Estimation of shadow prices of soil organic carbon depletion and freshwater depletion for use in LCA

Abstract

Purpose

The interpretation of differences between alternative systems in life cycle assessment (LCA) can be problematic when different impact categories point to different directions. Using shadow prices is one way to overcome this problem, as the results are expressed in a monetary value, making comparison easy for decision makers. However, for the International Reference Life Cycle Data System midpoint impact categories 'water depletion' and 'land use', the shadow prices were missing. In the current paper, these were derived from literature sources.

Methods

Abatement-based shadow prices (P_a) were established from the costs of the abatement measures minus the additional benefits. The damage-based shadow price (P_d) was based on the economic damage per unit of impact. Damage to ecosystems or human health was not included, as monetary values were lacking. As a consequence, P_d is an underestimation. P_a prices for land use, based on soil organic carbon (SOC) depletion, were derived from the cost of abatement measures like adding organic matter to agricultural soil or changing tillage. The response of crop yield to SOC, for several countries and crops, was used for the P_d calculation. For water depletion, P_a was based on water saving measures and desalination techniques, and P_d was based on economic losses due to water unavailability.

Results and discussion

The following shadow prices were found for SOC depletion: P_a of 0.10 € kg⁻¹ SOC and P_d of 0.0286 € kg⁻¹ SOC. For water depletion, P_a of 15.8 € m⁻³ eq. was based on replacing turf with less-water-consuming planting. The value of water for irrigation was the base for the P_d 5.17 € m⁻³ eq. Freshwater and SOC P_a values unexpectedly exceeded the P_d values. This originated partly from the methods used. P_d was established by averaging marginal costs, while P_a used the most expensive measure, and this may lead to P_a exceeding P_d. Furthermore, the damage-based P_d for SOC and water depletion was mainly based on crop yield, and other types of ecological or societal damage will exist. Including these damages that lacked reliable data will increase P_d.

Conclusions

The shadow prices presented here are the first science-based global estimates. For LCA, the P_d values should preferably be used. The values are regarded as conservative estimates since only economic damage was included as other damages like ecological damage could not be monetised. The estimated shadow prices were derived for impacts where economic data is relatively scarce, and this limited the quality of the estimates. More extensive studies are needed to further improve the quality of the estimated prices.

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