Abstract
Current methods available to calculate eco-efficiency require a sample of products and are not applicable for one product only. Furthermore, the methods require a weighting process. Thus, they contain subjectivity, or it is possible that the weighting factors' values do not match stakeholders' values. This paper proposes a new method of measuring the eco-efficiency ratio. The numerator is the contribution of a product's life cycle to the economy, and the denominator is the economic burden caused by a product's life cycle. The economic contribution is calculated using the input-output method. The economic burden is calculated by estimating the health damage caused by pollutant emissions over a product's life cycle. The damage is expressed in Disability Adjusted Life Years (DALY) and is valued using the human capital approach. The applicability of the proposed method is presented by calculating the eco-efficiency of electricity generations in Indonesia. The proposed method shows that the eco-efficiency ratio of a product depends on the income and tax multiplier, supply chain process efficiency, value of the product, GDP per capita, and the level of emissions. The proposed method enhances the decision-making process because it is more straightforward, free from subjectivity, and applicable for one product only.
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