Circular economy in development projects: quantitative assessment of benefits for investors, users, and society through TCO, LCCA, and social return on investment models

Abstract

The study focuses on a quantitative assessment of how the implementation of circular principles in modern development affects the interests of investors, users, and society when compared to traditional construction practices. The aim of the work is to test the hypothesis that accounting for the full life-cycle cost of a building and external social and environmental effects makes it possible to justify the economic feasibility of the circular approach despite higher initial investments. The materials used include two simulation models of a standard residential complex with an area of twenty-five thousand square meters – a traditional one and one designed according to principles of design for disassembly, the use of materials with high recycled content, and the implementation of resource-efficient engineering systems. The methodology is based on the integration of total cost of ownership analysis and life-cycle cost analysis with a planning horizon of fifty years, as well as on the application of the social return on investment (SROI) calculation method with monetization of key externalities, including reduction of greenhouse gas emissions, decreased consumption of non-renewable resources, reduced landfill burden, and improved public health. The calculations are based on estimate, regulatory, and market data on the cost of materials and equipment, building energy modeling, manufacturer specifications, and healthcare system statistics, while scenario and sensitivity analyses are applied. The obtained results show that with an increase in capital expenditures of approximately eleven percent, the circular model ensures a reduction in total operating costs by almost forty-three percent and transforms the end-of-life stage from a cost source into a revenue source due to the high residual value of materials and modules, leading to a reduction in the discounted full life-cycle cost by about twenty-three percent compared to the traditional project. For the end user, annual housing operating costs are reduced by more than forty percent, which is equivalent to savings exceeding one thousand euros for a typical eighty-square-meter apartment. Monetization of social and environmental benefits demonstrates additional value for society exceeding seven million euros over the facility’s life cycle, and the ratio of total monetized benefit to additional capital investment is slightly above two, confirming the high social profitability of circular development. It is concluded that an integrated model combining financial and socio-environmental indicators can serve as an effective decision-support tool for investors, developers, financial institutions, and public authorities in shaping sustainable construction policy and selecting priority projects.