Skip to main content
SpringerLink
Log in

Economic modelling and indicators in life cycle sustainability assessment

  • LIFE CYCLE SUSTAINABILITY ASSESSMENT: FROM LCA TO LCSA
  • Published:
The International Journal of Life Cycle Assessment Aims and scope Submit manuscript

Abstract

Purpose

Sustainability assessment in life cycle assessment (LCA) addresses societal aspects of technologies or products to evaluate whether a technology/product helps to address important challenges faced by society or whether it causes problems to society or at least selected social groups. In this paper, we analyse how this has been, and can be addressed in the context of economic assessments. We discuss the need for systemic measures applicable in the macro-economic setting.

Methods

The modelling framework of life cycle costing (LCC) is analysed as a key component of the life cycle sustainability assessment (LCSA) framework. Supply chain analysis is applied to LCC in order to understand the relationships between societal concerns of value adding and the basic cost associated with a functional unit. Methods to link LCC as a foreground economic inventory to a background economy wide inventory such as an input–output table are shown. Other modelling frameworks designed to capture consequential effects in LCSA are discussed.

Results

LCC is a useful indicator in economic assessments, but it fails to capture the full dimension of economic sustainability. It has potential contradictions in system boundary to an environmental LCA, and includes normative judgements at the equivalent of the inventory level. Further, it has an inherent contradiction between user goals (minimisation of cost) and social goals (maximisation of value adding), and has no clear application in a consequential setting. LCC is focussed on the indicator of life cycle cost, to the exclusion of many relevant indicators that can be utilised in LCSA. As such, we propose the coverage of indicators in economic assessment to include the value adding to the economy by type of input, import dependency, indicators associated with the role of capital and labour, the innovation potential, linkages and the structural impact on economic sectors.

Conclusions

If the economic dimension of LCSA is to be equivalently addressed as the other pillars, formalisation of equivalent frameworks must be undertaken. Much can be advanced from other fields that could see LCSA to take a more central role in policy formation.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

Notes

  1. www.exiobase.eu

References

  • Aghion P, Howitt P (1998) On the macroeconomic effects of major technological change. Ann Econ Statist 49–50:53–75

    Google Scholar 

  • Aghion P, Howitt P (2009) The Economics of Growth. MIT Press, Cambridge and London

    Google Scholar 

  • Alcamo J (ed) (1994) IMAGE 2.0: Integrated modelling of global climate change. Kluwer Academic Press, Dordrecht, Netherlands

    Google Scholar 

  • Alcott B (2009) Historical overview of the Jevons paradox in the literature. In: Polimeni JM, Mayumi K, Giampietro M, Alcott B (eds) The Myth of Resource Efficiency: The Jevons Paradox. Earthscan, London, pp 7–78

    Google Scholar 

  • Ayres RU, Warr B (2005) Accounting for growth: the role of physical work. Struct Change Econ Dynam 16(2):181–209

    Article  Google Scholar 

  • Barro RJ, Sala-i-Martin X (1994) Quality Improvements in Models of Growth. Quality Improvements in Models of Growth. C.E.P.R. Discussion Papers, CEPR Discussion Papers: 1076

  • Benko T, Szanyi A, Mizsey P, Fonyo Z (2006) Environmental and economic comparison of waste solvent treatment options. Cent Eur J Chem 4(1):92–110

    Article  CAS  Google Scholar 

  • Berck P, Hoffmann S (2002) Assessing the employment impacts of environmental and natural resource policy. Environ Resource Econ 22(1):133–156

    Article  Google Scholar 

  • BMU (1998) Nachhaltige Entwicklung in Deutschland, Entwurf eines umweltpolitischen Schwerpunktprogramms (Sustainable development in Germany—environmental policy program). Bonn: Ministry for Environment, Nature Protection and Reactor Safety. Nachhaltige Entwicklung in Deutschland, Entwurf eines umweltpolitischen Schwerpunktprogramms (Sustainable development in Germany—environmental policy program). Bonn: Ministry for Environment, Nature Protection and Reactor Safety

  • Bracciali A, Cervello S, Gatti P (2008) Acoustic Effectiveness of Damped Wheels and Impact on Life-Cycle Cost of Different Typologies of Passenger Trains. In: Schulte-Werning B, Thompson D, Gautier P-E et al (eds) Noise and Vibration Mitigation for Rail Transportation Systems, vol 99. Notes on Numerical Fluid Mechanics and Multidisciplinary Design. Springer Berlin/Heidelberg, pp 257–263. doi:10.1007/978-3-540-74893-9_36

  • Chenery HB, Watanabe T (1958) International comparisons of the structure of production. Econometrica 26(4):487–521

    Article  Google Scholar 

  • Dahlström K, Ekins P (2007) Combining economic and environmental dimensions: Value chain analysis of UK aluminium flows. Resour Conservat Recycl 51(3):541–560

    Article  Google Scholar 

  • Dandres T, Gaudreault C, Tirado-Seco P, Samson R (2011) Assessing non-marginal variations with consequential LCA: Application to European energy sector. Renew Sustain Energ Rev 15(6):3121–3132

    Article  Google Scholar 

  • Dandres T, Gaudreault C, Tirado-Seco P, Samson R (2012) Macroanalysis of the economic and environmental impacts of a 2005–2025 European Union bioenergy policy using the GTAP model and life cycle assessment. Renew Sustain Energ Rev 16(2):1180–1192

    Article  Google Scholar 

  • Defourny J, Thorbecke E (1984) Structural path analysis and multiplier decomposition within a social accounting matrix framework. Econ J 94:111–136

    Article  Google Scholar 

  • Ekvall T, Andrae A (2006) Attributional and consequential environmental assessment of the shift to lead-free solders. Int J Life Cycle Assess 11(5):344–353

    Article  CAS  Google Scholar 

  • Ereev SY, Patel MK (2012) Standardized cost estimation for new technologies (SCENT) – methodology and tool. J Bus Chem 9(1):31

    Google Scholar 

  • European Commission (2010) International Reference Life Cycle Data System (ILCD) handbook. Publ Office Eur Union. doi:10.2788/96557

  • EUROSTAT (2005) Measuring progress towards a more sustainable Europe. Measuring progress towards a more sustainable Europe. European Communities

  • Foran B, Lenzen M, Dey C (2005) Balancing Act—A Triple Bottom Line Account of the Australian Economy. Balancing Act—A Triple Bottom Line Account of the Australian Economy. CSIRO Resource Futures and The University of Sydney, Canberra, ACT, Australia

  • Ghosh A (1958) Input-output approach in an allocation system. Economica 25(97):58–64

    Article  Google Scholar 

  • Girod B, de Haan P, Scholz R (2011) Consumption-as-usual instead of ceteris paribus assumption for demand. Int J Life Cycle Assess 16(1):3–11

    Article  Google Scholar 

  • Granovskii M, Dincer I, Rosen MA (2006) Economic and environmental comparison of conventional, hybrid, electric and hydrogen fuel cell vehicles. J Power Sourc 159(2):1186–1193

    Article  CAS  Google Scholar 

  • Guinée JB, Heijungs R, Huppes G, Zamagni A, Masoni P, Buonamici R, Ekvall T, Rydberg T (2011) Past Life Cycle Assessment: Present, and Future. Environ Sci Technol 45(1):90–96

    Article  Google Scholar 

  • Gujba H, Mulugetta Y, Azapagic A (2010) Environmental and economic appraisal of power generation capacity expansion plan in Nigeria. Energ Pol 38(10):5636–5652

    Article  Google Scholar 

  • Hawken P (1993) The Ecology of Commerce—A Declaration of Sustainability. ISBN 0-88730-655-1 edn. Harper Business, New York

  • Heijungs R, Suh S (2002) The computational structure of life cycle assessment. Kluwer Academic Publishers, Dordrecht, Netherlands

    Book  Google Scholar 

  • Heijungs R, Huppes G, Guinée JB (2010) Life cycle assessment and sustainability analysis of products, materials and technologies. Toward a scientific framework for sustainability life cycle analysis. Polym Degrad Stab 95(3):422–428

    Article  CAS  Google Scholar 

  • Hertwich EG (2005) Consumption and the Rebound Effect: An Industrial Ecology Perspective. J Ind Ecol 9(1–2):85–98

    Google Scholar 

  • Hertwich EG (2012) Life Cycle Sustainability: Technologies, Actions and Institutions. (draft)

  • Hertwich EG, Sanders M, Wood R (2011) Prospective Sustainability Assessment of Technologies: Indicators and measures of economic impact. Prospective Sustainability Assessment of Technologies: Indicators and measures of economic impact PROSUITE Project Report Task 2.1. Utrecht University, Utrecht

  • Hunkeler DJ, Lichtenvort K, Rebitzer G, Ciroth A, SETAC-Europe (2008) Environmental life cycle costing. SETAC

  • Jevons WS (1866) The coal question: an inquiry concerning the progress of the nation, and theprobable exhaustion of our coal mines. Macmillan & Co, London

    Google Scholar 

  • Kloepffer W (2008) Life cycle sustainability assessment of products. Int J Life Cycle Assess 13(2):89–95

    Article  Google Scholar 

  • Kruse S, Flysjö A, Kasperczyk N, Scholz A (2009) Socioeconomic indicators as a complement to life cycle assessment—an application to salmon production systems. Int J Life Cycle Assess 14(1):8–18

    Article  Google Scholar 

  • Kuznets S (1955) Economic growth and income inequality. Am Econ Rev 1:1–28

    Google Scholar 

  • Lenzen M, Treloar G (2003) Differential convergence of life-cycle inventories towards upstream production layers. J Ind Ecol 6(3–4):137–160

    Google Scholar 

  • Leontief W (1941) The Structure of the American Economy, 1919–1939. Oxford University Press, Oxford, UK

    Google Scholar 

  • Linnanen L, Luoma P, Pesonen H-L (2002) Ecological tax reform—a value chain level approach. Bus Strateg Environ 11(3):170–180

    Article  Google Scholar 

  • May JR, Brennan DJ (2006) Sustainability assessment of australian electricity generation. Process Saf Environ Prot 84(2):131–142

    Article  CAS  Google Scholar 

  • Miller RE, Blair PD (1985) Input-Output Analysis: Foundations and Extensions. Prentice-Hall, Englewood Cliffs, NJ, USA

    Google Scholar 

  • Moe E (2010) Energy, industry and politics: Energy, vested interests, and long-term economic growth and development. Energy 35(4):1730–1740

    Article  Google Scholar 

  • Murphy DJ, Hall CAS (2011) Energy return on investment, peak oil, and the end of economic growth. Ann NY Acad Sci 1219(1):52–72

    Article  Google Scholar 

  • Nakamura S, Rebitzer G (2008) Environmental Life Cycle Costing. In: Environmental Life Cycle Costing. CRC Press, pp 35–57. doi:10.1201/9781420054736.ch3

  • Norris G (2001a) Integrating life cycle cost analysis and LCA. Int J Life Cycle Assess 6(2):118–120

    Google Scholar 

  • Norris GA (2001b) Integrating Economic Analysis into LCA. Environ Qual Manag 10(3):59–64

    Article  Google Scholar 

  • Parikh U (2002) Life cycle accounting: towards life cycle design. Int J Life Cycle Assess 7(3):183–183

    Article  Google Scholar 

  • Rasmussen PN (1956) Studies in Intersectoral Relations. North-Holland, Amsterdam, Netherlands

    Google Scholar 

  • Rebitzer G, Hunkeler D (2003) Life cycle costing in LCM: ambitions, opportunities, and limitations—discussing a framework. Int J Life Cycle Assess 8(5):253–256

    Article  Google Scholar 

  • Schmidheiny S (1992) Changing course: a global business perspective on development and the environment. MIT Press, Cambridge, Mass

    Google Scholar 

  • Schwab Castella P, Blanc I, Gomez Ferrer M, Ecabert B, Wakeman M, Manson J-A, Emery D, Han S-H, Hong J, Jolliet O (2009) Integrating life cycle costs and environmental impacts of composite rail car-bodies for a Korean train. Int J Life Cycle Assess 14(5):429–442

    Article  Google Scholar 

  • Seuring S, Schmidt W-P, Ciroth A, Rebitzer G, Huppes G, Lichtenvort K (2008) Modeling for Life Cycle Costing. In: Environmental Life Cycle Costing. CRC Press, pp 17–34. doi:10.1201/9781420054736.ch2

  • Sohn J (2004) Do birds of a feather flock together? Economic linkage and geographic proximity. Ann Reg Sci 38(1):47–73

    Article  Google Scholar 

  • Solow RM (1956) A contribution to the theory of economic growth. Q J Econ 70(1):65–94

    Article  Google Scholar 

  • Sorrell S (2009) Jevons’ Paradox revisited: The evidence for backfire from improved energy efficiency. Energ Pol 37(4):1456–1469

    Article  Google Scholar 

  • Stiglitz J, Sen A, Fitoussi J-P (2009) The Measurement of Economic Performance and Social Progress Revisited. The Measurement of Economic Performance and Social Progress Revisited. Commission on the Measurement of Economic Performance and Social Progress, Paris

  • Stölting W, Spengler T (2005) Life cycle considerations in remanufacturing strategies—a framework for decision support. In: Fleuren H, Hertog D, Kort P (eds) Operations Research Proceedings 2004, vol 2004. Operations Research Proceedings. Springer Berlin Heidelberg, pp 50–58. doi:10.1007/3-540-27679-3_7

  • Swarr T, Hunkeler D, Klöpffer W, Pesonen H-L, Ciroth A, Brent A, Pagan R (2011a) Environmental life-cycle costing: a code of practice. Int J Life Cycle Assess 16(5):389–391

    Article  Google Scholar 

  • Swarr T, Hunkeler D, Klöpffer W, Pesonen H-L, Ciroth A, Brent A, Pagan R (2011b) Environmental Life Cycle Costing: A Code of Practice. Society of Environmental Toxicology & Chemistry

  • Takase K, Kondo Y, Washizu A (2005) An analysis of sustainable consumption by the waste input-output model. J Ind Ecol 9(1–2):201–220

    Google Scholar 

  • Thiesen J, Christensen TS, Kristensen TG, Andersen RD, Brunoe B, Gregersen TK, Thrane M, Weidema BP (2008) Rebound effects of price differences. Int J Life Cycle Assess 13(2):104–114

    Article  Google Scholar 

  • Thomassen MA, Dolman MA, van Calker KJ, de Boer IJM (2009) Relating life cycle assessment indicators to gross value added for Dutch dairy farms. Ecolog Econ 68(8–9):2278–2284

    Article  Google Scholar 

  • UN (2001) Indicators of Sustainable Development: Guidelines and Methodologies. Indicators of Sustainable Development: Guidelines and Methodologies. United Nations, New York

    Google Scholar 

  • Van Den Bergh JCJM, Truffer B, Kallis G (2011) Environmental innovation and societal transitions: Introduction and overview. Environ Innov Soc Transit 1(1):1–23

    Article  Google Scholar 

  • Vendrusculo E, Queiroz G, Jannuzzi G, da Silva JH, Pomilio J (2009) Life cycle cost analysis of energy efficiency design options for refrigerators in Brazil. Energ Effic 2(3):271–286

    Article  Google Scholar 

  • Weidema BP (1993) Market aspects in product life cycle inventory methodology. J Clean Prod 1(3–4):161–166

    Article  Google Scholar 

  • Weidema B (2006) The integration of economic and social aspects in life cycle impact assessment. Int J Life Cycle Assess 11(Special Issue 1):89–96

    Article  Google Scholar 

  • Wood R, Garnett S (2010) Regional sustainability in Northern Australia—A quantitative assessment of social, economic and environmental impacts. Ecolog Econ 69(9):1877–1882

    Article  Google Scholar 

  • Wood R, Lenzen M (2009) Aggregate measures of complex economic structure and evolution a review and case study. J Ind Ecol 13(2):264–283

    Article  Google Scholar 

  • World Bank (2011) The Changing Wealth of Nations: Measuring Sustainable Development for the New Millennium. World Bank, Washington, DC

    Google Scholar 

  • World Commission on Environment and Development (1987) Our Common Future. Oxford University Press, Oxford

    Google Scholar 

Download references

Acknowledgments

Research funding from the European Union through the 7th framework programme (Prospective Sustainability Assessment of Technologies, www.prosuite.org) is acknowledged.

Author information

Authors and Affiliations

  1. Industrial Ecology Program, NTNU - Norwegian University of Science and Technology, Trondheim, 7491, Norway

    Richard Wood & Edgar G. Hertwich

Authors
  1. Richard Wood
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Edgar G. Hertwich
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Richard Wood.

Additional information

Responsible editor: Alessandra Zamagni

Rights and permissions

Reprints and permissions

About this article

Cite this article

Wood, R., Hertwich, E.G. Economic modelling and indicators in life cycle sustainability assessment. Int J Life Cycle Assess 18, 1710–1721 (2013). https://doi.org/10.1007/s11367-012-0463-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11367-012-0463-2

Keywords

Search

Navigation