Accounting for imperfect displacement in life cycle assessment for refurbishing and remanufacturing operations

Refurbishing and remanufacturing are often championed for their potential to reduce environmental impacts, yet their true benefits remain a subject of debate. A primary challenge is imperfect displacement – where refurbished/remanufactured units do not fully substitute for new products – leading to rebound effects that can offset environmental gains. Recent Life Cycle Assessment (LCA) research has begun to address this through a displacement rate (DR), which compares the quantity of new products displaced to the quantity of refurbished/remanufactured products supplied to the market. However, practical approaches to estimating realistic DRs remain limited, with most studies resorting to subjective assumptions. This article shows how to endogenize DR by using an established modeling approach from the Operations Management literature. This involves modeling firm and customer decisions and estimating DR as a function of cost, market, and operational parameters. The authors propose that companies must verify whether this market-driven DR exceeds the ‘break-even’ DR – the threshold required for a circular strategy to achieve net environmental savings, as calculated through LCA. The authors demonstrate these notions through a case study in the electronics industry. Their results highlight that, for products with use- dominated impacts, companies must strategically select their target markets, as geography significantly influences both break-even and market-driven displacement. Overall, the authors provide scholars and practitioners with an interdisciplinary framework to evaluate the environmental benefits of refurbishing/remanufacturing strategies. This framework offers a practical calculation with feasible data requirements, enabling firms to simulate prospective scenarios and identify actionable levers to influence displacement with both environmental sustainability and profitability in mind.