Towards a New Measure of the Environmental Life Cycle Performance of Products from Consumption Perspective

The fact that “money is conserved”, as e.g. Dragulescu and Yakovenko (2000) highlight, makes it distinct from the other household resources. Saved time, as example, is actually net extra time available for activities and not handed over to the producers of the purchased products, in contrast to the situation for money that is merely transferred when purchasing a product.[1]

Eco-efficiency, i.e. the quotient of price per environmental impact of a product therefore is a useful indicator: in its most simple form, a twice as expensive product of the same impact effectively reduces the ability of the consumer to spend the money on consuming other goods (Huppes and Ishikawa 2005).

However, we argue here that the concept of eco-efficiency is not considering the effect of additional consumption if the product is only produced cheaper, but a higher profit is kept by the producer: this profit is used for investment by the producing company or distributed to the company owners, e.g. shareholders, and hence available for additional consumption, the same way as it would be available to the consumer of that product if instead the product price would be reduced. More precisely, all profits along the supply-chain (and of consumables during product use and end-of-life services) need to be excluded from the economic component of ecoefficiency, to avoid this distortion.

This insight clarifies from a different perspective that the limiting factor in global consumption is global production, which is obviously limited by the output of the active labour force: If a product is produced with less workforce along its supplychain, the not anymore required workforce is available for producing more of this product (or other products), hence increasing global production and consumption and hence environmental impacts. And the more qualified this not anymore required workforce is, the more overall production is increased, given the on average higher productivity of the higher qualified workforce. In short: The higher the quotient of the qualification-weighted amount of human working time q*t of a product and overall (i.e. normalized and weighted) environmental impact over the life cycle of a product, the less impacting the product, including considering the secondary effects of freed human work productivity (what is structurally equivalent to the effect by the enabled additional consumption by the product's consumer due to additionally available income).[2] This is called “Environmental work productivity” WPENV (Eq. 13.1):

With N being the normalization factor, W the weighting factor, and LCIA the LCIA result of the product, per impact category j.

The price of a product of the eco-efficiency concept is hence replaced by the work productivity, avoiding the distortion due to profits that are part of the consumer price of a product.

If we inverse this quotient, we get a measure for the environmental intensity of human work productivity WIENV (Eq. 13.2):

If using the global human productivity and global environmental impact, this is the global average environmental intensity of qualification-weighted human work WIENV,G.

We can use this measure to integrate the effect of different work intensity of a

product to correct the life cycle wide environmental impact of the product. By forming the quotient of the product-specific WIENV,P and the global average WIENV,G, we obtain a normalized factor that expresses the potential net change of environmental impacts due to the amount of human productivity our product binds. Applying this factor to the normalized and weighted LCIA results of the analyzed product yields it's actual impact IMPnet, including considering the approximated secondary consequences due to the specific environmental intensity of its production (Eq. 13.3):

It is important to highlight that this formula does not capture other secondary consequences and that it takes a product perspective.

  • [1] Note that also saving money in a bank account means consumption, as it allows other economic actors to take a loan and invest, same as buying on credit by the consumer. The only way to avoid that available household income is available for consumption, is to keep it at home (while that may mean that it marginally affects inflation)
  • [2] Note that the other secondary consequences that were addressed above are, however, not yet included
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