Stakeholders' perceptions of and willingness to pay for circular economy in the construction sector

The construction sector operates largely under a linear take-make-dispose model, fostering a demolition culture where end-of-life materials lose value. Transitioning to a circular economy (CE)—make-use-reuse—offers opportunities to reduce environmental impacts and create value across the built environment. The need is acute: construction and demolition waste (C&D) is massive and growing (e.g., 600 million tons in the U.S. in 2018), while the world faces substantial new building demand over the next three decades and stringent emissions reduction goals (e.g., EU −55% by 2030, climate neutrality by 2050). Circular practices that reduce, reuse, and recycle materials can help lower embodied carbon in buildings. Despite emerging policies, tools, certifications, and technologies that encourage circularity, implementation at scale remains limited. This study investigates current perceptions of circularity and reuse in the construction industry, quantifies willingness to pay (WTP) for circular practices, and identifies economic incentives and regulations that could accelerate adoption via a sector-wide survey of developers, design and construction teams, and material suppliers.

Existing research identifies multiple barriers to CE adoption in construction: cultural (e.g., lack of interest, collaboration), regulatory (e.g., weak frameworks, limited incentives), financial (e.g., high upfront costs, limited business cases), and sectoral (e.g., misaligned incentives). Reported cost premiums for circular practices vary by context. Earlier work found deconstruction cost premiums of 17–25% versus demolition, while recent analyses show mixed lifetime cost effects: recycled/biobased materials may not increase lifetime costs, disassembly can shift costs from end-of-life to upfront, and structural element reuse can raise total lifetime costs. At macro scale, recyclers and C&D waste generators can benefit economically, and end users can benefit when recycled materials are used. Profitability and supply chain effects are key to company adoption decisions. Steel reuse in the UK can be cost-competitive depending on refurbishment vs raw material costs. Circular business models and policy can enable value capture, but sector-wide quantifications of WTP and financial value remain scarce. Prior studies often provide case-specific, anecdotal, or high-level business model insights, underscoring the need for broader, quantitative assessments of perceptions and WTP across stakeholder groups in the built environment.

The study employed an iterative survey approach: exploratory interviews with 6 industry experts, literature review and survey development, pilot dissemination, final dissemination, and data analysis. Insights from preliminary interviews highlighted inconsistent definitions of circularity/reuse, multiple supply chain concern points, and the potential for regulation to facilitate reuse. Survey instrument: Questions were tailored to three stakeholder groups—developers/real estate, design and construction teams, and material suppliers—alongside a core set for all. The questionnaire comprised five sections: (1) company/demographics; (2) circular economy and reuse concepts; (3) supply chain and circular economy; (4) circularity (barriers, perceived premiums); (5) willingness-to-pay (WTP). Question types included multiple choice, text, drag-and-drop, and sliders, covering adoption status, perceived barriers, enablers/bottlenecks along the value chain, perceived cost/time premiums for deconstruction and reuse, and WTP metrics specific to each stakeholder group. Sampling and distribution: A closed-ended online questionnaire (Qualtrics) was disseminated via purposive and snowball non-probability sampling through existing networks, associations, and institutional partners (e.g., MIT Center for Real Estate, MIT Climate and Sustainability Consortium), reaching several hundred practitioners. The survey was opened by 95 people; 58 provided partial responses (≥5% answered), and 42 completed a majority (>50%). Responses from all 58 consenting participants were included for questions they answered. Reliability: Internal consistency was assessed using Cronbach’s alpha. For two common quantitative questions (perceived cost and time premiums; 33 respondents), α = 0.877, indicating acceptable reliability. For designers (14 respondents answering four quantitative items), α = 0.812. Sample sizes for real estate and suppliers were insufficient for separate alpha calculations. Analysis combined descriptive statistics (min, max, mean, median, SD, ranges) and qualitative synthesis of open-ended responses.

- Familiarity and adoption: 83% had heard of circularity before the survey. Across all respondents, 47.5% reported adopting circular practices, 35% had not, and 17.5% were unsure. Among those familiar with circularity, 53% had implemented practices. Reported practices included salvaging/reusing materials, using post-consumer crushed concrete aggregate, designing for circularity, and embodied carbon reduction efforts. - Barriers: Key perceived impediments included lack of standardized structural assessment methods (15.9%), client disinterest (15.9%), higher costs (12.5%), more complex logistics (12.5%), uncertainty about supply (11.4%), and lack of information about the process (11.4%). Longer construction time was cited by 3 respondents; 2 reported no interest. Barrier prominence varied by stakeholder: design/construction emphasized client interest and structural assessment methods; suppliers emphasized logistics and supply uncertainty; real estate emphasized structural assessment and costs. - Perceived premiums: Overall perceived deconstruction cost premium vs demolition averaged 66.4% (SD 54.23), with an average time premium of 46.4% (SD 49.20). By stakeholder, perceived cost premiums were: suppliers 105.5% (range 2–200%; median 101.5%), design/construction 54.9% (0–135%; median 50%), real estate 66.7% (5–161%; median 40%). Time premiums: suppliers 98.8% (15–200%; median 124%), design/construction 43.0% (0–135%; median 27.5%), real estate 31.7% (2–81%; median 25%). - Supply chain enablers/bottlenecks: The design phase was most often considered the largest enabler of reuse across actors and regions. Demolition practices and landfill/waste diversion were viewed as the largest bottlenecks; landfill/waste to landfill also appeared as an enabler, highlighting that bottlenecks can become enablers when addressed. - Willingness to pay (WTP): Real estate respondents were willing to accept an average 9.6% construction cost premium (SD 6.45; median 10%) contingent on a minimum 52.9% embodied carbon reduction (SD 24.55; median 50%). Design teams would implement circular practices at a mean design cost premium of 23.3% (SD 23.08; median 15%) and, under fixed-fee conditions, were willing to absorb costs averaging 23.7% of project design profits (SD 30.09; median 10%). Material suppliers reported willingness to pay a mean 54.2% premium (SD 49.27; median 37.5%) to implement circular practices for reused materials (n=6). - Motivations: Adoption drivers included future net-zero goals (20.7%), regulatory demands (19%), and client requirements (19%), followed by design team recommendations (13.8%), marketing/brand (10.3%), and government incentives (5.2%). Regionally, client demand and net-zero goals dominated in North America, Asia, and Europe, with regulation commonly third. - Openness to adoption: Despite citing barriers, many respondents remained open to circular practices: among those listing lack of information or higher costs, 7 and 10 respectively would still consider adoption; complex logistics (11) and supply uncertainty (9) showed similar openness. Overall, 26 would consider adopting circular practices, 12 might adopt with the right benefits, 1 would adopt only if mandated, and 1 opposed.

The study directly addresses the research goal of characterizing perceptions, WTP, and enabling conditions for circularity in construction. Results reveal substantial awareness and early adoption across stakeholders, yet persistent concerns about structural assessment standards, client demand, costs, logistics, and supply uncertainty. Quantified WTP indicates market readiness to pay premiums under certain conditions—most notably, real estate’s willingness to pay about 10% more for construction in exchange for roughly 50% embodied carbon reduction. This provides a concrete basis for aligning project requirements, procurement strategies, and policy instruments with stakeholder thresholds. Perceived premiums—especially for deconstruction and time—are high, particularly among suppliers, suggesting the need for standardization, streamlined logistics, and scale to reduce costs and perceived risks. The design phase emerged as a pivotal enabler, underscoring the importance of design for disassembly, specification practices that accommodate reused materials, and early collaboration across the value chain. Motivations centered on net-zero objectives, regulation, and client demand, indicating that policy signals, certification incentives, and informed clients can drive uptake. Together, these findings inform policymakers and market actors about where to focus interventions (e.g., standards for structural assessment, incentives to offset early premiums, support for reverse logistics) to accelerate circular adoption.

This sector-level survey provides an initial quantification of construction stakeholders’ perceptions and willingness to pay for circular practices. Key contributions include: (1) evidence that developers will accept approximately a 10% cost premium for substantial embodied carbon reductions (~50%); (2) designers’ willingness to allocate meaningful portions of fees or profits to enable circular strategies; (3) suppliers’ readiness to bear significant premiums to implement reuse practices; and (4) identification of major barriers (standards, costs, logistics, supply uncertainty) and the design phase as a key enabler. These insights outline the economic landscape for circular transition in the built environment and suggest that targeted incentives (e.g., tax exemptions, certification benefits), regulatory clarity (e.g., standardized structural assessment for reused components), and supply chain innovations could catalyze broader adoption. Future research should employ larger, more diverse samples; integrate more granular quantitative measures; assess consumer demand; evaluate regulatory and workforce constraints; and model project-level and portfolio-level financial outcomes under different circular scenarios.

- Sampling and generalizability: Non-probability purposive and snowball sampling; modest sample size (58 partial, 42 majority) limits generalizability and subgroup analyses. - Data structure: Many qualitative responses complicate quantification and cross-comparisons; more balanced quantitative/qualitative instruments could yield deeper insights. - Reliability by subgroup: Cronbach’s alpha adequate overall and for designers, but insufficient respondents to validate reliability separately for real estate and suppliers. - Scope gaps: The survey centered on firms’ willingness to implement circular practices; it did not deeply investigate consumer demand for sustainable buildings, detailed regulatory barriers across jurisdictions, or workforce training feasibility. - Potential regional effects: While markets were reported, the influence of regional circularity policies on responses was not explicitly measured. - Perception vs reality: Reported premiums and barriers reflect perceptions that may differ from realized costs/time on specific projects.