Page 238 - Materials Chemistry, Second Edition

236 11. A composite life cycle sustainability index for sustainability prioritization of industrial systems

TABLE 11.5 Economic indicators from economic parameters and cash flows (Iba ´n ˜ez-For es et al., 2014;
Lo ´pez-Maldonado et al., 2011).
Method Indicator (Unit) Description
Economic Total annual cost It represents the annual cost of operating assets spent by the investigated
parameters ($,¥, …) system, which embraces the expense ratio, front-end load, back-end load,
redemption fee, transaction costs, and opportunity costs of all those costs
Net present value It is the difference between the present value of future cash inflows (income)
($,¥, …) and the present value of future cash outflows (expenditure), which accounts
for the time value of money
Economic It refers to the potential of a region, country, or company in terms of economic
potential development, growth, and creation of surplus value
Cash flows Incoming cash ($, It refers to the total capital income generated by the system, which may
¥, …) include revenue, the sales of a product or service, salvage income, and
variable value income, current assets recovered, etc., while the
implementation of a decision for reducing the costs also can be integrated
Outgoing cash ($, It refers to the total capital expenditure of the system, which may include the
¥, …) capital expenditures for the acquisition or construction of fixed assets,
operating costs, production costs, administrative expenses, and sales
expenses incurred in the operation, etc.

indicators, are introduced by referring to the work of Iba ´n ˜ez-For es et al. (2014).Inthis, the
tool of economic parameters can be adopted for analyzing the cost-effectiveness of an in-
dustrial system, which typically embraces three indicators including the total annual cost,
the net present value, and the economic potential; while the tool of cash flows can be
utilized for measuring the economic balance of all the incoming and outgoing cash flows
regarding the investment of an industrial system, where both the expenditure and profits
should be taken into account. Detailed descriptions of the involved indicators can be
found in Table 11.5.

11.3.4 Other typical economic indicators
Among the existing researches regarding life cycle sustainability assessment, some other
economic indicators have been developed for representing the economic performance/im-
pact/potential of an industrial system. In this sub-section, other typical economic indicators
are summarized in Table 11.6. Consequently, users can select proper indicators according to
their preferences and the actual conditions of the investigated system.
For measuring the economic performance of an industrial system with life cycle thinking,
the LCC method is strongly suggested due to its high flexibility and easy operation, as well as
its good connection with the environmental and social assessment (De Menna et al., 2018).
However, in order to offer a more comprehensive economic evaluation result, the indicators
from the tools of economic parameters and cash flows, as well as other typical criteria like
economic benefit, and economic risk can also be selected according to the actual conditions
of the investigated system.