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Monetizing Social Impacts in Life Cycle Assessment: A Framework for Credibility and Utility

This paper explores the potential for monetizing social impacts of products, comparing it to environmental issues. The study presents a framework for identifying relevant social impact indicators, examining their significance and implications for sustainable development. Key indicators include health and well-being, economic prosperity, cultural integrity, and gender relations. Through examples, the paper discusses how to create trade-offs, manage uncertainty, and prioritize indicators in a meaningful way, ultimately questioning the credibility, truthfulness, and usefulness of such monetization.

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Monetizing Social Impacts in Life Cycle Assessment: A Framework for Credibility and Utility

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  1. Monetizing social impacts for use in LCA Bengt Steen Chalmers University of Technology, Environmental System Analysis and CPM, Centre for Environmental Assessment of Products and Material Systems

  2. Basic question • Is it possible to monetize social impacts of products with the same credibility as for environmental issues? Is it meaningful? • Is it true? • Is it useful?

  3. Content • A framework • Choice of indicators • A long list of indicators • Screening process to get a short list • Three examples • Conclusion

  4. A framework

  5. Choice of indicators • What to include • How to make trade-offs • How to handle uncertainty

  6. Choice of indicators Number of unique values & rights in trade-offs Strong sustainability Very careful Degree of precaution Weak sustainability Size of moral circle All generations animals, plants Family, village All living human beings Self

  7. A list of impact categories* • Health and social well-being • Quality of the living environment (liveability) • Economic impacts and material well-being • Cultural impacts • Family and community impacts • Institutional, legal, political and equity impacts • Gender relations * From van Schooten et al 2003

  8. Indicators for Health and social well-being • Death of self or a family member • Death in the community • Nutrition • Actual physical health and fertility • Perceived health • Mental health • Aspirations • Autonomy • Stigmatisation or deviance labelling • Feelings in relation to the project

  9. Quality of the living environment (liveability) • Quality of the living environment (actual and perceived) (Similar issues that is treated in environmental impact assessments) • Leisure and recreation opportunities and facilities • Environmental amenity value/aesthetic quality • Availability of housing facilities • Physical quality of housing (actual and perceived) • Social quality of housing (homeliness) • Adequacy of physical infrastructure • Adequacy and access to social infrastructure • Personal safety and hazard exposure (actual and perceived) • Crime and violence (actual and perceived)

  10. Economic impacts and material well-being • Workload • Standard of living • Economic prosperity and resilience • Income • Property values • Employment • Replacement costs of environmental functions (that was formely provided by the environment, but now has to be paid for) • Economic dependency • Burden of national debt (including intergenerational debts)

  11. Cultural impacts • Change in cultural values (moral rules, beliefs etc) • Cultural affrontage (violation of sacred sites etc.) • Cultural integrity • Experience of being culturally marginalized • Profanization of culture • Loss of language or dialect • Natural and cultural heritage (violation, damage or destruction of)

  12. Family and community impacts • Alteration of family structure • Obligations to living family members and ancestors • Family violence • Social networks • Community identification and connection • Community cohesion (actual and perceived) • Social differentiation and inequity • Social tension and violence

  13. Institutional, legal, political and equity impacts • Functioning of government agencies • Integrity of government and government agencies • Tenure or legal rights • Subsidiarity (the principle that decisions should be taken as close to the people as possible • Human rights • Participation in decision making • Access to legal procedures and legal advice • Impact equity

  14. Gender relations • Women’s physical integrity • Personal autonomy of women • Gender division of production-oriented labour • Gender division of household labour • Gender division of reproductive labour • Gender-based control over, and access to resources • Political emancipation of women

  15. What to include in a short list • Impact significance • Relevance to products • Known pathways • Relevant for sustainable development, i.e. • Need oriented • Development oriented • Resource oriented • External costs and benefits

  16. Health and social well-being Quality of the living environment (liveability) Economic impacts and material well-being Cultural impacts Family and community impacts Institutional, legal, political and equity impacts Gender relations Poverty Employment Crime Equity (gender etc) War Impact significance-important issues of today

  17. Relevance to products • Health and social well-being • Quality of the living environment (liveability) • Economic impacts and material well-being • Cultural impacts • Family and community impacts • Institutional, legal, political and equity impacts • Gender relations

  18. Known pathways • Health and social well-being • Quality of the living environment (liveability) • Economic impacts and material well-being • Cultural impacts • Family and community impacts • Institutional, legal, political and equity impacts • Gender relations

  19. Relevant for sustainable development Social Environ-ment Sustainable development Economy SD = Increasing resilience • For example by: • increasing capacity to peacefully resolve or transform conflicts • Increasing the capacity to satisfy needs • Wisdom (know what needs to be done) • Skills (be able to do it) • Empathy (be motivated to do it) Key social sustainability values

  20. Relevant for sustainable development • Health and social well-being • Quality of the living environment (liveability) • Economic impacts and material well-being • Cultural impacts • Family and community impacts • Institutional, legal, political and equity impacts • Gender relations • Wisdom • Skills • Empathy

  21. Some problems in making a short list • To include impacts that are many and small - Rings on water • Allocation problems • Uncertainty • Trade-offs

  22. Short list for use of a Car • Death in the community • Actual physical health and fertility • Availability of housing facilities • Income • Property values • Employment

  23. Short list for the use phase of a fridge (exl. Electricity production) • Actual physical health and fertility • Income • Employment

  24. Short list for a video (movie) • Mental health • Aspirations • Crime and violence • Income • Employment • Change in cultural values • Cultural integrity • Profanization of culture • Natural and cultural heritage • Social networks • Community identifi-cation and connection • Community cohesion • Social tension and violence • Wisdom • Skills

  25. Monetarisation options for use of a car • Death in the community OKaccident statistics • Actual physical health and fertility, Health OK, • Availability of housing facilities, OK, via hedonic price methods • Income – from use costs x (1-dymanic factor) • Property values - OK, via hedonic price methods • Employment – workhours x employment value x dynamic factor

  26. Monetarisation options for the use phase of a fridge • Actual physical health and fertility. Data from health authorities + values from WTP • Income – From use costs x(1- dynamic factor) • Employment – From workhours in supply chain + employment value x dynamic factor

  27. Monetarisation options for a video (movie) • Mental health - qualitatively • Aspirations - qualitatively • Crime and violence - qualitatively • Income from costs x (1-dynamic factor) • Employment – from workhours + employment value • Change in cultural values - qualitatively • Cultural integrity - qualitatively • Profanization of culture - qualitatively • Natural and cultural heritage - qualitatively • Social networks - qualitatively • Community identification and connection - qualitatively • Community cohesion - qualitatively • Social tension and violence - qualitatively • Wisdom - qualitatively • Skills - qualitatively

  28. Global accounting estimates • Income from economic activity: 100% • Loan from future generations environment: 10-15% • Basic physical consumption : 20-100% • Social consumption:0 – 80%

  29. Conclusions • Social impacts have a significant monetary value • For many social impacts it does not seem possible to estimate their monetary value with an accuracy that fulfil normal demands and leads to general acceptance • Monetaristion of social impacts may be meaningful in engineering, but we need to develop the language to explain what is done • There is a need to develop the sustainability feature further in social impact assessment

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