Rethinking Housing: Leveraging Product-Service Systems For A Circular Housing Economy

Abstract

Despite the urgency of environmental concerns, a transition to Circular Economy (CE) housing has been slow to unfold. The challenge lies not just in technically designing houses and their elements to function within a closed system, but also in cultivating stakeholders' commitment to managing them in circular ways. This underscores the need to rethink the industry’s business models through the lens of a CE. One promising business model frequently cited for its CE potential is the Product-Service System (PSS), as a combination of tangible products and intangible services that are jointly capable of fulfilling user needs. More commonly applied and researched in the field of manufacturing, the PSS shifts the focus from selling products to selling their function. That is, value resides not solely in physical products but in their usage. With suppliers maintaining responsibility throughout the products’ life cycle, the PSS aligns incentives towards reduced resource usage and waste generation. The PSS, however, is an emerging phenomenon in the housing context and research on its application is limited. This study relies on multiple sources of qualitative data, drawing insights from broader literature and 15 semi-structured interviews with key stakeholders in the sector, in developing a conceptual model. This conceptual model encapsulates findings to elucidate the concept of PSS as a business model for circular housing. It underscores focusing on a broader view of value, collaboration through intermediary-led value networks, and performance-linked mechanisms in the value capture for operationalisation. Additionally, reflecting on the context of housing, the implementation barriers are identified. These barriers highlight the necessity of holistic interventions that encompass regulatory reforms, a rethink of traditional values and norms and cultural shifts. Beyond the theoretical contributions, this study offers a valuable guide for practitioners and policymakers seeking to harness the benefits of PSS in advancing a CE in housing.