5.9 Life Cycle Costing
99
create specific eco-efficiencies for each indicator. This can be useful to single out
and communicate a specific environmental impact in the context of an LCA.
Making use of eco-efficiency opens up many opportunities for comparing technologies, product systems, and services by allowing for a quantitative connection
between economic and ecological impacts. In practice, eco-efficiency calculations
are used following the ISO 14045 standard by chemical companies such as BASF
(BASF, 2018).
While uncertainties in the economic outlook of a product or process are included
in the NPV calculation through the discount rate, uncertainties in the LCA’s
calculation of impacts (as well as consideration of risks with a low likelihood
of occurrence) are not always extensively considered in available LCA impact
methods. Values of eco-efficiency for specific products or processes should not be
considered absolute, and instead rather used only for supporting design comparisons
and understanding sensitivities. The development of the eco-efficiency calculation
has been important in helping to better take into account the external costs of
a product or process. However, a significant and remaining challenge is the fair
translation of calculated LCA impacts into monetary values that could be used to
reduce the NPV. If and how to place a monetary value on the health of humans and
ecosystems is to some extent subjective and, more generally, a topic of moral debate.
5.9
Life Cycle Costing
As mentioned at the start of the chapter, a full life cycle sustainability assessment
(LCSA) considers not just LCA but also life cycle costing (LCC) and social life cycle
assessment (SLCA). LCC predates the development of LCA and is an important
aspect to consider in parallel to an LCA. LCC is an analysis of the financial flows
of a product or process over its life cycle, and it helps to ensure the economic
balance by considering all of the costs involved across each step of the entire life
cycle. This includes costs that may be attributed to different stakeholders involved
at different stages. While LCC is often done by one particular stakeholder to help
inform their own decision-making regarding the product or process in question, it is
most beneficial when the results can be presented in a transparent way that helps to
inform all stakeholders involved.
Calculations within LCC help to compare product and process variants during
the design process in terms of their cost-effectiveness. Example costs that might be
involved in an LCC analysis of a product include:
• Research and development costs
• Production costs
• Distribution costs
• End-of-life costs (e.g., associated with reuse, recycling, and disposal processes)
99
create specific eco-efficiencies for each indicator. This can be useful to single out
and communicate a specific environmental impact in the context of an LCA.
Making use of eco-efficiency opens up many opportunities for comparing technologies, product systems, and services by allowing for a quantitative connection
between economic and ecological impacts. In practice, eco-efficiency calculations
are used following the ISO 14045 standard by chemical companies such as BASF
(BASF, 2018).
While uncertainties in the economic outlook of a product or process are included
in the NPV calculation through the discount rate, uncertainties in the LCA’s
calculation of impacts (as well as consideration of risks with a low likelihood
of occurrence) are not always extensively considered in available LCA impact
methods. Values of eco-efficiency for specific products or processes should not be
considered absolute, and instead rather used only for supporting design comparisons
and understanding sensitivities. The development of the eco-efficiency calculation
has been important in helping to better take into account the external costs of
a product or process. However, a significant and remaining challenge is the fair
translation of calculated LCA impacts into monetary values that could be used to
reduce the NPV. If and how to place a monetary value on the health of humans and
ecosystems is to some extent subjective and, more generally, a topic of moral debate.
5.9
Life Cycle Costing
As mentioned at the start of the chapter, a full life cycle sustainability assessment
(LCSA) considers not just LCA but also life cycle costing (LCC) and social life cycle
assessment (SLCA). LCC predates the development of LCA and is an important
aspect to consider in parallel to an LCA. LCC is an analysis of the financial flows
of a product or process over its life cycle, and it helps to ensure the economic
balance by considering all of the costs involved across each step of the entire life
cycle. This includes costs that may be attributed to different stakeholders involved
at different stages. While LCC is often done by one particular stakeholder to help
inform their own decision-making regarding the product or process in question, it is
most beneficial when the results can be presented in a transparent way that helps to
inform all stakeholders involved.
Calculations within LCC help to compare product and process variants during
the design process in terms of their cost-effectiveness. Example costs that might be
involved in an LCC analysis of a product include:
• Research and development costs
• Production costs
• Distribution costs
• End-of-life costs (e.g., associated with reuse, recycling, and disposal processes)