ECOST- the natural cost of consumption
Evaluating a true cost of consumption in terms of natural resources
It can be very perplexing for the environmentally conscious consumer to contrast different “items” in terms of their cost to the environment (also referred to as externalities). What will have less of an environmental impact, Is it better to drive or fly and can it be at all compared to other activities using a common environmental currency?
As a proof of concept we are trying to focus on several questions listed below which are of interest to many people.
- Plastic or paper? A discussion in terms of natural costs for disposable bags, cups and dishes, etc. Is it better to use a paper bag, plastic bag or some reusable bag that is more difficult to produce but lasts longer? What is the cost of using disposable dishes in comparison to reusable ones? What if the plates are made out of compostable corn product, paper, or plastic?
- Drive or fly?
- Bus, train or carpool?
- Dishwasher or hand wash? A discussion in terms of natural costs of weather it is better to wash those dishes by hand or in a dishwasher?
- Hybrid or conventional? buying a hybrid or just a smaller car? What is the natural cost of producing and replacing the battery of a hybrid car?
- Local/organic or conventional food?
We begin by serving as an annotated portal to the literature with the hope that we will be able to follow up with independent integrative assessment when we have assembled a suitable collection of people.
The task of The Natural Cost is to estimate, for each such item, the cost in terms of resources: energy, pollution, water, bulk resource etc. and in terms of the aggregate cost of offsetting the individual costs (eco$). This estimate will be based on expert analysis of each item.
We hope to help make more educated decisions, enable appreciation of the costs of consumption, educate about the complexities and challenges of environmental costs evaluation.
Clearly this is an immense task and the estimates are bound to be dependent on the assumptions taken, the expert evaluating them, etc. Yet the need is great and the heightened level of awareness, coupled with the technological advances in communicating information, makes it very timely. The hope is that such a resource will be instrumental in the following ways:
- Individuals will be able to make more informed decisions about their consumption
- Assuming this will affect the choices of consumers, firms will have an incentive to try to minimize the Natural Cost of their products and thus advance their sales. This can create a positive feedback loop based on competition.
In order to achieve such a tool there will need to be a large evaluation process of the complete life cycle costs as well as advances in the “algorithms” or economic framework of integrating these externalities. We are encouraged by examples such as the Forest Stewardship Council, and other organizations. It is well understood that for such an effort to succeed there will be a need for significant funds and many dedicated people to invest years of work.
Methodologies & Examples
In a nutshell Ecost is basically an aggregate of complicated environmental impact data about a certain product or service, also known as eco-indicators or eggregate. In other words complicated environmental impacts about products and services such as Life Cycle Assessment are smartly aggregated into simple data forms that can be easily used by consumers, designers or others for comparisons and evaluations. Obviously this simplification requires scientific research and proofs otherwise they will fail to provide the main environmental themes and 'prices'. Uncertainties in data and different methodologies proposed for the same process/product are commonplace.
- Internalizing externalities - internalizing the externalities of products and services is accounting the monetary costs of the damage to health and the environment which were often not incorporated in the market value of the process or product. This allows to reflect the 'real' cost of a product or service. The ExternE  project is a EU initiative to put a price tag on externalities.
- The Environmental Impact Quotient (EIQ) is a tool to assess the environmental impact of pesticides used in agriculture . The complicated task of mapping the environmental impact of pesticides is eggregated into a relatively simple equation which consists of three components: farmer, consumer and ecological impacts. Each component includes the toxicity and other factors of the pesticide in question and the end calculation gives the amount of impact. The higher the value the higher the environmental impact on the farmer, consumer or the environment. The total EIQ is the sum of these three components. Thus, the EIQ is a tool for farmers and consumers to assess, manage, and consume crops based on readily information on pesticides' environmental impact. As such EIQ serves as an ecost for a particular pesticide used .
- The Ecological footprint is an ecological indicator of human appropriation of resources. It transforms this impact into single global units of area that can be eggregate of a single value cost, or ecost. It can thus be compared to the available natural capital, the biocapacity. The Water footprint is also an ecost of a product or service where the price value is the amount of water (direct and indirect) consumed during the lifecycle of a product or during a certain process or service. Carbon footprint labels, which show the amount of GHG emissions of products during their lifecycle, has been incorporated in several leading retailers: The carbon regulation label  is an initiative of the Carbon Trust in the UK; Casino retailer in france ; and the german PCF initiative a collaboration of 10 business .
- Life Cycle Assessment - Referred to as LCA this method is an life cycle assessment of a product or service's environmental impact from its extraction (or beginning) to its end life. At first an inventory of all relevant environmental data is collected for every phase of the life cycle. Consequently, Tthe eco indicator was developed as an eggregation of complicated Life Cycle data into simple categories that enable evaluating environmental impacts of a product, and product comparisons. The eco indicator 99 is a weighting method of impacts into predefined categories and is widely used in Life Cycle Assessment in the LCIA (LCA Inventory analysis) stage. Relying on previous experience (Eco indicator 95) where too many categories were defined (e.g. acidification, eutrophication etc) the designers of the Eco indicator 99 defined 3 categories. Too many categories resulted in a difficulty to determine the relative contribution of each category on ecosystem and man and then arriving at a global score by summation. The three damage categories are 1) Human health - the overall number of diseases and life years lost due to impacts that cause disease such as ozone depletion, climate change, toxics etc (units of DALY). 2) Ecosystem Quality - it is evaluated as the change in biodiversity. Land use changes, toxicity and more all contribute. 3) Resources - the amount of surplus energy required in the future to extract the resources in question. This assumes that the more a resource is extracted the more energy consuming it becomes to extract it in the future since that resource becomes more scarce. The units of the eco-indicator are arbitrary and are refereed to as Pt, where 1/1000 of a Pt is estimated as the environmental impact of an average European throughout a year. The eggregation process of the Eco indicator from emissions (impacts) into scores is noted in figure 1. For each category damage models had to be used to assess the score and weighting Environment product declarations or EPDs are aimed at standardizing environmental impacts of products by providing specific categories for specific products and simplifying Life Cycle Assessments . Or in other people words "Environmental Product Declarations are defined by ISO 14025 as being “quantified environmental data for a product with pre-set categories of parameters based on the ISO 14040 series of standards, but not excluding additional environmental information.” While this sounds confusing, an EPD is essentially a verified document containing LCA results and additional product and environmental performance information. It is a single source for finding diverse information about a product’s environmental performance, verified by a qualified third party" . A climate Declaration is a single environmental impact category (GHG in CO2 equiv.) used to asses a product , intended to further eggregate the complicated multi-category EPD. "A climate declaration "describes the emissions of green-house gases, expressed as CO2-equivalents for a product's life cycle. It is based on verified results from life cycle assessment (LCA) - based information in accordance with ISO 14025"." . A recent attempt to eggregate LCA data in a different way is done by Geortgakellos . Aware of the time and effort consuming of LCA inventories construction combined with the need to provide designers and policy makers with practical tools, he proposes a methodology which is based on a low and high level aggregation. In the first step, as in LCA, low level aggregation is performed for inventories with the same measuring units. Afterward a high level aggregation is performed on categories with different measuring units but with common basis (e.g. all pollutants) resulting in a 5-category polygon. This aggregation is done by dividing each pollutant with the threshold value allowed for this specific pollutant, resulting in the amount of mass of air or water needed to dilute each emission to acceptable values defined by the threshold value. The resulting polygon area is a measure of the environmental impact, the higher it is the greater the environmental impact of this specific product.
- A multi-dimensional sustainability index label by Wal-Mart , which marks the sustainability of the companies and not their products using a questionnaire.
- Emergy Analysis (EA) - Emergy is the amount of solar energy required (directly or indirectly) to obtain a product (good or service) or energy flow in a given process. Solar energy is the common basis of all energy flows in all ecosystems and thus serves as a common denominator. The greater the emergy flow necessary to sustain a process, the greater the quantity of solar to produce a process/product, the greater the environmental cost. Thus emergy accounting accounts for the time (or memory) of all the solar energy consumed during the process. Emergy is usually measured in solar energy joules (sej). The solar emergy required to generate a unit flow or storage of available energy is called solar transformity and is expressed as solar emergy joules per joule of output flow (seJ/J). Mathematically: M = τB Where M is Emergy, τ is the transformaty and B is the available energy. Emergy per unit (g) is the solar emergy needed to obtain one unit of a product (specific emergy) . H. Odum from the university of Florida has developed this concept from the 1980s. According to him nature is organized in energy hierarchies defined by the transformities of the objects (i.e. inner property, like mass). The higher the transformity of an object the more solar energy is required to produce 1 J of its available energy, thus this product is higher in the hierarchical chain . By converting all the material, energy and monetary flows into input and output emergy flows for a given product or ecosystem one has reduced a multi dimensional accounting problem into a one dimensional scalar system treating ecological and economical counterparts with the same coin (figure 2). Developed specific indicators that track inputs and outputs, sustainable non-sustainable, and monetary flows can hint on the environmental burdens associated with the system, the sustainability of the product and ways of achieving maximum yields .
- Another possibility to define the ecost is by assessing the monetary values of the ecological burdens associated with a product or service. Several attempts to value ecological services (notably ) have given a tag price on ecosystem functions that have been taken for granted and constantly excluded from market evaluations. The methods used to evaluate ecosystem functions are both direct and indirect. Direct methods include valuating timber, food, and material from their market prices. Indirect methods include assessing the price of soil erosion control for instance by avoided costs or damage avoided (the former by alternative methods - how much would it cost to build a man made erosion control system like dams, and the latter by how much would it cost to clean lakes, dams etc caused by soil erosion etc). Another indirect method is willingness-to-pay: using this method the cultural value of ecosystems was assessed by asking people how much will they be willing to pay to see these ecosystems etc. By conducting detailed inventories of the life cycle of products or processes we can assess their environmental stress, define the ecosystems that are harmed and then evaluate the market costs of these burdens (e.g. ).
Dimitrios A. Georgakellos, 2005. Evaluation of life cycle inventory results using critical volume aggregation and polygon-based interpretation. Journal of Cleaner Production, Volume 13, Issue 6, May 2005, Pages 567-582.
Jorge H. Hau and Bhavik R. Bakshik Promise and Problems of Emergy Analysis, Dept. of Chemical Engineering, Ohio State university (online article).
Hong-Fang Lua, Wen-Ling Kangb, Daniel E. Campbellc, Hai Rena, Yao-Wen Tand, Rui-Xiang Fengd, Jin-Tang Luod and Fei-Peng Chenb 2009, Emergy and economic evaluations of four fruit production systems on reclaimed wetlands surrounding the Pearl River Estuary. China Ecological Engineering Volume 35, Issue 12, December 2009, Pages 1743-1757.
Robert Costanza, Ralph d'Arge, Rudolf de Groot, Stephen Farberparallel, Monica Grasso†, Bruce Hannon, Karin Limburg£star, Shahid Naeem, Robert V. O'Neill, Jose Paruelo, Robert G. Raskin, Paul Suttonparallelparallel & Marjan van den Belt, 1997. The value of the world's ecosystem services and natural capital. Nature 387, pages 253 - 260; doi:10.1038/387253a0
O. Ayalon, Y. Avnimelech, M. Shechter, 2000. Application of a comparative multidimensional life cycle analysis in solid waste management policy: the case of soft drink containers. J. Environmental Science and Policy, Vol. 3, Issue 2- 3, pages 135-144 (online article).
- simapro - a company that specializes in life cycle cost assessments
- WithoutHotAir - Lots of useful quantitative data and other material in a new free online book by David MacKay
- The sustainability Consortium is a collaboration of academics, government agencies and NGOs initiated by Wal-Mart to develop a sustainability index for products.
- the goodguide is another attempt to internalize environmental impacts into products.
Clearly at this stage the formulation is very naïve and rudimentary, any comments and suggestions will be highly appreciated.
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