, and relieve the pressure of resource scarcity that is responsible for the volatile commodity prices markets currently face. The circular economy does not come without challenges though. Consider how product leasing and sharing models could potentially affect cash flows for both the manufacturers and consumers of a product that is currently sold, consumed, and disposed of. In the traditional model, a large sum of money will change hands CLICK HERE to return to Table of Contents
at the beginning of the product life cycle, whereas in the circular model, smaller, but more stable amounts will transact for an extended period of time. How might this affect product R&D funding or company valuations for example? While the circular economy presents both opportunities and challenges for all of us, proponents are driving towards its adoption across many industries, including building and construction. Here are thoughts offered by a Professional Quantity Surveyor (PQS) on how the professional can use, add value and address circularity in the building industry. Enabling circular economy for the built environment The built environment is a major consumer of natural resources, as our world population grows rapidly, and therefore responsible for the fast pace of resource depletions. Engineering and design firm, Arup, estimates that some 50% of global steel production is used
by the engineering and construction industry. Resources will only keep getting harder to access, with rising costs, not to mention unsustainable physical and economic waste when they are not reused. Buildings and infrastructure are capital-intensive structures, designed for long life. In 2017, the average age of commercial buildings in the US was estimated by the real estate data firm, SMR, to be about 50 years. In the linear economy, the construction and demolition of buildings result in large waste for the landfill – we’ll refer to those as ‘capital wastes’. Also, operating buildings leaves behind wastes in the form of components that are replaced at the ends of their lives – we call these the ‘operational wastes’. With circularity in the built environment, all or most of these capital and operational wastes can be avoided, but doing so requires the participation of all stakeholders: owners, construction professionals, users and occupants, regulators, and so on.
Winter 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 33
