Return on environment

The Return on Environment (ROE) is developed, and tested, as an objective indicator to support the results of Life Cycle Assessments. It is based on the observation that a ratio of life cycle costs incurred throughout the extraction, transport, manufacturing, use and disposal stages, to the selling price, appears to scale linearly with a quantitative impact assessment. ROE is therefore a normalization method which permits comparison of new assessments with existing data, even from products with quite different characteristics. It can, alternatively, be applied to estimate either the life cycle cost, or quantify environmental impact, provided the other is known. Like its economic cousin, the return on investment, cases studied typically have ROEs in over the range of 2–20%. ROE is intended as a preliminary estimation method, akin to engineering costing, which has a precision of +-30%. As such, it can be used to rapidly determine if a more detailed cost assessment can be justified and, if so, where the efforts should be oriented. ROE is a measurable life cycle index intended to render LCAs more suitable for decision making. A further benefit that ROE provides is the guidance to a life cycle practitioner, or product development team, to assess if sufficient data has been collected, or if costs and impacts have been over or under-estimated. It has advantages over specific ecoindicators, such as manufacturing energy or waste emissions, which are both product specific and subjective. The Return on Environment also serves as a systematic index for reporting improvements or as a relative environmental rating.