The Econo-Environmental Return (EER)

Abstract

Aim and Background

Many analytical tools have been developed to support the implementation of sustainable development. Principal among these are the ones that are based on physical aspects such as life cycle assessment (LCA), while others focus on non-physical aspects, namely on monetary concepts, such as life cycle costing and total cost assessment. Each kind of tool is designed to assess a specific aspect (environmental or economic) of the entire life of a good or a service. Unfortunately, even if the literature clearly states the advantage of combining these tools, case studies with global conclusions considering both aspects are still rare. Most often, studies conclude separately on each aspect; environmental impact and cost assessment.

Definitions

The already published concept ofReturn on Environment (ROE), inspired from return on investment, is a first step in the right direction for combining these tools and hence, achieving better alternative comparisons. Considering some limitations as to the ease with which it compares two or more similar goods, two new indexes are suggested here. The first one, called theEnvironmental Return (ER), focuses only on environmental aspects. It allows the comparison on an environmental basis of several goods or services fulfilling the same function. The second definition, called theEcono-Environmental Return (EER), is an index created by the combination of the environmental impact assessment results (such as an LCIA) and those from an economic assessment (such as an LCC or a TCA). From a simple decision rule, a decision-maker can compare several goods on both environmental and economic aspects.

Discussion and Conclusion

A simplified case study is used to present a numerical application of these two definitions and to interpret their different results and conclusions. Two different types of broadloom carpet, PET (recycled polyester) and nylon, are compared. When they are only compared on an LCIA basis, the PET carpet is preferred over the nylon one, while the opposite is true when they are compared on both economic aspect and environmental impact bases. The major advantage of theEcono-Environmental Return is that two goods can be compared without requiring a specific industrial sector reference value.