Resource accounting for a circular economy: evidence from a digitalised waste management system

ABSTRACT

The transition to a circular economy requires accounting for all resource streams in the economy to facilitate the maintenance of these resources at their highest value and utility for as long as possible. In this paper, we investigate the role of resource accounting tools and practices in driving the transition to a circular economy by measuring resource streams and taking measures to promote circularity in those resource streams. In particular, we focus on (1) the role of digitalised resource accounting systems in enabling the identification and reporting of resource streams, and (2) the effect of using such information to incentivize household recycling behavior to promote more circularity in resource streams. Our empirical setting is the development of a digitalised waste management system in Western Norway. Our research design has three empirical pillars: qualitative interviews of managers in the industry, historical data analyses of waste generation and recycling, and two illustrative large-scale natural quasi-experiments on more than 170,000 households' recycling behavior. Our study illuminates the development of the resource accounting system and demonstrates the effect of using resource accounting information to incentivize households' recycling behavior through experimentation with a “pay-as-you-throw” (PAYT) system. Our findings show the manner in which the resource accounting system enabled measurement of resource streams and the use of that resource information to promote circularity among households. Furthermore, our experiments reveal the effectiveness of using resource accounting data for incentivizing recycling behavior. Thus, our study illuminates the role of accounting in the transition to a circular economy.

KEYWORDS:

• Resource accounting
• circular economy
• digitalization
• natural experiment
• sustainability
• waste management

Acknowledgements

We are grateful to the editor, the special issue editors and to two anonymous reviewers for their valuable suggestions and comments, which helped us improve the manuscript. We are indebted to Toralf Igesund and Kirsten Grevskott at BIR for invaluable help with the data upon which our paper builds, and to former CEO Steinar Nævdal for initiating the research collaboration that made this study possible.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 We elaborate on these two research aims in the next section, informed by our review of the literature.

2 The number of households in the experiments is an approximation based on the following calculation. The nine municipalities included in the study had a combined population of approximately 350,000 at the time of the experiments. According to Statistics Norway (2020), the average household in the region had 2.07 inhabitants; thus, the number of households in the study is approximately 170,000.

3 An acronym for the Bergen-area Intermunicipal Renovation-company.

4 Until recently, the company was called WasteIQ. Its name changed on October 1st 2021, and we have chosen to use the company’s current name Carrot throughout the paper.

5 Due to the patterns in the aggregate resource stream data reported in section 4.3, and in light of our prediction that the PAYT system should reduce residual waste generation and increase other recycled resource streams, we report one-tailed p-values for our t-tests. The exception is the results for paper and cardboard, which diverged from this pattern. We explore this surprising result elsewhere in the paper. We are grateful to an anonymous reviewer for suggesting that we report one-tailed p-values for our significance tests.

6 Our empirical investigation is limited to the early stages of the development of such a resource accounting system. That is, it does not cover attempts to capture increases in the longevity of throughput, the secondary use of materials in the system and so on, even though such pilot projects are currently ongoing in BIR and Carrot's innovation projects.

Additional information

Funding

We gratefully acknowledge the financial support from the Norwegian Research Council [grant number 299378] and the Norwegian Retailers’ Environment Fund [grant number 1124294].