Can the Sharing Economy Alleviate Some of the World’s Toughest Problems?

Some leading experts say yes. If we’re smart.

While the benefits of the sharing economy are often viewed through a fairly tight lens — it’s a nice way to save on an overnight stay, borrow a drill, or grab a cheaper ride to the airport, for instance — we may be missing the big picture, and an enormous opportunity.

The world continues to struggle with some of the most daunting and pervasive challenges it has ever encountered. Global warming, overpopulation, income inequality, and uneven educational opportunities are among a host of vexing issues that threaten the economic stability of many countries and even the long-term viability of the earth as a habitable home.

During much of the 20th century, the task of tackling such complex public issues as pollution, poverty, and job creation was relegated to the government, which had the size, authority and financial resources to make things happen. Increasingly, however, large governmental efforts in these areas have fallen short, weighed down by their own size and lack of clear direction. In the US, by some estimates, only one percent of federal non-defense discretionary spending is backed by any evidence of effectiveness. For instance, the feds have spent decades and innumerable dollars trying to improve the earning of low-income individuals through a series of training and employment programs, but the General Accountability Office found little evidence that any of these efforts worked.

Enter the multidimensional sharing economy, estimated to potentially generate more than $335 billion in revenue by 2025, up from $15 billion today, according to PwC. The sharing economy is based on a tech-enabled ability to identify underutilized goods or services, and match these goods or services with people who need them. It’s peer-to-peer connection at its finest, a potent combination of people and platform that can potentially impact a wide variety of fields. One of the most critical and immediate is in the area of sustainability.

Our world “is littered with underutilized assets,” said April Rinne, a sharing economy expert and adviser, in an interview with Reinvent. Rinne has traveled to almost 100 countries and worked in about 50 of them, seeing first-hand the effects of the sharing economy. “If we could identify that underutilization and then start putting those assets into better use at a macro level, you start seeing a very real material effect on sustainability.”

The key to that shift involves sharing underutilized things, spaces and skills, Rinne says, and then figuring out, “how do we design products, services and urban infrastructure to prioritize and promote a shared use model rather than an ownership model.”

Rinne: “Our world is littered with underutilized assets.”

The sharing economy could provide an important pathway to improved environmental sustainability, because of its unrivaled ability to leverage tech in the service of transactional efficiency — connecting those who have with those who want.

The ramifications of that change can be truly profound, and many experts are encouraging us to use these new powers and dream big. “Let’s rethink the world using today’s technology,” says Tim O’Reilly, founder and CEO of O’Reilly Media in an interview with Reinvent. Instead of getting caught up in the glitter of the latest-greatest cell phone componentry — a bigger screen! new colors!— it’s time to seek out the long-term potential implications. For example, we fuss over the quality of a new camera in the iPhone as a tool for better selfies, and forget that it’s the same super-sharp lens that can be used to diagnose a deadly disease.

O’Reilly says this big picture thinking is essential: “Let’s stop optimizing for the short-term. Let’s start optimizing for the long-term, and think about how to make the society we want. Let’s harness technology to do the impossible…..there’s so much ahead of us.”

O’Reilly: “Let’s rethink the world.”

O’Reilly is not alone is his positivity. Experts say the sharing economy could improve our planet and alleviate suffering in a number of ways. Here’s a quick (and admittedly limited) list of what’s possible, in two major areas:

Sustainability

Reduce traffic — Researchers at UC Berkeley conducted a shared-use vehicle survey and found that for every car made widely available for sharing, more than 10 are taken off of cities’ congested freeways. Ride-hailing services like Uber, Lyft, and Rideshare can provide a more financially efficient and ecological intelligent alternative to owning a car. Regular ride-hailing users rely heavily on a wide range of personal transportation options that go well beyond ride-hailing alone — such as taking public transit, walking, or riding a bike. To be sure, this trend carries a strong geographic component: For Americans who live far from urban centers, a personal vehicle might be the only option. But for city dwellers, the easy usability of ride-hailing apps can take a lot of vehicles off the road.

Cut waste — Just a few years ago, the traditional image of success was the aggregation of material goods. Buy a car. Then a house. Fill it with stuff. Upgrade. Repeat. We live in a world overstuffed with goods and gadgets, kitchen supplies we rarely use and clothes we hardly ever wear. Today an emerging access mindset suggests we don’t need to own every single thing — everyone on the block doesn’t have to have their own snow blower or lawn mower, so why don’t we pool together and reduce over-consumption? The idea of possession is no longer paramount. Less is the new more. This is particularly true with Millennials (those born between 1981 and 1998) who often value experience over goods. More than three in four Millennials would chose to spend money on an experience rather than buy something, according to a study by Harris Group.

Decrease carbon emissions — According to a study conducted by the Cleantech Group and underwritten by Airbnb, trips that rely on home sharing companies, including bed-and-breakfasts, emit 66 percent less CO2 than trips using hotels — including hotels with very high efficiency ratings. Most of the water used by hotels is for cleaning, laundry, cooking, and other related activities.

Socio-economic

Create jobs — According to a report out last year, 45 million adults in the US — or more than one in five people — have worked in the sharing economy. Many earned money through the sharing economy not as full-time work, but rather as part-time supplemental income. More than half of those who offer services in the sharing economy say their financial situation has improved over the past year, compared to 34 percent of the general population, and 64 percent expect their financial situations to improve in the next year.

Promote trust — Peer-to-peer collaboration, the cornerstone of the sharing economy, is built on trust between buyer and seller. In a world where leaders and governments increasingly prey on the fear of those who are different from us and come from different places, the collaborative economy regularly demonstrates how, by working together, we can create great things and provide more opportunity.

Improve communities — The sharing economy also brings economic benefits to local business. Travelers who choose home exchanges, for example, have more money to burn if they don’t cough up hundreds of dollars a night at fancy downtown hotels. These extra funds might instead be spent at neighborhood businesses such as restaurants, feeding a broader variety of businesses. With the sharing economy, an entire community can benefit from an individual’s vacation, not just one hotel.

The story of the 21st century

Ultimately, the sharing economy recognizes a simple fact: we have a very limited set of natural resources and need to use these limited resources to support more than seven billion people. An increased reliance on collaboration and peer-to-peer networks could result in a fundamental shift in the way our world functions, and deliver hope for the future.

Few people feels as strongly about that as Adam Werbach, a founder of the sharing service Yerdle and the youngest-ever president of the Sierra Club.

Werbach: “This will be the economic story for the 21st century.”

“I’m an optimist,” admits Werbach, in his interview with Reinvent. “So I hope this will be the economic story for the 21st century: how we finally figured out that there would be 10 billion people on the planet and we only had one planet to live on. And that all of us need to have food, shelter and basic human rights, and that the sharing economy was the mechanism by which we actually found enough for everyone on this planet.”