1 Introduction
Social and environmental impacts occur along the product life cycle and are
measured by different indicators. To assess the sustainability performance of a
product life cycle, a social, economic and environmental impact assessment is
needed.
Despite the absence of scientific agreement on a set of indicators to be considered in the framework of Life Cycle Sustainability Assessment (LCSA), several
implementations have been already realised at companies and product levels.
However, the results of a sustainability assessment are often expressed through
out several indicators, making their interpretation and the identification of the relative trade-offs challenging. A possibility to facilitate the interpretation is monetizing all impacts indicators. However, monetisation induced a set of
methodological issues and choices that are debatable and that must be known before
implementation. The aim of the session was to clarify the state of the art of related
methodological approaches, towards a guidance for businesses and governments in
order to correctly use monetisation in portfolio assessment and decision making.
Based on the outcomes of the session held at LCM 2017 conference, this paper
first presents the most important elements from the methodological state of the art,
and then some general guidance as well as concrete feedback from industries.
2 State of the Art of the Methodology
Monetisation is nowadays growing from research to standardisation. Monetary
valuation has been used in policy making for decades mostly in cost-benefit
analyses, since the early 30s in the United States. More recently in the European
Union where this approach is observed since the 90s, in directives such as the
National Emission Ceilings Directive (NEC directive (2001/81/EC), EU research
projects such as the National Energy Education Development project (NEED
(2007)), and many others. By the way, an umbrella of different concepts stays under
the monetization term such as: market price, abatement costs, societal costs &
benefits etc.
Mr. Philipp Preiss clarify the definition as follow, based on ExternE (2005) [1, 2]
researches:
• Externalities arise, when the social or economic activities of a participant have
negative or positive impacts on another participant and these impacts are not
fully accounted for or compensated by the first participant.
• External costs are externalities that are transformed into monetary values. They
are the share of damage costs which is not internalised.
Monetisation is promoted for several reasons. In the first hand, with monetisation of externalities the monetary values are shown explicitly. However, without
392
S. Morel et al.
Social and environmental impacts occur along the product life cycle and are
measured by different indicators. To assess the sustainability performance of a
product life cycle, a social, economic and environmental impact assessment is
needed.
Despite the absence of scientific agreement on a set of indicators to be considered in the framework of Life Cycle Sustainability Assessment (LCSA), several
implementations have been already realised at companies and product levels.
However, the results of a sustainability assessment are often expressed through
out several indicators, making their interpretation and the identification of the relative trade-offs challenging. A possibility to facilitate the interpretation is monetizing all impacts indicators. However, monetisation induced a set of
methodological issues and choices that are debatable and that must be known before
implementation. The aim of the session was to clarify the state of the art of related
methodological approaches, towards a guidance for businesses and governments in
order to correctly use monetisation in portfolio assessment and decision making.
Based on the outcomes of the session held at LCM 2017 conference, this paper
first presents the most important elements from the methodological state of the art,
and then some general guidance as well as concrete feedback from industries.
2 State of the Art of the Methodology
Monetisation is nowadays growing from research to standardisation. Monetary
valuation has been used in policy making for decades mostly in cost-benefit
analyses, since the early 30s in the United States. More recently in the European
Union where this approach is observed since the 90s, in directives such as the
National Emission Ceilings Directive (NEC directive (2001/81/EC), EU research
projects such as the National Energy Education Development project (NEED
(2007)), and many others. By the way, an umbrella of different concepts stays under
the monetization term such as: market price, abatement costs, societal costs &
benefits etc.
Mr. Philipp Preiss clarify the definition as follow, based on ExternE (2005) [1, 2]
researches:
• Externalities arise, when the social or economic activities of a participant have
negative or positive impacts on another participant and these impacts are not
fully accounted for or compensated by the first participant.
• External costs are externalities that are transformed into monetary values. They
are the share of damage costs which is not internalised.
Monetisation is promoted for several reasons. In the first hand, with monetisation of externalities the monetary values are shown explicitly. However, without
392
S. Morel et al.