Hidden environmental costs
Eco-costs are environmental costs that are not yet reflected in the market price of a product. They measure the total environmental impact of a product and the cost we'd need to make to prevent that impact.
The goal of eco-costs is to reduce pollution and depletion of resources to sustainable levels that align with the Earth's carrying capacity.
Eco costs can be seen as hidden obligations, as they can be avoided through the implementation of technical prevention measures.
For example;
Many large production facilities for paper, plastics, and metals are part of the EU Emissions Trading System since they are top polluters in Europe. Each year the emitted emissions of these companies need to be reduced until the -55% reduction is met in 2030 (Green Deal Target).
Therefore these companies need to implement countermeasures. If they are not able to do so, they can buy expensive ETS credits.
Both countermeasures and ETS credits will reflect in an increased cost of packaging. These costs are now still hidden - and we call them eco-costs.
How are eco costs calculated?
The methodology behind the eco-costs model is illustrated in the system graph below.
When you calculate the total impact of a product with a Life Cycle Assessment method (LCA), you get many more impact results than just carbon impact. Think of the impact on biodiversity, human health, or material scarcity. In LCA terms, we call these impact categories midpoint indicators.
Now - we can look at these midpoint indicators individually, for example by looking at the kg CO2-equivalent for the carbon footprint. But adding them up to see the total impact isn't possible without an eco-cost system, as they all have different scientific formulas.
Single impact categories (carbon footprint) vs eco costs (total)
Eco-costs are used in the Pickler tool as what is described in Life Cycle Assessments as a 'single indicator'. A single indicator is a relative value that presents the environmental impact of the packaging by summing up the contributions of midpoint indicators.
The eco-cost model takes into account a broader range of environmental measurements, including resource depletion, eco-toxicity, and human health. It provides pre-defined scientific monetary values for all these indicators, which allows us to add them up to a single indicator, expressed in €!
The result: We now have insights into the total impact of a product, instead of limiting ourselves to a single category like carbon footprint. This single score also enables us to finally compare the total impact of products!
The eco-costs system complies with ISO 14008 (“Monetary valuation of environmental impacts and related environmental aspects”) and uses the ‘averting costs method’, also called ‘(marginal) prevention costs method’ (see section 6.3).
How does Pickler incorporate eco costs?
The Pickler tool is designed to help the packaging industry calculate and lower the eco-costs of its packaging - and move towards a more sustainable future.
Compare products with eco costs
Pickler enables you to compare the total environmental impact of products with the comparison feature via eco costs. Comparing the eco costs of packaging helps:
Built impact reduction cases, by comparing products or portfolios with less impactful alternatives in your offering.
Empower customers to weigh both sales prices and eco costs in considering a purchase.
Additionally, you can create scenarios with the scenario feature. This enables you to:
Create impact reduction scenarios for customers by switching processes, materials, or transport distances and seeing how these changes reflect in the total impact.