Prospective life cycle and circularity assessment of circular business models using an empirically grounded agent-based model

Abstract

Despite the need for methodologies that support early-phase decision-making in the transition to a circular economy, current sustainability assessments often lack a prospective method that dynamically accounts for consumer decision-making based on empirical evidence. This study addresses this need by evaluating the circularity and environmental impacts of circular business models over a 30-year period, using an empirically grounded agent-based model coupled with life cycle assessment and material flow analysis. We developed a methodology to parameterize agents’ decision-making using data from demographically representative surveys and to prospectively assess the sustainability impacts of circular strategies. The case study examines the reuse, refurbishment, and subscription models of refrigerators and laptops in Japan. Results from Morris Elementary effects method and scenario analyses revealed that manufacturer-led refurbishment could reduce emissions of the whole society by 10%–12% and extend product lifetimes by 30%–33%. In contrast, the subscription model shows minimal benefits, with improvements of only 0%–3%, primarily due to consumer preferences for new products. Our consequential approach extends beyond technical strategies to evaluate the effectiveness of strategies targeting consumer behavior, including pricing, advertisements, and improvements in repair and collection services. The findings highlight the need for combining synergistic circular and diffusion strategies and suggest the need for a reorientation of policy efforts from end-of-life material recovery to refurbishment, reuse, and repair, supported by intensive campaigns and substantial price reductions in circular offerings. The methodology presented here facilitates prospective, dynamic, and consequential assessments of circular economy strategies to enhance consumer acceptance and ensure sustainability gains.