Uncertainty, variability, price changes and their implications on a regional building materials industry: The case of Swiss canton Argovia

Abstract

There is an increasing effort of the cement and concrete industry to increase material efficiency and reduce CO2 emissions. Several strategies have been identified to achieve this goal, but the implementation of a circular economy (CE) strategy is being pursued most actively by governments and public organizations to increase material efficiency and improve sustainability in the construction industry. This transition to a CE, however, is a process, which features a high multi-dimensional complexity and a fundamental change of a complex socio-technical system. It can be interpreted as a co-evolutionary process between public policies and business models It is, therefore, necessary to understand the existing system and the interactions between business models and public policies to support decision- and policy-makers in the transition towards a CE.We would like to contribute to this understanding and identify initial implications on which business models and which public policies support a transition towards a CE. The aim of the paper is to provide a novel analysis of the economic structure of a regional building materials industry to identify regional conditions and give first implications on how to implement a CE in a regional context. We use an integrated assessment model to enable a comprehensive environmental and economical assessment of an industry and to generate data for policymaking. This method combines Material-Flow-Analysis (MFA) and Life-Cycle-Assessment (LCA) using an input-output approach. We demonstrate how we can evaluate uncertainties in model application and demonstrate in a case study that our model produces robust results. On this basis, we discuss what additional insights on systems behavior we gain from uncertainty analysis focusing on price data. We use an uncertainty analysis as a basis for identifying implications for business models and policies. In addition, we use the price model in the Input-Output Analysis (IOA) to investigate the impact of price changes on linked sectors. We use an exemplary assessment of the building materials industry in the Swiss canton of A-rgovia as a case study.First, we were able to show that the model used here is robust and has reasonable uncertainties. Using the results of the Sensitivity-Analysis we could formulate initial indications of how business models are affected by the shift to CE. We have shown that vertical integration of different sectors makes sense regarding a CE to buffer price volatilities, but also to secure the supply of raw materials. Furthermore, the results of the uncertainty analysis and the price model provided us with initial findings, in which sectors policies are most efficient and how price changes affect the downstream sectors. The new approach presented here to capture a regional industry in detail using economic calculations and uncertainty considerations represents an important contribution to better understand a regional industry and to support the process of decision- and policymaking.