Introduction

For all scarce materials, except for water and endangered animals, the background data for depletion are obtained from the EcoCost/Value system. Justification for the data can be found in (Delft University of Technology, 2022). ESCU’s for pollution are equal to EcoCosts.
The Oiconomy Pricing Tool (O.P.T.) considers waste/end-of-life separately. The aspect of depletion considers the extraction of virgin scarce materials and the aspects of waste and end-of-life consider littering, loss of value and uncontrolled destinations of the materials. These aspects together make a measure of circularity.

Characterization factor and Indicator

The impact category is depletion of scarce materials, the characterization factor the economic price and the indicator the amount of used virgin scarce material.

Targets

Zero depletion.

Background calculations

The EcoCosts for depletion are equal to the market value of the extracted material, and therefore increases with the scarcity of the material and the ESCU’s are calculated as:
ESCU’s = (Q_m-Q_R) x P_m + RC, where:

Q_m is the quantity of virgin (and therefore freshly extracted and withdrawn from the earth’s/nature’s supply) material used in one unit of product.
P_m , the price factor, for metals and most other materials taken from the EcoCost system (Delft University of Technology, 2022), and included in the O.P.T. For water a methodology, slightly adapted from  EcoCosts at the Utrecht University, is used. Below these two methodologies are summarized.
Q_r  is the amount of the material that is demonstrated recycled.
RC is the costs of recycling, including ESCU’s.

(Source and site for more information: https://www.ecocostsvalue.com/eco-costs/eco-costs-resource-scarcity/). “The original eco-costs of materials depletion was based on a combination of recycling and “deeper digging” in combination with mining of ores with a lower concentration (which is more expensive), as prevention measures for depletion. This method had 3 disadvantages: (1) for many critical materials the recycling rates are limited, caused by ‘diffusion’ (2) the time frame for materials depletion is long term, 100 years – 1000 years or more, which makes it likely that new reserves are discovered or a substitution is developed (3) the long time periods make it less relevant for the short term, e.g. 10 – 30 years

The new eco-costs of metals depletion (as of the eco-costs 2017 V1.3), however, are calculated in a different way. It is related to the short time supply risk of metals, in line with the philosophy of the European union of the Critical Raw Materials (CRM) and the Supply Risk Index of the British Geological Survey. The basic idea is that metals can suddenly become scarce, caused by geopolitical unrest or other supply problems (strikes, serious accidents), that cause shortages in the balance of supply and demand. The result is heavy price fluctuations (IEA 2021). From business point of view, these sudden price jumps are disruptive for existing markets and are suddenly eroding the profitability of products. From governmental point of view, a sudden price jump may cause economic recession. The eco-costs of metal scarcity are equal to a sudden, unexpected, price increase compared to the 10 years average price of the past. Eco-costs are defined as a financial risk: the so called ‘Value at Risk’ at a 95% threshold, the VAR(95). It means that there is a chance of 5% that this price jump exceeds the eco-costs in the coming year, compared to the average price in the last 10 years. Or the other way around: there is a 95% chance that the price jump is less than the eco-costs.
Eco-costs are therefore a business supply risk, where the price jump exceeds the eco-costs every 20 years (i.e. 5% probability for each individual year). The VAR(95) has been calculated from historical data for the period 1946 – 2015”. For details on the calculation and assumptions see ((J. Vogtländer et al., 2019); https://www.ecocostsvalue.com/eco-costs/eco-costs-resource-scarcity/).

In a well-functioning Oiconomy Pricing system, all quantities of depleted materials will be included in the obtained supplier-ESCU’s. Without complete supplier-ESCU’s, the product shall be analyzed and broken down into materials/pieces that can be found in the Idemat Database (Delft University of Technology, 2022), also included in the O.P.T. In addition, for each material with lacking ESCU’s LCA’s shall be studied to include excipients and processing aids that do not appear from the analysis of the used materials. At lacking supplier data, always the worst case shall be assumed (e.g. that processing aids are not recycled). It speaks for itself that this is not the intention of the Oiconomy Pricing System and maximum pressure should be put on suppliers to join the system and provide ESCU’s.
The Oiconomy Pricing system puts the responsibility of completing lacking data at all stages of the supply chain, which means that in theory, every actor in the supply chain should require data from further tier actors.

Foreground calculations

At full availability of supplier-ESCU’s, only for self-added virgin materials ESCU’s are allocated.

Introduction

The scarcity of fresh water is location dependent. The marginal preventative measure against depletion of local fresh water is the very expensive seawater desalination and pumped transport to the location, both with renewable energy. In many cases, cheaper options are available, such as crop choice, planting in pits, evaporation mitigation, soil improvement, local rainwater harvesting, reuse of water, drip technology, desalination of brackish water and long distance transport of available fresh water. The practitioner is challenged to determine his foreground mitigation options, but without demonstration of other options, ESCU’s are allocated based on the marginal measure.

Characterization factor and indicator

The impact category is depletion of scarce fresh water and the indicator is the quantity of used fresh water. The characterization factor depends on the local scarcity of water.

Target

An Aqueduct Atlas Baseline Water Depletion factor <0,1

Background calculations

ESCU’s  = Max{(BWD – 0,1) x Q x (WDC + CT),0} , where:
Q = The quantity of lost fresh water as defined above.
EL = The elevation of the location of water use in meters.
DL = The shortest distance to a sea with open connection to an ocean of the location in kilometers.
BWD = The Aqueduct Atlas Baseline Water Depletion factor (https://www.wri.org/applications/aqueduct/water-risk-atlas).
CT = The costs of transport (pumping) the water from sea to the location with renewable energy, which is calculated, using EL and DL and the data for horizontal and vertical transport in (Zhou & Tol, 2005).
WDC = is the seawater desalination costs with renewable energy: WDC = MIN(D_WNR + DPC x CSP).
D_WNR = the ESCU’s for desalination with not renewable energy of 1 m3 of seawater and can be found in O.F.-07 Scarce Resources.
DPC = the Required Power Consumption for 1 m3 of desalinated water is obtained from http://www.lenntech.nl/kostenberekening-ontziltingsinstallatie.htm (corrected for renewable energy)
CSEP is the country specific ESCU allocation for 1 kwH of power and can be found in O.F.-05 Energy resources.

The country specific WDC in O.F.-07, column Q, is calculated based on the country specific average energy mix; If self-use of renewable energy can be demonstrated, WDC  can be calculated with the data in O.F.-07 Scarce Resources.

The formula also shows that If BWD <= than 0,1, the water is not considered scarce and the ESCU’s zero. Literature shows values of both 0,1 and 0,2 for locations without water scarcity.

Water Reuse.

One potential mitigation is reuse of the already used water. Examples: Before-used water can be used for irrigation in agriculture, parks or gardens, toilet flushing, industrial processing, surface cleaning of roads or environmental restoration. If water is reused, the ESCU’s are divided by 2 for both first and next user. Preliminarily, it is assumed that water is not reused more than 1 time.

Foreground calculations

The organization is challenged to determine and demonstrate its own specific costs to mitigate its product related water depletion. In that case, in the above formula for background ESCU’s, WDC + CT (the costs of seawater desalinization + transport) is replaced by the actual demonstrated costs for the percentage of water depletion mitigation. For the remainder of depletion, the background calculations apply.

Introduction

Several products by their use deplete materials, such as fuels, batteries, tires, lubrication oils, maintenance, repairs, brakes, water, cleaning agents, tools.

The properties of a utensil are the determining cause of future pollution. The higher the pollution per time or distance unit of use and the longer the product life, the higher the future pollution.
Therefore the ESCU’s caused by the use of a utensil is calculated by the foreground emissions per time- or travelled distance unit, multiplied by the product life and multiplied with the background price factors for the emissions obtained from the EcoCost system (Delft University of Technology, 2022).
Important here is to realize that the product is the utensil, for instance a car, which gets its total lifetime ESCU’s for burning fuels allocated. However it that product (the car) becomes a capital good for business purposes (covered by the sections on transport), ESCU’s are only allocated for the emissions by the transport related to that other product. This prevents double counting.
In this stage of the Oiconomy Pricing system, most capital goods are not yet included. If, in the future, capital goods are included, the allocated use-ESCU’s must be allocated, depreciated proportionally to organization’s financial depreciation methods. However, in that case double counting of pollution ESCU’s will become an issue and requires a compensation.

Depletion data on used fuels and transport of goods are included in the ESCU’s for pollution, where totals from the EcoCost system were taken. Not included yet are depletion ESCU’s for commuting and business trips with passenger cars.

Impact category and Indicator

The impact category is depletion of scarce materials, the characterization factor the economic price and the indicator the amount of used virgin scarce material.

Target

For fresh water, An Aqueduct Atlas Baseline Water Depletion factor <0,1.
For other materials, zero depletion.

Background calculations

Currently, there are not enough data on use related depletion to create background data on a reasonable amount of products or even product categories.
However, because the use phase of a product is the responsibility of the end-producer, there are no unknown suppliers involved and therefore, the end producers should be able to provide the data and contribute to the required research.

Foreground calculations

The use-sections of the Oiconomy Pricing Tool only request foreground data.
Above, in the section about depletion, explained was that first ESCU’s for depletion are allocated at the point of first use and subtracted again when recycling can be demonstrated at the bottom end of the life cycle. For Use-Depletion, because the calculations of both are simultaneous, ESCU’s for demonstrated recycling are directly subtracted.

Introduction

The amount of production-existing waste highly depends on the character of the raw materials (e.g. not all parts of food produce are edible), design issues, production and logistic errors, human, equipment and maintenance failures, shelf-life and quality issues and supply-demand imbalances. Therefore, waste quantities are highly variable and unpredictable.

Impact category and Indicator

In a fully developed circular economy, all material flows are not only recycled, but also not “downcycled”, and keep their value, or have enough positive impact for compensating their full upstream ESCU’s. Therefore, the O.P.T. divides the ESCU’s between origin and destination product according relative to their value.
In the section of depletion, ESCU’s for depletion of materials are calculated as the value of the virgin materials. In the sections of waste/disposal and end-of-life, ESCU’s are recovered by the market value of the demonstrably recycled materials, augmented with ESCU’s for collection and processing.
This way, in a fully developed Oiconomy Pricing System, with a zero value of the waste material, all depletion ESCU’s are allocated to the first product-user and the next user zero depletion-ESCU’s. However, if the material has a residual value, an equal amount of ESCU’s are allocated to the destination product and subtracted from the original product. If transport and processing costs for reworking waste are higher than the original extraction costs, the paid price and ESCU’s for the waste will gradually mitigate with every new use of the material.

Targets

Zero litter and zero loss of value of materials

Background calculations

Very generic background average quantities of waste from production could be derived from (CBS, 2019; Kalisz et al., 2022; Ndlovu et al., 2017; ICF Consulting; The American Petroleum Institute, 2000). Because of lack of more granular data, the tool uses these averages as background data in an indiscriminate way, assuming the same waste percentage for all materials.

ESCU’s for depletion are obtained from the EcoCost system (Delft University of Technology, 2022). Transport and processing ESCU’s are derived from (bouldercounty.gov, 2022; PRO Europe, 2022). Transport and processing costs of both sources may not be based on the same calculation principles. The transport and processing costs, taken from PRO Europe consider packaging waste at European consumer level, which should develop to all materials at industrial level. The Boulder data consider USA data on materials on industrial level.
ESCU’s are subtracted for demonstrable amounts of KwH’s and for demonstrable amounts of recovered methane from landfills, for which background data are taken from the EcoCost system (Delft University of Technology, 2022).

Foreground calculations

The tool offers the practitioner the opportunity to enter foreground quantities of waste flows for each material. In addition, in case of foreground data, the tool accounts for quantities that are recycled, incinerated with energy recovery or land filled/fermented with methane recovery.
For demonstrably recovered electricity ESCU’s are subtracted depending on the countries’ specific emissions for power, taken from the Idemat_2021_Global_Electricity_Calculation to ESCUs 2022 database at www. ecocostvalue.com. For demonstrably recovered methane, ESCU’s are subtracted based on the relative global warming potential of methane relative to CO2, taken from (Delft University of Technology, 2022).

(Note: still missing, also in the tool.)

Introduction

The main issues at the end-of-life stage of a product are:
1. A product life shorter than necessary, or redundancy. The consumer buys too much and is tempted to that behavior e.g. by advertising, low quality, low prices, lack of repair and refurbishment opportunities, fashion and social group behavior.
2. Litter, landfill, depletion of materials, pollution, caused by the design of the product and the lack of facilities and opportunities for sustainable disposal.
3. In many countries, the costs of sustainable disposal is an externality, paid by the society and not included in the price of the product and not assessed and organized before the product is introduced into the market.

Impact category and Indicator

Litter and pollution by the waste flow existing at end-of-life disposal.

Targets

Zero litter and pollution by end-of-life disposed materials.

Background and Foreground calculation

The Oiconomy Assessment Tool allocates disposal ESCU’s for the following shortcomings:

1. Any disposed material for which no sustainable destination can be demonstrated.
   Background ESCU’s are allocated for all materials for which no sustainable destination can be demonstrated, but ESCU’s, equal to the obtained price (for the waste) are subtracted for quantities that are either self-retained and recycled or reused, or demonstrably externally recycled.

Redundancy. A product life curve shall be made, showing the most common product life (CPL) (the moment of maximum amounts of products reaching end-of-life) and the moment that 80% of the product (80%PL) has reached end-of-life. A “redundancy factor” is determined as 80%PL/CPL. Without actual determination of this factor, a default value of 2,0 is assumed, without further justification.
The ESCU’s for depletion, transport and processing are multiplied by the redundancy factor.
By means of the determination of a governance quality based reducing multiplication factor (RMF) the obtained ESCU value can be mitigated.