Eco-costs - Sustainability Impact Metrics

What are eco-costs?

Eco-costs are hidden environmental costs that our society bears: the harm to nature, human health, and the depletion of natural resources. In economics, these are known as “external costs,” meaning costs that are not yet included in our economic system. The use of almost all products and services comes with eco-costs. We must reduce this damage drastically to a level that Mother Earth can carry. However, the changes required to achieve this do cost money. The University of Delft has calculated as accurately as possible the money that is needed, under the condition that we take prevention measures urgently. These costs are called eco-costs. The target norm is the so-called “no-effect level,” and the calculation technique is that of preventive costs. Economically, we don’t need degrowth, provided we redesign our current economy: we should not waste our money on damage itself, but use it to reduce the damage, i.e. we must take prevention measures and must introduce the circular economy.

In the environment, we face more than just the climate problem. There are many different pollution problems related to water, soil, and air. Eco-costs have been calculated for the most significant issues.

Note: Eco-costs are “hidden environmental costs for society that are not part of the market price” (the so called ‘external costs’). These costs have to be reduced drastically, since our society will not accept it anymore, and will force Companies to take remedial actions. This leads to another definition of eco-costs: “the financial business risk of non-compliance with future regulations“, which is explained in the book Eco-efficient Value creation, Section 1.3

The most important issues are:

Climate change, where weather systems are thrown out of balance because we, as humans, are releasing far too much carbon into the atmosphere, which was safely stored in our Earth’s crust for millions of years.
Protecting Nature and Biodiversity e.g. in European Natura 2000 areas, where (a) agriculture, industry, and transport have been emitting excessive nitrogen compounds for decades, leading to the overgrowth of unique plants by grasses and weeds, and (b) forests and birds are dying due to acidification from sulfur emissions. Change of nature to land for cultivation is a thread for biodiversity.
Clean water in lakes, rivers, and oceans, where (a) an excess of phosphates from fertilizers causes oxygen depletion in lakes, suffocating ecosystems, (b) toxic substances from industry (chemistry and metals) make all life in rivers disappear, and (c) the “plastic soup” in the ocean severely threatens underwater life.
Human health is increasingly affected by the accumulation of deadly and harmful toxic substances in the human body. This may not noticed by individual people, but the devastating effects are evident in medical statistics. It becomes increasingly clear in cities and countries that this cannot continue.
Materials scarcity is increasingly a sustainability issue: (a) the growing population in our world needs ever more materials (b) the elimination of fossil fuels goes hand in hand with increased demand of metals, (c) geopolitical tensions may cause sudden disruptions of supply chains.

For in-depth theory on eco-costs, klick on: concept and structure, emissions, resource scarcity, energy. land-use, and Social- eco-costs

A coherent approach

It is essential to address these problems one by one in a coherent approach. Consequences of choices are always crucial. Two examples: (1) the transition from fossil fuel electricity to sustainable electricity involves the use of other raw materials (such as rare earth metals, lithium, cobalt, nickel), leading to scarcity in those materials. (2) the transition to extensive agriculture and livestock farming reduces emissions but requires more land.

So, you must constantly weigh the pros and cons of new alternatives, seeking smart solutions to build a smarter economy. The system of eco-costs (“metrics”) facilitates these considerations, both in LCA (product level) and CSRD (company level).

This website section of the Sustainability Impact Metrics Foundation provides the necessary information and transparency on how eco-costs are calculated for each of the aforementioned issues, based on scientific literature.
Through this system, the eco-costs have been determined for every chemical substance (including metals and other raw materials such as ores and rare earth elements), providing the building blocks for further analysis using the IDEMAT database.

What is the IDEMAT LCA database?

When the direct emissions from a production process (factory) are known, we have its eco-costs, i.e., the sum of “scope 1” emissions. However, we need to look at the entire chain, including all processes of all suppliers (“scope 2” for energy and “scope 3” for materials). In LCA as well as in CSRD, the simple idea is to request this data from the supplier (scope 1, 2 and 3). Occasionally, suppliers have those data, but often they won’t. In that case, they must request the data from their suppliers. This process continues backwards throughout the chain (it’s actually an expanding backwards “process tree”). Since there are by far not enough LCA practitioners in the world to calculate everything in this process tree, waiting for results this way will take a very long time (even in the next 10 years, all the work still won’t be done).

The solution lies in LCA databases (scope 2 and scope 3) with average data. An example is electricity in a specific country: how green is the electricity from the sockets? The answer is that we don’t know specifically, but we do know it for the average because we know how much of each type of electricity was generated in the past year. Since we know the emissions, and thus the eco-costs of each type of electricity (solar, wind, coal, gas, etc.), we know the average per kWh.

The same applies to raw materials like oil, plastics, wood, metal, and food. We don’t know specifically, but we do know it on average per type of raw material. Scientists have been working on this for decades, resulting in databases with generic scope 2 and scope 3 data. At the University of Delft, calculations have been made over the past two decades because there was dissatisfaction with the transparency of commercial databases and because commercial databases are insufficiently kept up-to-date. The Sustainability Impact Metrics Foundation’s mission is to maintain this IDEMAT database based on new publications in peer-reviewed journals.

In IDEMAT, you can find the carbon footprint and eco-costs of approximately 1600 raw materials and processes (scope 1, 2, and 3). These data can be

applied in LCA and CSRD, where the generic data in the tree gradually can be replaced by specific data from suppliers.
In such a way materials can be replaced by materials that have lower eco-costs (i.e. recycled or biobased materials), electricity can be replaced by sustainable electricity with a low carbon contend , and manufacturing processes can be optimized, gradually building a smart circular economy.
The aim is the so-called ‘double- objective in innovation as defined by the WBCSD (1995):

“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 lifecycle, to a level at least in line with the earth’s estimated carrying capacity”

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For further information of
in-depth theory on eco-costs, klick on:
concept and structure, emissions, resource scarcity, energy. land-use, and Social- eco-costs