In their Response to Weinzettel1, Pelletier and Tyedmers (2012) refer to biophysical2 modeling in relation to LCA in the first sentence of their Response in order to exclude economic allocation from LCA and further emphasize this connection in their description of LCA in order to determine its purpose:
This is not the role of LCA. LCA is a biophysical modeling framework for quantifying how the inventory of material/energy inputs/outputs associated with the life cycle of a product/service (life cycle inventory [LCI]) translates into environmental impacts (or impact potentials) using established impact assessment methods (life cycle impact assessment [LCIA]).
To my knowledge, there is no official document which states that LCA is a biophysical framework, method, etc. and the word biophysical is not included in the ISO standards for LCA. The description above is a description of only part of LCA, i.e. life cycle impact assessment (LCIA), as it reads as: “LCA is … a framework, for quantifying how the inventory … translates into environmental impacts …”.
While LCIA is about assessment of the environmental impacts and therefore the word biophysical may be correct in this context (the processes are driven by biophysical laws), another part of LCA is also creating the inventory itself within the life cycle inventory (LCI) phase and it is in connection to this phase where allocation is used and discussed. Therefore there might be a discussion started, whether LCI is or should be a biophysical framework or not. My contribution to this discussion is that it is not and it should not be a biophysical framework, since there are other than biophysical laws and drivers for the processes covered by LCI. LCI is about quantifying flows within or generated by the socioeconomic system and are therefore driven also by different laws, including economic laws. Therefore I find the word biophysical inappropriate, since I assume that LCA should focus on the causal relationships within the analyzed systems. This often creates the basis for the use of market information and economic allocation in LCA3, see Ardente and Cellura (2012) for examples.
It should be further clarified that economic allocation is not the same as saying that economic value is an indicator of environmental burden, as Pelletier and Tyedmers suggest:
In short, using economic allocation essentially means accepting, a priori, that economically cheap equals environmentally benign, rather than seeking a more realistic basis for intelligent management of resources and waste streams in the economy as a whole.
Market information and economic allocation are only used to determine the responsibility for environmental burden and to split environmental burden of a process among its outputs. This must not be misinterpreted and generalized to all products.
I am grateful to Ardente and Cellura (2012) for their advanced review of economic allocation and examples. I agree that we should focus on the drawbacks of economic allocation and try to develop standards how to avoid them. I also agree that economic allocation does not need to be the sole allocation method, but as I mentioned in my Letter to editor of JIE (Weinzettel 2012), economic allocation should not be excluded from LCA.
In order to conclude, I see LCA as a composition of two methods, LCI and LCIA. While the latter one can be seen as a biophysical, the first one should not. Therefore, I see the reasoning for excluding economic allocation from LCI inappropriate.
Ardente, F. and M. Cellura. 2012. Economic Allocation in Life Cycle Assessment: The State of the Art and Discussion of Examples. JOURNAL OF INDUSTRIAL ECOLOGY 16(3): 387-398.
Pelletier, N. and P. Tyedmers. 2012. Understanding Who is Responsible for Pollution: What Only the Market can Tell Us-Comment on "An Ecological Economic Critique of the Use of Market Information in Life Cycle Assessment Research" Response. JOURNAL OF INDUSTRIAL ECOLOGY 16(3): 456-458.
Weinzettel, J. 2012. Understanding Who is Responsible for Pollution: What Only the Market can Tell UsuComment on "An Ecological Economic Critique of the Use of Market Information in Life Cycle Assessment Research". JOURNAL OF INDUSTRIAL ECOLOGY 16(3): 455-456.
1 See also Weinzettel (2012).
2 Pelletier and Tyedmers used the word biophysical in order to exclude other than physical and biological dimensions from LCA. I accept their definition of this word and I do not want to raise a discussion on the meaning of this word.
3 Note, that I am not suggesting using only economic allocation. My intention is to explain, why market information and economic allocation should not be excluded from LCA.
A bit of history on this debate...
The debate between Nathan Pelletier & Peter Tyedmers, on the one hand, and Jan Weinzettel on the other, began with Pelletier & Tyedmers’ 2011 paper in the JIE, “An ecological economic critique of the use of market information in life cycle assessment research.” Weinzettel published a short critique of that paper in 2012 with a response by Pelletier and Tyedmers in the same issue. Because the authors wanted to continue the debate, because the number of pages in the JIE is limited, and because all thought that other members of the industrial ecology community might want to participate, the authors were asked to migrate their discussion to the ISIE discussion forum.
The full references to the 3 publications are:
Pelletier, N. and P. Tyedmers. 2011. An ecological economic critique of the use of market information in life cycle assessment research. Journal of Industrial Ecology 15(3): 342-354. http://dx.doi.org/10.1111/j.1530-9290.2011.00337.x
Weinzettel, J. 2012. Understanding Who is Responsible for Pollution: What Only the Market can Tell UsundefinedComment on “An Ecological Economic Critique of the Use of Market Information in Life Cycle Assessment Research”. Journal of Industrial Ecology 16(3): 455-456. http://dx.doi.org/10.1111/j.1530-9290.2012.00460.x
Pelletier, N. and P. Tyedmers. 2012. Response to Weinzettel. Journal of Industrial Ecology 16(3): 456-458. http://dx.doi.org/10.1111/j.1530-9290.2012.00479.x
The issue of how to deal with multifunctional processes in LCA is complex and as old as the tool itself. I have followed the debate between Pelletier & Tyedmers and Weinzettel with great interest, as this is a controversial and divisive topic among the LCA community.
LCA models (by quantitatively assigning, characterizing and, subsequently, interpreting) the biophysical flows associated with ECONOMIC products; therefore, it is very limiting to exclude economic realities from LCA modeling, particularly substitution effects. What we, LCA modellers, want to do is to capture the realities associated with the products we want to assess. If our product of interest results from multifunctional processes, there is only one way to avoid artificially partitioning burdens (i.e. allocation): to expand the system in order to include displaced products. Fortunately, the ISO standards recognize this and recommend system expansion as the first step when dealing with multifunctional processes. The displacement of products is clearly mediated by market mechanisms, and has found its translation in LCA through the use of e.g. consequential and economic-equilibrium models.
Despite the requirement of the ISO standards, many LCA practitioners choose to tackle multifunctional processes by engaging in allocation, instead of avoiding it. When allocation is not avoided, there is no right or wrong answer as the means by which total burdens are ascribed between co-products (i.e. allocation) is essentially subjective in nature. This means the researcher is necessarily faced with choosing one arbitrary way of sharing the total burdens of a process among the different co-products. Clearly, there is no defensible manner in which this can be done biophysically (because this is not a biophysical question!).
Take the example of gold. Part of the life cycle of gold products is the mining of the metal, which requires the extraction of ore containing both gold and rock, the latter can be used for e.g. road construction. For illustrative purposes, assume that in extracting 1,000 kg of ore, 999 kg rock are extracted for every 1 kg of gold. Assume further that gold is priced at €1,000/kg and rock at €0.50/kg, and that the emissions associated with the process total 1,000 kg CO2-eq.. To ascribe the burdens of the process between gold and rock on a biophysical basis completely ignores the economic realities that cause the extraction to take place: i.e. that the process is driven by the gold, not rock, as this is the most valuable co-product, despite its disproportionately low mass. The total value of the extraction process of 1,000 kg of ore results in a total value of ~€1,500/kg ore. It would not make sense to ascribe most of the burden (99.9%) to the co-product with the lowest economic value, which is what would happen if one used mass allocation. Alternatively, economic allocation would ascribe 2/3 of the impacts to the gold and 1/3 to the rock. In this way, impacts are ascribed proportionately to their value, which makes sense as it reflects the causalities of the process taking place, and is consistent with the assumption of rational and profit-maximising behaviour from the economic agents involved. Even better than that would be the inclusion of the avoided burdens of whatever it is that the rock is displacing in road construction (if any), as it would better reflect reality.
In allocating, the argument that prices don't reflect externalities (which they don't), does not apply to the criticism of using market information in LCA. The issue at hand is how to partition those externalities between the co-products. In the above example, neither the price of gold nor the price of rock reflect the externalities arising with the emission of 1,000 kg CO2-eq.. Despite this being important in sustainable resource management, it has nothing to do with dealing with multifunctional processes or allocation. If we assumed that these externalities can be rectified by their inclusion at a price of €0.10/kg CO2-eq., the extraction process of 1,000kg ore would have become €100 more expensive. This says nothing about the relative responsibility of the co-products and the use of this argument is, hence, a misunderstanding.
Biophysical allocation may be very attractive to physical/environmental scientists. However, it is important that LCA modellers recognise that what they do is at the intersection of biophysical and economic systems and that ignoring one of them would be limiting. More importantly, substitution and rebound effects need to be considered in holistic and comprehensive assessments, which is what LCA claims to be.
Suh, S., Weidema, B., Schmidt, J. H. and Heijungs, R. (2010), Generalized Make and Use Framework for Allocation in Life Cycle Assessment. Journal of Industrial Ecology, 14: 335–353. doi: 10.1111/j.1530-9290.2010.00235.x
Weidema, B. (2000), Avoiding Co-Product Allocation in Life-Cycle Assessment. Journal of Industrial Ecology, 4: 11–33. doi: 10.1162/108819800300106366
Weidema, B. P. (2009), Avoiding or Ignoring Uncertainty. Journal of Industrial Ecology, 13: 354–356. doi: 10.1111/j.1530-9290.2009.00132.x
Weidema, B. P. and Schmidt, J. H. (2010), Avoiding Allocation in Life Cycle Assessment Revisited. Journal of Industrial Ecology, 14: 192–195. doi: 10.1111/j.1530-9290.2010.00236.x
Weinzettel and Brandao both raise some provocative points, which merit further consideration. First is Weinzettel’s concern that “there is no official document which states that LCA is a biophysical framework, method, etc. and the word biophysical is not included in the ISO standards for LCA.” He suggest that, while the term biophysical might be appropriate in the context of LCIA, it is not relevant at the LCI stage.
Weinzettel is correct that the ISO 14044 norm does not contain the term “biophysical.” This is simply a pithy term that we have adopted because we believe that it best conveys the concept that we hold to be necessarily central to ensuring a robust and meaningful relationship between LCI and LCIA.
Strictly speaking, according to ISO 14044, LCI is the “phase of life cycle assessment involving the compilation and quantification of inputs and outputs for a product throughout its life cycle.” We interpret that this refers to compilation and quantification of material and energy inputs and outputs. This includes the entropic waste streams that are inevitably generated, and the quantification of which (in relation to a defined functional unit) we understand to be the central purpose of LCA. These are the “biophysical” flows to which we refer. Their biophysical nature is reflected in the units of measure typically associated with LCI data (i.e. kgs, m3, MJ, kWh, etc.). We do not recall ever having encountered LCI data that is not biophysical by nature (at least in the context of process-based environmental LCA).
Indeed, the ISO 14044 allocation hierarchy includes the following guidance, which underscores the biophysical nature of inventory data and the desirability of maintaining biophysical relationships in allocation procedures: “The inventory is based on material balances between input and output. Allocation procedures should therefore approximate as much as possible such fundamental input/output relationships and characteristics.” We are in complete agreement that maintaining such input/output relationships and characteristics is fundamental to arriving at a robust LCI data set, and meaningful LCIA results. It would seem that the ISO 14044 standard is, in fact, quite clear in this respect. We therefore struggle to identify the precise location of the toehold that Weinzettel finds for questioning our interpretation.
Weinzettel subsequently challenges our contention that using economic allocation, by default, produces information suggesting that economically cheap = environmentally benign. He states “Market information and economic allocation are only used to determine the responsibility for environmental burden and to split environmental burden of a process among its outputs. This must not be misinterpreted and generalized to all products.” Again, we have difficulty following the logic. So long as a co-product is of low economic value relative to its other co-products, it will be attributed a commensurately small share of the environmental burdens associated with the co-product system. This is, indeed, generalizable to all products that fit this criterion. Moreover, the “signal” provided then is, essentially, to buy cheap co-products in order to have a lower environmental impact. We fail to see the utility of this information, since it has no grounding in the underpinning biophysical reality of the system and its impacts whatsoever.
Brandao emphasizes that LCA models characterize the biophysical flows associated with economic products and that it is, hence, limiting to exclude economic realities from LCA modeling. We appreciate the recognition that LCA is used to model biophysical flows. We are skeptical that LCA need necessarily address economic products (one can easily imagine an LCA model of a system where the products are not traded in markets), but this is a secondary concern. We wish to clarify, however, that our position is not that LCA must fully exclude economic realities (to the extent that they are actually reflected in the biophysical flows that are modeled), but rather that “market information should be excluded from LCA (and similar modeling frameworks) wherever its use results in distortions of the biophysical relationships that LCA models are intended to represent.” We appreciate Brandao’s point that displacement of products is (often, although not always) mediated by market mechanisms, and that this has been accommodated in LCA through consequential modeling and (occasionally) the use of economic equilibrium models. We agree that it is desirable to account for such effects when it can be done in a robust manner (i.e. such that the resultant models actually do reflect the biophysical reality associated with the processes in question). We do not agree with Brandao that substitution and system expansion are the same thing – but again, this is a secondary argument that falls outside of the current debate.
Brandao goes on to argue that, excluding system expansion, all forms of allocation are necessarily arbitrary, and that there are no correct allocation solutions (we might point out that identifying an appropriate substitution scenario as in consequential LCA requires numerous tenuous assumptions about the behavior of perfect markets that exist only in economics text books – we have seen some truly interesting scenarios in the peer-reviewed literature – and that the result is often quite arbitrary, but we digress...). To quote Brandao, “This means the researcher is necessarily faced with choosing one arbitrary way of sharing the total burdens of a process among the different co-products. Clearly, there is no defensible manner in which this can be done biophysically (because this is not a biophysical question!).
It seems evident to us that Brandao’s assertion is simply incorrect. Indeed, the preferred status of allocation based on an underlying physical relationship in the ISO 14044 hierarchy, and the previously quoted ISO text regarding the importance that allocation solutions maintain biophysical relationships strongly suggests otherwise. Such allocation solutions are preferred precisely because they apportion burdens on the basis of a biophysical relationship, and hence result in non-arbitrary, internally consistent, biophysically representative (and useful) model results. One might ask what would otherwise be the purpose/rationale behind the current ISO 14044 hierarchy, and the preferred status of allocation based on an underlying physical relationship?
We have further stressed elsewhere that the relationships chosen as allocation criteria should also be relevant, in that they take into account the relevant functional attributes provided by the co-product streams. In this way the model results actually reflect the environmental costs of providing the defined functional attributes. Since one of the key purposes of LCA is to provide a basis for comparing the environmental costs of producing specific functional attributes via competing processes (i.e. product comparisons), this would seem to be of obvious utility.
Brandao’s subsequent example of gold mining fails to achieve this (as do the various iterations of this theme found in the literature, typically invoked by researchers defending the use of economic allocation). It is unclear to us why the only physical criterion ever invoked in such arguments is mass, since mass is rarely a relevant functional attribute/underlying physical relationship by which to allocate burdens. Nonetheless, we suggest that, as arbitrary as such a solution might be, it would nonetheless still be preferable to using economic allocation (we reiterate that we doubt that it is ever meaningful/robust/scientifically legitimate to use economic allocation in process-based environmental LCA) because, in the least, the results would still be grounded in/reflect the physical reality of the system modeled. Instead, Brandao’s arguments emphasize arriving at results that “make sense” and that are “consistent with the assumption of rational and profit-maximising behaviour from the economic agents involved.”
We suggest that the intellectual attachment to economic allocation evident in such arguments reflects the basic desire of the rational mind for results that correspond to expectations. In this case, however, such expectations arise out of a misplaced application of the principle of fairness (and related notions of responsibility), or the volition to arrive at model results that incentivize particular desirable behaviours (for example, greater use of low-value co-products). These are important principles, but they have no place in biophysical modeling. For this reason, we strongly question the scientific legitimacy of operationalizing these motivations in LCA models via economic allocation.
As a concluding note, we think that exploration of this topic would better serve the broad community of interested practitioners were it hosted in an open-access peer-reviewed venue, rather than a limited-entry discussion forum (i.e. only fee-paying ISIE members can post replies here). Towards this end, a special issue of JIE or some other appropriate venue would be most welcome.
Nathan Pelletier and Peter Tyedmers
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