Integration of environment and economy – economic valuation (IMP)Type Research project
The project intended to strengthen the long-term competitiveness of the manufacturing industry through a pro-active risk management. It considers both environmental aspects as well as economic value, early in the product development phase.
Business has long been a matter between seller and buyer. Transactions between them are based on the value a product or service has for the seller and buyer. But most products and services also creates values and costs for third parties, so called externalities. Some of these externalities arise from changes in the environment.
Already at the Rio-conference 1992, there was an international, political consensus about the “polluter pays principle”. This principle has been confirmed at a number of other occasions, such as within EU. When EU, some years ago, launched their Integrated Product Policy initiative, the principle was transformed to “get the prices right”, i.e. the price should include environmental costs. Nowadays there are more precise requirements in EU for including environmental costs in the energy and transport sectors.
Environmental impacts from products have so far been seen as negative features, which have been subject to minimization. However, innovation and product development is about value creation in a wider sense. In order to make this happen in an efficient way, there is a need to be able to describe the value of environmental change.
Aim & objectives
The project aims at facilitate a change from a reactive to proactive product development strategy with regards to environment and sustainability. The project also aims at making the integration of environment and sustainability aspects more efficient early in the product development phase, and stimulate to radical eco-innovation and not merely to incremental changes.
The project goal is to contribute to more efficient product development by developing and establishing a methodology that make environmental costs more visible, early in the product development phase.
The project has contributed with a broadly accepted methodology for estimation of environmental damage costs for society from product systems and how these costs will affect a company, via internalization. Through this methodology, environmental aspects will be more efficiently integrated into the product development decision process.
A significant impact of the project has been through:
1) increased motivation at companies by visualizing economic values of decreased future environmental impacts
2) efficient dissemination of product results through workshops, international standardization and publications in scientific journals.
Standardization work: One specific task in this project was to initiate a working group for an ISO standard, a framework standard regarding monetarization and economic valuation.
The project also generated a follow-up research project within the center, called “Development of methodology to communicate environmental damage cost data.”