Leveraging Life Cycle Assessment to Better Promote the Circular Economy: A First Step Using the Concept of Opportunity Cost

Abstract

In economics, opportunity cost is defined as the benefit foregone by choosing another course of action. Considering opportunity costs enables the improved handling of trade-offs to better support strategic decision-making. We introduce the concept of opportunity cost into life cycle assessment (LCA). In our framework, opportunity cost extends the system expansion paradigm to support better alignment with a circular economy (CE). Opportunity cost thinking is considered to be most useful for the efficient allocation of scarce economic capital for the creation of economic value. In the environmental domain, we use such thinking to account for the implications of ‘wasting waste.’ In this paper, we consider a case of treated wastewater sludge being used as a source of nutrients as a vehicle to study the points at which LCA can support a CE. Our conclusions, however, have wider repercussions because there are many more situations in which product systems are analytically demarcated from the web of connections in which they are embedded.