WINNIPEG, MB, Jan 27, 2014/ Troy Media/ – Last Wednesday, the U.S. Congress’ House Committee on Small Business held a hearing on what many experts believe is one of the most significant new sectors of the economy. While it is still in its infancy – even the most senior companies in the industry are only around five years old – and was initially seen by many as a niche curiosity, it has grown to the point where Forbes called it one of the most important economic developments to watch in 2014.
Officially known as ‘collaborative consumption’, it is more colloquially called the sharing economy, and proponents argue it will be essential to helping humans flourish in an increasingly dense, urban world.
While we are used to sharing certain goods (library books come to mind), the trend since the 1950s has been towards greater personal ownership. As generations of couples moved from cities to suburbs, they sought to fill their new homes and garages with cars, furniture, and appliances. Yet, for various reasons, millennials – those aged 20 to 35 – In large urban centres are increasingly spurning this consumption.
When it comes to transportation, for instance, they prefer to live in neighbourhoods where they do not need to drive frequently, are more concerned with the environmental impacts of driving, and are averse to the high cost of owning a personal vehicle. As such, they are choosing car-sharing over outright ownership to meet their transportation needs.
Today, collaborative consumption is spreading beyond just big-ticket items like cars. The nascent 1000 Tools startup lets people rent power tools from each other, for instance, and Union Kitchen in Washington offers communal kitchenware. These companies essentially ask, is it really necessary for the average person to own a full set of power tools, or an expensive camera, or certain sporting equipment, when they use these items only a few times a year? For many millennials, the answer is no. These young citizens are more concerned with access than ownership, and by sharing and renting can enjoy the products they want without the hassle and expense of purchase, storage, and maintenance.
Besides these personal benefits, collaborative consumption also makes for a more efficient use of resources. Most private cars, for instance, sit idle for about 90 per cent of the day, and households in the developed world have, on average, $3,000 worth of unused items. More broadly, as North America undergoes a new re-urbanization it is simply not possible for everyone to cram all the stuff they owned in a 2,000 square foot mini-mansion into a city townhome. With their dense, walkable neighbourhoods and easy access to restaurants and attractions, cities are attractive to young citizens, and sharing makes an urban lifestyle possible without sacrificing the amenities of a suburban one. As one company’s motto states, it allows citizens to “own less and do more”.
With so many advantages, it is not surprising more and more North Americans view collaboration as a useful consumption strategy. As this sector expands, however, it does mean governments will be confronted with new questions. What sort of insurance do ride-sharing companies need, for example? Studies suggest one shared car takes 12 private vehicles off the road. So what impact will this have on a city’s transportation network? Additionally, conventional urban design has embraced separation, with housing constructed well away from shopping districts and office parks, and the line between consumers and producers clearly demarcated; the sharing economy does away with these distinctions, and thrives in places where use patterns merge. As such, what sort of changes will need to be made to allow a larger sharing economy to function efficiently?
It is useful for federal governments to learn more about collaborative consumption, but it will be officials at the municipal and provincial/state level who will be grappling most directly with these new considerations. Local policymakers on both sides of the border should therefore be proactive in examining what effect the sharing economy will have within their jurisdictions.
Collaborative consumption has arisen out of a shift towards a culture that values the accumulation of experiences over assets, and greater financial uncertainty for young workers entering the labour force. These factors are not likely to go away anytime soon, and with a healthy sharing economy offering significant social, environmental, and economic advantages, it is in everyone’s best interest for governments to act now to devise policies and regulations that accommodate this exciting economic trend.
Benjamin Gillies is a political economy graduate from the University of Manitoba, where he focused on urban development and energy policy. He works as a consultant and as a columnist for Troy Media.
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