Functions, commodities and environmental impacts in an ecological economic model

Abstract

In contrast to macroscopic tools, life cycle assessment (LCA) starts from the microstructure of an economic system: the production and consumption of functional flows. Due to the level of resolution required for function-level details, the model used for LCA has relied on process-specific data and has treated the product system as a stand-alone system instead of a system embedded within a broader economic system. This separation causes various problems, including incompleteness of the system and loss of applicability for a variety of analytical tools developed for LCA or economic models. This study aims to link the functional flow-based, micro-level LCA system to its embedding, commodity-based, meso- or macro-level economic system represented by input–output accounts, resulting in a comprehensive ecological–economic model within a consistent and flexible mathematical framework. For this purpose, the LCA computational structure is reformulated into a functional flow by process framework and reintroduced in the context of the input–output tradition. It is argued that the model presented here overcomes the problem of incompleteness of the system and enables various analytical tools developed for LCA or input–output analysis (IOA) to be utilised for further analysis. The applicability of the model for cleaner production and supply chain management is demonstrated using a simplified product system and structural path analysis as an example.