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

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?

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

A framework

Choice of indicators  What to include  How to make trade-offs  How to handle uncertainty

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

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

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

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)

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)

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)

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

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

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

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

Impact significance-important issues of today  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

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

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

Social Environ- ment Economy Sustainable development Relevant for sustainable development 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

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

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

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

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

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

Monetarisation options for use of a car  Death in the community OK accident 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

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

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

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

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