At 12:15 PM 12/17/00 -0800, Patrick Longfield wrote:
>Is this not simply Life Cycle Analysis.
>
>Every product we produce perhaps should have such an assessment made.
>
>In Sydney Australia, the decision is to buy local strawberries or ones that
have been grown in Queensland, 1000 kilometres away, or maybe California.
>
>Is not the argument similar?
>
>patrick
I did not think of that. But yes it is similar. This analysis, while
imaginative, or conceptual, would be how a life cycle assessment is done.
There are expressions perhaps: 'end to end solutions' or 'environmental
accounting'.
Actually I have a little booklet which discusses environmental accounting.
It is put out by The Society of Certified Management Accountants, and is
called "Tools and Techniques of Environmental Accounting for Business
Decisions" 2/96, Hamilton, Ontario, Canada
In this little book there is an Exhibit 1 which is from the USEPA, An
Introduction to Environmental Accounting as a Business Management Tool: Key
Concept and Terms, 1995. This exhibit lists three environmental costs
incurred by firms: (a) potentially hidden costs, (b) contingent costs, and
image and relationship costs. Certain of these costs are 'internalized'
costs such as 'environmental fines' because the firm 'involuntarily' has a
failure. Other costs are 'external' and are born by society and the
environment and are not a direct cost to the firm.
Now the interesting thing is external costs are such 'potential liabilities'
as 'risk of cleanup' and 'damage to natural resources' or 'damage to people
and property'. If a firm chooses to, it can reduce it's exposure to
indirect, less tangible costs by performing a 'full life-cycle cost'
assessment.
By performing a 'full life-cycle assessment', and doing the accounting, the
firm may expect to reduce liability, meet future regulatory compliance, gain
an 'enhanced position in 'green' market products', and improve corporate
image in terms of a commitment to the environment.
"[External costs]...are costs for which firms are not accountable or that
have no material economic consequences to firms under control and
foreseeable regulatory and market condition" which may include acid rain,
ozone depletiong, and auditory deafness in persons living near airports.
The management accountant therefore is capable of performing, or having
someone else perform, a cost analysis related to environmental externalities
as a means to 'catch' what are termed 'undercosted products', 'poor
management decisions' and 'reduced corporate profitability'. A 'life cycle
assessment' is one method which is used to define activities, processes and
products that cause environmental costs. I would call this defining
'end-to-end solutions' rather than end-of-pipe solutions.
One example of a life cycle analysis/assessment would be in replacing a
rather potentially toxic dye with a water based dye made with vegetable
materials, re-using the containers because with the water based dye they can
be rinsed out. With the toxic dyes, rinsing out the containers and re-using
them would require a whole seperate system of cleaning. Then there is the
possibility of water treatment in a plant, and in fact I think that is what
'Body Shop International' is doing. Instead of treating the water that is
used in their production facilities and putting back into the stream, BI has
taken steps to treat waste water and re-use it. Actually in Thames I think
they raise fish in the ponds and grow flowers in greenhouses heated with
waste heat. Their Environmental Statement is pretty fascinating.
I quess that is what is meant by 'end-to-end' solutions.
LCA
"The momentum toward responsible management of global energy and
environmental resources is unmistakable and irreversible. Customers are
demanding products that are functional, energy-efficient and environmentally
responsible....German washing machines contain computer chips that sense the
weight of a load and dispense soap and water accordingly." [p.13, supra CMA,
Guideline #40]
Whoops here is another set of phrases:
*"upstream and downstream effects" of their products and services
*"gradle to grave" environmental burdens and opportunities
*"recognition of external environmental impacts"
"This process evaluates the environmental effect of a product or activity
holistically, by analyzing its entire life cycle....identifying and
quantifying energy and materials used and wastes....addresses environmental
health, human health and resource depletion....It does not address social
impacts."
The primary objectives of a LCA are to look at all the 'interactions of
activities with the environment', to understand 'environmental consequences
of human activities', and to provide decision makers the information ... on
the environmental effects, and opportunities to improve.
The purpose of the LFA is to improve environmental quality and reduce waste
generation; and thus to go beyond regulatory compliance. There are many
benefits because with the LFA it is possible to obtain and maintain a raw
material data base in just about any sector, obtain community good will,
gain visibility in the markets, etc.
"When costs are improperly allocated, managers receive distorted signals
regarding the true costs and benefits of retaining or changing processes or
products. Moreover, misallocation of environmental costs prevents effective
performance monitoring, product pricing, incentive and reward systems, and
other activities essential to maintaining a competitive enterprise."
Anyway, the life cycle analysis is really important for natural resources
based industries because of the multiple/cumulative effects which clearcut
logging and roadbuilding can have on various resources. It is appearing that
clearcut logging, or unsustainable grazing, .has more cumulative effects
each year because something new is discovered about the impact of our
species and technology is having in natural systems.
anyway,,
good night
john foster
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