Economic evaluation of externalities in waste management LCC studies: state‐of‐art, perspective and open issues

Conference Dates

June 5 – 10, 2022


Life cycle costing (LCC) has been developed as a tool aimed at supporting public administrations in decisions regarding public investments and public policies. In its original version, it paid special attention to financial expenditures that are related to a project along its lifetime, with the aim of allowing a better and more efficient allocation of public funds. More recently, this focus has been expanded, to encompass not only the consequences on the public budget, but also those that affect the society as a whole, possibly including future generations and non-anthropocentric outcomes. This means including in the evaluation a whole range of “intangible” elements that have no immediate relation to market values, or are hardly reducible to monetary evaluation: from pollution to climate change, from biodiversity to human life. Economists have proposed innovative techniques aimed at bringing non-market goods into the valuation framework and making them comparable with any other value. This approach has been successful enough to persuade hard-science practitioners, who often make use of these techniques, without paying due attention to their theoretical and practical limitations. This is particularly true in the field of waste management, where LCC, in coordination with LCA, has become a standard approach. Nonetheless, further challenges emerge, once the assessment of waste management policies needs to consider previously disregarded aspects, such as climate change or the circular economy. Particularly the latter poses new and somewhat unexplored challenges: waste treatment solutions must be compared with alternative strategies that include waste prevention, product design, choice of materials. The very boundaries of the analysis – where exactly the “cradle” and the “grave” are located – are not obvious. The objective of this seminar is to discuss the rationale of economic valuation techniques and to discuss their grounding principles, in order to test the validity of the approach. We shall discuss the state-of-the-art of economic valuation, from alternative theoretical angles, and especially the neoclassical economic paradigm and the emerging ecological-economic paradigm, paying particular attention to most recent theoretical developments and concrete applications. We shall try to understand the usefulness, but also the limits, of the underlying economic concepts. This seminar is especially addressed to non-economists, with the aim of demonstrating how potent and illuminating the economic perspective may be, but also warning about the possible misuse of economic concepts.

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