Eco-Efficiency Analysis (EE)

Primary Source: Guinée, J. (2006) Eco-Efficiency Analysis SWOT Analysis in Report on the SWOT analysis of concepts, methods, and models potentially supporting LCA. Eds. Schepelmann, Ritthoff & Santman (Wuppertal Institute for Climate and Energy) & Jeswani and Azapagic (University of Manchester), pp 103-108

Level of analysis: Micro at the level of substances and products, meso at the level of businesses and sectors.

Assessed aspects of sustainability: environmental, economic

Description of the methodology:

There is not one methodology for Eco-Efficiency analysis (EE). The current situation is rather that there is a general conceptual understanding of what Eco-Efficiency (EE) is and there is a variety of methods for EE analysis (e.g., Landsiedel & Saling, 2002; Saling et al., 2002; Seppäläa et al., 2005; Kobayashi et al., 2005; Davidson et al., 2005; Scholz & Wiek, 2005; Dahlström & Ekins, 2005; Hellweg et al., 2005; Morioka et al., 2005; Suh et al., 2005; Saling et al., 2005). In this SWOT, we will therefore not describe EE analysis in detail, as it is exactly the detail that is differing widely among different authors. For example, some calculate a number for eco-efficiency whereas others present plots without combining ecological and economic indicators into one number.

According to the World Business Council for Sustainable Development (WBCSD): Eco-efficiency is achieved by 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 to a level at least in line with the earth’s estimated carrying capacity. In short, it is concerned with creating more value with less impact.

According to Huppes & Ishikawa (In Anonymous, 2005), “Eco-efficiency is an instrument for sustainability analysis, indicating an empirical relation in economic activities between environmental cost or value and environmental impact. This empirical relation can be matched against normative considerations as to how much environmental quality or improvement society would like to offer in exchange for economic welfare, or what the trade-off between the economy and the environment should be if society is to realize a certain level of environmental quality.”

Detailed Description

Although the concept of eco-efficiency (EE) was first introduced by Schaltegger and Sturm (1990), the concept only became popular after adoption by the World Business Council for Sustainable Development (WBCSD) in 1992. EE analysis has slowly emerged from then on dealing with measuring EE through e.g. indicator(s).

Although, there is as yet no unambiguous and generally accepted definition of eco-efficiency, consensus seems to be growing that an eco-efficiency indicator expresses the ratio between an environmental and a financial variable (Heijungs, 2007).

At the first WBCSD multi-stakeholder workshop on eco-efficiency in 1993 participants agreed on the working definition of eco-efficiency as described above (WBCSD, 2000).

Many business leaders, inside and outside the WBCSD, however, often express eco-efficiency as creating more value with less impact or doing more with less. Academic experts and practitioners term eco-efficiency the synthesis of economic and environmental efficiency in parallel, where the prefix eco stands for both economy and ecology.

The European Environment Agency (EEA, 1999a; EEA, 1999b) has adopted eco-efficiency ratio indicators for countries, asking for an absolute and relative de-linking of growth of welfare from the use of nature. It intends to measure and compare economic sectors and countries with each other according to their eco-efficiency status and improvements. The agency has announced a set of Headline Indicators with the intention of developing a data basis for European countries and economic sectors. Both the EEA and the WBCSD are working towards matching headline indicators for nations and generally applicable indicators for corporate reporting. Governments can use various incentives to promote action toward progress and support initiatives to advance eco-efficiency – rewarding the leading-edge companies and putting pressure on the laggards. Incentives to reward eco-efficiency will guide innovation in the right direction and create new products and services (WBCSD, 2000).

In a Special Issue of the Journal of Industrial Ecology selected papers presented at the First International Conference on Quantified Eco-Efficiency, held in Leiden in the Netherlands in 2004, were published. Huppes & Ishikawa (2005a-c) show in this special issue that depending on different paradigms, different methods have been developed. A wide variety of methods (with different elaboration of both economy and ecology, using a life-cycle perspective or a gate-to-gate business perspective, producing relative or absolute numbers, working with costs or profits, etc. etc.), ratios and a – sometimes confusing – variety of terms and definitions used within the concept of eco-efficiency has been developed. It is thus not possible here to provide a detailed description of EE-methodology in general.

The practicalities of eco-efficiency analysis hence deserve our attention. Eco-efficiency analysis does not exist as an agreed-upon method with appropriate tools. It is a task, a challenge, to create it, not as a closed system of computational rules substituting for strategic thinking, but as a dynamic effort to help improve discussions on the future and to effectively improve our future. In that sense eco-efficiency forms an extension to industrial ecology, helping use its developing insights in technical, economic, and ultimately political decision making (Huppes & Ishikawa, 2005a-c).

Strengths

The most obvious strength of EE analysis is of course the combined analysis of economic and ecological aspects of goods and service systems, without the use of monetarization or another form of converting these two aspects into one indicator. Most EE methods developed produce one or more indicators, generally expressing the ratio between an environmental and an economic/financial variable. EE and its indicator(s) can be applied for comparing companies, products, countries, years, etc., as well as for monitoring and benchmarking.

Weaknesses/Limitations

The current weakness of EE lies in the variety of methods, implementation of economy (costs, profits, …..), combination (graphical presentation e.g. BASF method, ratio), level of application (companies, products, countries, etc.), elaboration of ecology (LCA with different scopes in terms of impacts considered and with or without weighting, in terms of ecological costs), etc.

EE (analysis) thus clearly needs:

–          Terminology and definitions.

–          Explicit (methodical) framework for eco-efficiency analysis.

–          Clarification of useful methods for different questions and different levels of application in terms of:

  • Eco-efficiency of what?
  • Environmental impact indicators/scores.
  • Weighting of impact scores
  • Which product/service (economic) value?

The above weaknesses could probably be solved to a large extent by standardisation and harmonisation of EE methods.

What is left then as weakness is not much, although one could consider it a weakness that only two out of three pillars of sustainability is considered in EE – although further developments are evolving here (see below) –, environmental impacts are aggregated by weighting, which is for one person a blessing and for another a nightmare, and that only one or two types of costs are included. However, on a more principal level, “making specific choices leading to lower than maximum possible environmental improvement, based on eco-efficiency considerations” (Huppes & Ishikawa, 2005) may be considered as an opportunity lost depending on the cultural perspective of an individual.

Opportunities for broadening and deepening LCA

The three pillars of sustainability are increasingly reflected in current policies providing opportunities for tools as EE analysis that combine two out or three pillars within one tool; tools including all three pillars are currently also being developed, such as SEEbalance® (Schmidt et al., 2004).

Among possible others, SCP as overall strategy and TSURE and IPP as SCP-elaborations most obviously offer EE analysis opportunities for gaining more importance.

For example, the Thematic Strategy on Sustainable Use of Natural Resources (TSURE) offers clear opportunities for broadening current LCA to LCA-based EE analysis, as TSURE’s objective is to reduce the life-cycle environmental impacts associated with resource use and to do so in a growing economy.

Threats for broadening and deepening LCA

Main threat for EE analysis is the lack of clear terminology with definitions, methodical framework and elaborated methods for specific questions and applications situations/levels.

Through research and concerted actions, consensus forming etc., progress will have to be made on:

–          Unified terminology.

–          Explicit (methodical) framework for eco-efficiency analysis.

–          Eco-efficiency of what (environmental intensity of production; environmental improvements measures; ….)?

–          Type of environmental impact indicators/scores to be used in which situation?

–          Weighting of impact scores in order to get one aggregated value in the numerator.

–          Which product/service (economic) value should be adopted in which situation?

Literature/Internet links

WBCSD (2000). Eco-Efficiency -creating more value with less impact.

Bleischwitz R., Peter Hennicke (2004). Eco-Efficiency, Regulation and Sustainable Business; Towards a Governance Structure for Sustainable Development.

European Environment Agency (EEA) (1999a). Environment in the European Union at the turn of the century, Environmental assessment report no. 2. EEA, Copenhagen.

European Environment Agency (EEA) (1999b). Making Sustainability Accountable: Ecoefficiency, Resource Productivity and Innovation. Topic Report no. 11. EEA, Copenhagen.

Heijungs, R. (2007). From thermodynamic efficiency to eco-efficiency. In: Quantified eco-efficiency: an introduction with applications, edited by Huppes, G. and M. Ishikawa. Springer, Dordrecht, The Netherlands: 79-103.

Huppes G., Ishikawa M. (2007). Huppes, G. and M. Ishikawa. 2007. An introduction to quantified eco-efficiency analysis. In: Quantified eco-efficiency: an introduction with applications, edited by Huppes, G. and M. Ishikawa. Springer, Dordrecht, The Netherlands, 1-38.

Huppes, G., M. Ishikawa (2005a). Why Eco-Efficiency? Journal of Industrial Ecology 9(4): 2-5.

Huppes, G., M. Ishikawa (2005b). A framework for quantified eco-efficiency analysis. Journal of Industrial Ecology 9(4): 25-41.

Huppes, G. and M. Ishikawa (2005c). Eco-Efficiency and its terminology. Journal of Industrial Ecology 9(4): 43-46.

Landsiedel, Robert, Peter Saling (2002). Assessment of Toxicological Risks for Life Cycle Assessment and Eco-efficiency Analysis. International Journal of Life Cycle Assessment 7(5): 261-268.

Ritthoff, Michael, Christa Liedtke (2002). Kritische Prüfung der Ökoeffizienz-Analyse: Neuanschaffung oder Weiternutzung eines Kühlschranks; Wuppertal.

Saling, P., A. Kicherer, B. Dittrich-Krämer, R. Wittlinger, W. Zombik, I. Schmidt, W. Schrott & S. Schmidt (2002). Eco-efficiency analysis by BASF: the method. International Journal of Life Cycle Assessment 7(4): 203-218.

Saling, Peter, Roland Maisch, Maurizio Silvani, Natalie König (2005). Assessing the Environmental-Hazard Potential for Life Cycle Assessment, Eco-Efficiency and SEEbalance®. International Journal of Life Cycle Assessment 10(5): 364-371

Schaltegger, S., A. Sturm (1990). Ökologische Rationalität. Die Unternehmung 4: 273-290.

Schmidt, Isabell, ManfredMeurer, Peter Saling, Andreas Kicherer, Wolfgang Reuter, Carl-Otto Gensch (2004). SEEbalance®: Managing Sustainability of Products and Processes with the Socio-Eco-Efficiency Analysis by BASF. Greener Management International 45: 79-94.

Verfaillie, Hendrik A., Robin Bidwell (2000). Measuring eco-efficiency – a guide to reporting company performance. WBCSD. ISBN 2-940240-14-0. http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=Mjgy

Seppäläa, Jyri, Matti Melanen, Ilmo Mäenpää, Sirkka Koskela, Jyrki Tenhunen, Marja- Riitta Hiltunen (2005). How Can the Eco-efficiency of a Region be Measured and Monitored? Journal of Industrial Ecology 9(4): 117–130.

Kobayashi, Yoshinori, Hideki Kobayashi, Akinori Hongu, Kiyoshi Sanehira (2005). A Practical Method for Quantifying Eco-efficiency Using Eco-design Support Tools. Journal of Industrial Ecology 9(4): 131–144.

Davidson, Marc D., Bart H. Boon, Jessica van Swigchem (2005). Monetary Valuation of Emissions in Implementing Environmental Policy. Journal of Industrial Ecology 9(4): 145–154..

 

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