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Eco-Efficiency Analysis

Eco-efficiency analysis (EEA) is a tool for quantifying the relationship between economic value creation and environmental impacts, throughout the entire lifecycle of a product or service.[46-50] The term ‘eco-efficiency’ evolved from the work of the World Business Council for Sustainable Development (WBCSD) in response to the first United Nations Earth Summit. The WBCSD defines eco-efficiency as “the delivery of competitively-priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life-cycle.”[51] In other words, to be eco-efficient is to add more value to a good or service while simultaneously decreasing adverse environmental impacts. EEA evaluates products and services by examining their environmental impact in proportion to their cost-effectiveness. BASF Chemical Corp. was one of the first companies to establish an EEA methodology in the early 1990s with the goal of reducing the environmental impact and costs of its products and processes. BASF’s EEA tool quantifies the sustainability of products or processes throughout their entire life-cycle, beginning with the extraction of raw materials through the end of life disposal or recycling of the product. It compares two or more products analyzed from the end-use perspective to obtain comprehensive data on the total cost of ownership and the impact on the environment.[52]

Eco-Efficiency Analysis

EEA differs from benefit-cost analysis (jump to benefit-cost analysis) in that it does not seek to monetize environmental benefits or costs and compare them to non-environmental benefits or costs.[53] Whereas BCA typically seeks to evaluate the net social benefits of a policy or program compared to a baseline without the policy or program, EEA calculates the ratio of the total value of goods and services produced (output) to the sum of the environmental pressures created by the production of those goods and services (input). More sustainable alternatives have a higher output to input ratio, or eco-efficiency ratio.[54]

How can Eco-Efficiency Analyses contribute to sustainability?

Currently, EEA helps companies identify alternatives and opportunities to reduce environmental harm while increasing economic productivity by assessing products, processes, and overall systems over the entire life-cycle.[55] Efforts are underway to expand EEA to include a broader range of social considerations (socio-eco-efficiency analysis).[54]

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What are the main steps in an Eco-Efficiency Analysis?

There are many different approaches to EEA, but all methods typically include the assessment of economic impacts; the assessment of environmental impacts; discounting of impacts that occur in the future; and, aggregation of different environmental impacts into a single environmental damage index.[56] The economic assessment should reflect the viewpoints of both the manufacturer and the consumer, and should account for real and future costs over the entire life-cycle of the product or process.[57]

The environmental assessment typically considers the entire life-cycle of the product or process being evaluated, and therefore relies on the application of life-cycle assessment (jump to life-cycle assessment).[55] Environmental impacts may be determined based on five main aspects: raw materials consumption; energy consumption; intentional and accidental pollutant releases; toxicity potential of those releases; and, the abuse/risk potential. The economic and environmental effects of a product or process are often interrelated and should not be evaluated in isolation of one another.

Aggregating the environmental impacts into a single environmental damage index is complicated because there is typically no common standard of measurement, nor is there usually a set of unambiguous value-weights, such as market prices.[56] Stated preference approaches such as contingent valuation may be used to address this complication. In addition, weighting factors may be applied to reflect the scale of both economic and environmental impacts. Normalizing creates a common basis for comparison that uses corresponding reference scales. For example, the environmental assessment would be scaled to reflect the geographic scope of a country if the economic assessment reflects national gross domestic product.

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What are the strengths and limits of Eco-Efficiency Analysis in a sustainability context?

EEA is a market-driven tool for improving sustainability and can be used to evaluate a wide variety of business practices and models that may help reduce environmental pressures while increasing economic vitality.[51] However, eco-efficient improvements are often subject to diminishing returns.[58]

Combining economic and environmental assessments in an EEA relies on subjective weighting to normalize economic and ecological factors and produce a value that will lend itself to meaningful comparison. While various guidelines and ratios have been put forward, no single standard exists and, as with other tools that rely on subjective weights, there is discussion within the scientific community about the validity, uncertainty, and transparency required when applying weights.[51, 54]

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How could Eco-Efficiency Analysis used to support EPA decision-making?

EEA has the potential to contribute to sustainable decision-making at the EPA by providing analyses that reflect complex interactions between economic and environmental systems, as well as potential impacts resulting from those interactions. While EPA has used EEA to evaluate and encourage sustainability in industry, as well as to compare alternative business models,industry is currently the primary user of EEA in the decision-making context.[59]

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Where to Find More Information about Eco-Efficiency Analysis

  • BASF hosts a website on EEA that includes frequently asked questions, news, software, and projects.
  • The WBCSD has produced a variety of publications Exit EPA Disclaimer on EEA.
  • EPA’s Office of Resource Conservation and Recovery 2009 study: “Green Servicizing (PDF)(129 pp, 934K) for a More Sustainable US Economy: Key Concepts, Tools, and Analyses to Inform Policy Engagement.
  • An Application of Eco-efficiency Analysis on Projections for Construction and Demolition Waste Recycling Strategies at the City Level (Bohne et al., 2008 Exit EPA Disclaimer).

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Illustrative Example of an Approach using Eco-Efficiency Analysis

  • Life-Cycle Assessment of Lithium Ion Battery Technologies

    Source: EPA Office of Chemical Safety and Pollution Prevention[249]
    Suite of sustainability tools: life-cycle assessment; eco-efficiency analysis; green chemistry; collaborative-problem solving
    Use of lithium-ion batteries is growing in the US as the number of applications expands and as government programs encourage their use. Lithium-ion batteries are currently used in many products, including computers and cell phones. New technologies are under development that will allow for the use of lithium-ion batteries in electric cars. As electric vehicles become more prevalent in the United States, interest in developing these technologies grows. [250]

    With battery production on the rise, EPA’s DfE collaborated with EPA’s ORD to create the Lithium-ion Batteries and Nanotechnology Partnership in June 2009. The partnership is researching ways to produce batteries more efficiently and with fewer environmental impacts. DfE and ORD are conducting a quantitative environmental life-cycle assessment (LCA) of lithium-ion batteries used in electric drive vehicles, as well as of the nanomaterials and nanotechnology used to produce them.[251] Quantitative LCA is a technique for assessing potential environmental impacts associated with a product, process, or service. LCA helps battery manufacturers and suppliers to identify materials and processes that are associated with fewer environmental impacts and greater energy efficiency.

    In this case, the quantitative LCA assesses energy systems and environmental impacts at all stages of the batteries’ life: raw materials extraction and acquisition, materials processing, product manufacture, product use, and final disposition and end-of-life. The project is also assessing a nanotechnology application that has the potential to reduce environmental impacts. For example, this study is assessing battery anodes made from single walled carbon nanotubes. These anodes show promise for increased current capacity, extended electric vehicle range and battery life, and reduced recharge cycle time.

    To perform this analysis, DfE partnered with a number of battery manufacturing and recycling companies, research institutions, the Department of Energy’s Argonne National Laboratory, and non-governmental organizations.

  • Green Report: District of Columbia
    Source: ECOS Green Report: Case Studies on State Efforts to Achieve Sustainability, March 2012 [254] [Used with permission from the Environmental Research Institute of the States (ERIS), the Environmental Council of the States (ECOS), and the District of Columbia]
    Suite of sustainability tools: segmentation analysis; social network analysis; social impact assessment; environmental justice analysis; life-cycle assessment; futures methods; benefit-cost analysis; eco-efficiency analysis

    Sustainability that matters to our community

    The District Department of the Environment (DDOE) is currently coordinating a citywide sustainability planning effort for the Mayor. The Agency does not have an “official” formal definition of sustainability at this time. However, the Agency frequently uses a working definition that defines sustainability as the nexus of the environment, economics, and equity. DDOE also describes sustainability as meeting the needs of the present without compromising the ability of future generations to meet their own needs. These definitions are intended to be grounded in environmental protection, but inclusive of the critical connections between environment, economy, and equity.

    DDOE is home to core state and local programs that are simultaneously addressing sustainable practices including water and air quality protection, wildlife preservation and restoration, land remediation and toxics reduction, energy efficiency, and conservation. The Agency is working to integrate traditional regulatory programs into citywide sustainable efforts to strengthen programs and achieve the greatest possible environmental, health, economic and other equity benefits of cross-media coordination.

    Sustainable DC
    DDOE is co-lead (with the DC Office of Planning) of the Mayor’s sustainability planning process called Sustainable DC.

    Sustainable DC was launched in September 2011 with an intensive community outreach program. Throughout September and October, staff attended 50 community meetings and events to hear people's visions for a sustainable DC and actions the community can take to realize those visions. In November 2011, nine working groups (focusing on the built environment, climate, energy, food, nature, transportation, waste, water, and the overall green economy) were launched to develop recommended goals, actions, and indicators. These recommendations will be integrated into a draft plan in summer 2012.

    In this role, DDOE is playing a coordination function among the Green Cabinet, representing more than a dozen key agencies directly affecting citywide sustainability, including transportation, public works, health, public schools, real estate, economic development, employment services, and water and housing authorities.

    STAR Community Index
    DDOE also is coordinating with a national effort to develop the STAR Community Index Exit EPA Disclaimer. This is a framework for gauging the “triple bottom line” of sustainability and livability of US communities. STAR is intended to transform the way local governments plan and develop policies in the way that the US Green Building Council’s LEED program transformed the building industry. STAR will measure a jurisdiction’s sustainability across measures in specific categories. Through these standardized measures, cities will be able to more objectively assess their progress towards sustainability and compare themselves to other cities across the country.

    Because of the size and complexity of STAR’s scope, ten jurisdictions were selected to serve as beta communities (Atlanta, GA; Austin, TX; Boulder, CO; Chattanooga, TN; Cranberry Township, PA; Des Moines, IA; King County, WA; New York, NY; St. Louis, MO; and the District of Columbia). These communities will test and review the measures for appropriateness and feasibility.

    Benefit-Cost Analysis and Eco-Efficiency Analysis
    DDOE implements stormwater management projects on public sites. When evaluating project proposals, DDOE staff evaluates the cost/benefit of each proposal. The evaluation includes an analysis of the dollars per gallon of stormwater retained or treated, and whether the proposal will implement new technologies that may be beneficial to the District’s water quality efforts. At a much larger scale, staff is analyzing the relative environmental, economic development (jobs), and social equity benefits of digging huge tunnels to manage stormwater flows versus a large-scale deployment of green infrastructure (i.e., Low-Impact Development). Whereas traditional analysis might only look at the relative environmental performance and costs of these systems, this new sustainability-driven analysis will assess job creation, social support (i.e., unemployment and other social services) investment reduction, heat-island effect mitigation, community beautification, property value enhancement, and the costs and environmental performance of these systems.

    Environmental Justice Analysis
    DDOE considers social equity as a cornerstone of sustainability. Like many other states and local jurisdictions, DC, through DDOE’s Office of Enforcement and Environmental Justice, reviews major development plans to assure that no disparate environmental harms are imposed on minority and low-income populations. Under the Mayor’s evolving sustainability strategy, EJ will likely evolve into much more than a risk assessment/risk management process, and will become a means of assessing the relative benefits of District investments on the distribution of opportunity and hardship across the city. A good example is the new program incorporated into the DDOE’s proposed stormwater regulations, which would allow off-site stormwater mitigation for projects that cannot meet the city’s aggressive 1.2 inch rainfall retention standard. These off-site projects likely will occur in less-developed portions of the city, which tend to be DC’s lowest-income communities. This option will bring substantial investment in tree planting, bioretention, green roofs, and other practices that will not only allow more and better stormwater management, but also will create jobs and beautify neighborhoods– and reduce the significant social disparities across DC. And the program will increase stormwater management by over 50 percent, while reducing costs by 30 percent.

    Future Scenario Analysis
    During the next year, DDOE will forecast the impacts of the District’s revised stormwater regulations. The purpose of this analysis is to determine how future development will lead to improvements in water quality and how DDOE’s new off-site mitigation program will impact EJ issues in the city.

    Life-Cycle Assessment
    The District's revised stormwater regulations will include a payment-in-lieu option for sites that cannot otherwise meet their regulatory obligations. To determine the appropriate price for this option, DDOE staff developed a life-cycle cost assessment to capture the full cost of implementing stormwater practices.

    Segmentation Analysis, Social Impact Assessment, and Social Network Analysis
    The District has developed a new social marketing campaign to reduce litter. The campaign includes significant social and psychological (focus groups and interviews) analysis to determine the root causes of litter and to develop effective messages and approaches that will have an impact. Additionally, the program has surveyed residents to evaluate the impact of the marketing campaign as well as the new Bag Law that requires a 5-cent fee on disposable paper and plastic bags. 

    In addition to the tools mentioned above, DDOE has developed some new tools to measure the District’s sustainability activities:

    • Green Dashboard
      To help residents understand the District’s progress in becoming a more sustainable place in which to live, work, visit, and play, DDOE’s Office of Policy and Sustainability developed an online interactive Green Dashboard containing approximately 60 indicators in six categories (air quality and climate, energy and buildings, nature, transportation, waste and recycling, and water). Users are able to manipulate the data by time period and metric to suit their interests and will be able to also download raw data and image files of graphs for later use. Additionally, the Dashboard provides contextual information for each indicator, including information on what the data mean, why they are important, how the District compares to other jurisdictions, and ways users can get involved. Information is presented in an easy-to-read style with images and links to make the information engaging and digestible.
    • GreenUp DC
      DDOE developed GreenUp DC, an interactive web tool that teaches property owners how to reduce their energy footprint and stormwater releases. The tool tracks energy reduction and stormwater activities, and creates reports that allow DDOE to fulfill its legal obligations to US EPA. GreenUp DC allows DDOE to be transparent and responsive with up-to-the-minute statistical reporting on energy performance and stormwater reductions.

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