The eco-costs/value ratio: A tool to determine the long-term strategy for delinking economy and environmental ecology

Looking at the dynamic changes in our world, the ever growing economy seems to be one of the major rootcauses of the continuing deterioration of our environment. The question is: what can be done? Stopping the economic growth seems no realistic option, so the solution must be found in a better eco-efficiency of our systems for production and consumption (“de-linking of economy and ecology”). Future products and services need to have a high value/costs ratio combined with a low burden for our environment. At the Delft University of Technology, a LCA (Life Cycle Analyses) based model has been developed to assess the eco-efficiency of products, services, houses, buildings etc. The model is applied as well for EIA (Environmental Impact Assessment) of the urban and rural planning. It is called the model of the Ecocosts/Value Ratio, in short EVR (Vogtlander, 2001) [1]. The basic idea of the EVR model is to link the ‘value chain’ (Porter, 1985) [2] to the ecological ‘product chain’. In the value chain, the added value (in terms of money) and the added costs are determined for each step of the product ‘from cradle to grave’. Similarly, the ecological impact of each step in the product chain is expressed in terms of money, the so-called eco-costs. The ratio of eco-cost and value is defined in each step in the chain as: eco-costs EVR value = (1) The eco-costs have been defined in terms of marginal prevention costs ( end of pipe as well as system integrated ) for pollution and materials depletion. The eco-costs are ‘virtual’ costs: these costs are related to measures which have to be taken to make (and recycle) a product ‘in line with earth’s estimated carrying capacity’. These eco-costs are estimated on a what if basis (which technical measures are required to lower the current pollution and resource depletion to sustainable level?). The value in the model is the market value: the fair price as perceived by customers. The advantage of such a definition of eco-efficiency (instead of using costs ) is that the consumer behaviour is incorporated in the model. This makes the model suitable for strategic design of the transition towards an environmentally sustainable society: green products and services will only survive in our free market economy when they have a good value for the consumers.