From Life Cycle Costing to Economic Life Cycle Assessment—Introducing an Economic Impact Pathway

Abstract

Economic activities play a key role in human societies by providing goods and services through production, distribution, and exchange. At the same time, economic activities through common focus on short-term profitability may cause global crisis at all levels. The inclusion of three dimensions—environment, economy, and society—when measuring progress towards sustainable development has accordingly reached consensus. In this context, the Life cycle sustainability assessment (LCSA) framework has been developed for assessing the sustainability performance of products through Life cycle assessment (LCA), Life cycle costing (LCC), and Social life cycle assessment (SLCA). Yet, the focus of common economic assessments, by means of LCC, is still on financial costs. However, as economic activities may have a wide range of positive and negative consequences, it seems particularly important to extend the scope of economic assessments. Foremost, as the limitation to monetary values triggers inconsistent implementation practice. Further aspects like missing assessment targets, uncertainty, common goods, or even missing ownership remain unconsidered. Therefore, we propose economic life cycle assessment (EcLCA) for representing the economic pillar within the LCSA framework, following the requirements of ISO 14044, and introducing an economic impact pathway including midpoint and endpoint categories towards defined areas of protection (AoPs). We identify important target ratios by means of economic AoPs, which drive economic activities on the macro- and microeconomic level. Furthermore, we provide suggestions for midpoint and endpoint indicators representing the defined categories. With the presented EcLCA framework, a first step towards the inclusion of economic impacts within LCSA has been made. Relations between economic activities and resulting consequences are displayed, going beyond the cost-driven view of classical LCC. Further research and fine-tuning of the identified midpoint and endpoint categories and related indicators is, however, needed to enable a valid and consistent assessment basis for fostering the practical implementation of EcLCA and LCSA.