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