Economic Impacts of Resource Efficient Business Models in Electricals

1st March 2013

This report analyses take-back for re-sale schemesleasing and refurbishment and extended product lifetimes using four example products.

Key findings
For TVs, the take-back for re-sale business model leads to an additional increase in GDP of over £750m in 2020 (compared to an alternative scenario).
If the TV model were scaled up to the whole electronics sector (for which TVs compose only 13%), this could leverage over seven times the amount of additional GDP.

Overview

Overview

This report analyses a selection of Resource Efficient Business Models (REBMs) in four key product sectors (white goods, clothing, electronics and furniture), to assess their potential impacts on the UK economy. The formulation and macro-economic assessment of these models naturally involves making assumptions which are clearly explained in the report. Radical examples were purposefully modelled to demonstrate the “maximum impact” scenario. This is to help policymakers and delivery bodies understand the consequences of these models becoming successful.

Methodology

In broad terms, the project has operated a two-phase methodology, with Ricardo-AEA leading the first phase, and Cambridge Econometrics leading the second phase.

Phase 1

The first phase involved the identification and analysis of relevant REBMs to take forward to the second phase of the project.

Phase 2

The second phase of the project involved running the detailed scenarios (developed during phase one) in the MDM-E3 model to investigate the potential macroeconomic consequences to the UK economy of greater prevalence of resource efficient business models. The Cambridge Multisectoral Dynamic Model, EnergyEnvironment-Economy (MDM-E3) is a computer model of the UK economy maintained by CE as a tool for forecasting and scenario analysis.

Results

Results

  • For TVs, the take-back for re-sale business model leads to an additional increase in GDP of over £750m in 2020 (compared to an alternative scenario).
  • For clothing, the impact is even greater at over £1bn additional GDP in 2020.
  • If the TV model were scaled up to the whole electronics sector (for which TVs compose only 13%), this could leverage over seven times the amount of additional GDP.
  • The take-back models also create an even more significant improvement in the UK balance of trade due to lower reliance on imports. This implies that widening take-back for re-sale schemes beyond TVs and clothing might deliver a noticeable improvement in both GDP and trade.
  • For each business case a ‘business-as-usual’ was compared with simulated scenarios. Each business model is measured against three key indicators (Gross Domestic Product (GDP), Net Trade and Employment) and an assessment as to whether the impact is large enough to be considered meaningful at the macroeconomic level. 
  • In general the results indicate that, while using fewer raw materials, none of the REBMs would adversely affect economic activity, and some of them would actually increase GDP (a key variable used to demonstrate economic success).

The results are subject to various assumptions, and the scenarios were tested using sensitivity analysis in order to validate the robustness of the results. Radical examples were purposefully modelled to demonstrate the “maximum impact” scenario. 

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Documents

Documents

Want to find out more? You can find further information on resource efficient business models using the following links:

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