Estimation of shadow prices of soil organic carbon depletion and freshwater depletion for use in LCA

Abstract

The interpretation of differences between alternative systems in life cycle assessment (LCA) can be problematic when different impact categories point to different directions. Using shadow prices is one way to overcome this problem, as the results are expressed in a monetary value, making comparison easy for decision makers. However, for the International Reference Life Cycle Data System midpoint impact categories ‘water depletion’ and ‘land use’, the shadow prices were missing. In the current paper, these were derived from literature sources. Abatement-based shadow prices (Pa) were established from the costs of the abatement measures minus the additional benefits. The damage-based shadow price (Pd) was based on the economic damage per unit of impact. Damage to ecosystems or human health was not included, as monetary values were lacking. As a consequence, Pd is an underestimation. Pa prices for land use, based on soil organic carbon (SOC) depletion, were derived from the cost of abatement measures like adding organic matter to agricultural soil or changing tillage. The response of crop yield to SOC, for several countries and crops, was used for the Pd calculation. For water depletion, Pa was based on water saving measures and desalination techniques, and Pd was based on economic losses due to water unavailability. The following shadow prices were found for SOC depletion: Pa of 0.10 € kg−1 SOC and Pd of 0.0286 € kg−1 SOC. For water depletion, Pa of 15.8 € m−3 eq. was based on replacing turf with less-water-consuming planting. The value of water for irrigation was the base for the Pd 5.17 € m−3 eq. Freshwater and SOC Pa values unexpectedly exceeded the Pd values. This originated partly from the methods used. Pd was established by averaging marginal costs, while Pa used the most expensive measure, and this may lead to Pa exceeding Pd. Furthermore, the damage-based Pd for SOC and water depletion was mainly based on crop yield, and other types of ecological or societal damage will exist. Including these damages that lacked reliable data will increase Pd. The shadow prices presented here are the first science-based global estimates. For LCA, the Pd values should preferably be used. The values are regarded as conservative estimates since only economic damage was included as other damages like ecological damage could not be monetised. The estimated shadow prices were derived for impacts where economic data is relatively scarce, and this limited the quality of the estimates. More extensive studies are needed to further improve the quality of the estimated prices.