Abstract
The transition to a Circular Economy (CE) is promoted as a strategy for resource efficiency and sustainability, yet it can also trigger unintended rebound effects (RE) that erode expected resource and climate benefits. Existing RE assessments have typically focused on simplified efficiency calculations, giving limited attention to consumer behaviour, systemic feedback, and interactions between biological and technological cycles. This study applies and evaluates AIMRE, a System Dynamics (SD) based framework for the ex-ante identification and mitigation of potential RE, through a case study in the Danish housing sector. The case investigates the introduction of bio-based building blocks designed under dual circularity principles, combining renewable materials with modular design to enable material recirculation. AIMRE integrates structured stakeholder input with various tools such as the Rebound Effect Conceptual Framework (RECF), causal loop diagrams (CLDs), and stock and flow diagrams (SFDs) to capture adoption dynamics and motivational mechanisms. Simulation results demonstrate that while adoption of sustainable housing increases potential material efficiency, perceived environmental benefit (e.g., lower carbon footprint) and efficiency gains (e.g., faster construction) may legitimise the construction of larger homes, offsetting expected savings. Findings highlight AIMRE’s value as a co-development tool for business and policymakers alike, offering predictive insights for refining CE initiatives, advancing sufficiency strategies, and designing policies that safeguard sustainability outcomes.