This paper compares environmental impacts of the rental business model with the conventional model of manufacturing and selling. The case study examines a home use-water purifier by defining scenarios for operation and maintenance of the conventional and rental business models. Another purpose is to explore the potential improvement for the environmental performance of the rental business model in terms of the resource consumption and climate change.
The functional unit was supplying hot/cold drinking water for 15 years between 1998 and 2013. Primary data were from a Korean company that manufactures and servicizes water purifier; secondary data were from the Korean national LCI database, literatures, and interviews. Scenarios associated with all life cycle stages of a water purifier including operation and maintenance were based on current sales and rental market. Impact assessments were conducted according to the International Organization for Standardization’s 14044, and impact categories considered were global warming and abiotic resource depletion. The key issues and improvement potential of the rental business model were determined with the impact categories of global warming and abiotic resource depletion.
Results and discussion
This study indicates that the rental business model is more environmentally friendly than the conventional model in the impact on global warming while the conventional model shows lower abiotic resource depletion. Product operation was the most significant contributor to the selected environmental impacts for both conventional and rental models. Product maintenance was the second major contributor for the rental business model in terms of abiotic resource depletion. For the conventional model, however, production was a more significant contributor to the selected environmental impacts. The rental model showed approximately 32~37% improvements in the selected environmental impacts by focusing on the environmental education or information to consumers.
This quantitative life cycle assessment can be a tool for service business providers to understand the life cycle environmental impacts of Korean water purifier and explore potential improvement opportunities for sustainability. The lower life cycle impacts of the water purifier-rental business model can be attributed to the following: the preparation of instruction or environmental education regarding the consumer’s turning off behavior when the product is not in use, thus lower energy consumption during the use stage and shorter distance traveled for maintenance.
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A definition of PSS varies by authors, but this paper define PSS as a new business paradigm that generates profit by providing customers with integrated solutions of products and services that reduce the environmental impact while generating equal to or greater than those of the conventional business model (Chun and Lee 2013).
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This study was conducted as part of the “Development of Green Design Index” project (Grant No. M0000342) and financially supported by a grant from the R&D Program of the Korea Railroad Research Institute, Republic of Korea.
Responsible editor: Guido W. Sonnemann
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Chun, Y., Lee, K. Environmental impacts of the rental business model compared to the conventional business model: a Korean case of water purifier for home use. Int J Life Cycle Assess 22, 1096–1108 (2017). https://doi.org/10.1007/s11367-016-1227-1
- Business model
- Greenhouse gas (GHG) emissions
- Life cycle assessment (LCA)
- Product-service system (PSS)
- Water purifier