Cleaner Technology Projects in Denmark 1997
Total Cost Assessment
Total Cost Assessment
Arbejdsrapport nr. 51, 1997, Miljøstyrelsen
This project describes the outcome of an international project concerning "Total Cost Assessment" (TCA). It highlights the possibilities and problems involved when making financial investments analyses with the aim of including environmental aspects. Inspired by the international project, a Danish TCA-project has been outlined to simplify this work even more. In this report a possible method is outlined and it is exemplified with two test cases.
The Danish TCA project has to be seen in context of the increasing trend of including economic incentives in environmental politics. The Danish TCA concept is meant as a tool for companies to make it possible to include a sufficient amount of environmental bound benefits and costs in their financial investment analyses in order to make choices on an improved basis.
In the US this approach has proved to benefit not only business economics but also the environment. In the process of developing this report it has not been an objective to prove this coincidence. However, nothing has been revealed that could prove this to be wrong.
Adjusting the TCA concept to Danish conditions the focus of the development has been to end up with a concept that:
 | Helps the qualification of investment decisions in different divisions of the enterprises, |
| Is rather simple and may be used without any particular business economic or computer knowledge, |
| Has been adjusted to the need of small and medium sized enterprises in connection with investment speculations, |
| Provides enterprises without systematic analysis routines access to an analysis and management tool to be used for qualification and calculation of expected financial consequences in connection with investment analyses. Enterprises that already have analysis routines may find it a supplementary tool that may contribute to higher qualification of the decision basis of management, |
| As far as possible will be based on already existing information from the financial systems or accounts of the enterprises, |
| May be used by the enterprises without further use of another calculation rate, timetable, etc. than what is normally used in connection with investment analyses, |
| Gives access to stipulate special conditions in the spreadsheet of the product in question for the expected penetration curve and life cycle on the market. |
The testing with the Danish TCA concept has proved to be very useful since it structures investment analyses and makes it easier to include environmental aspects in the analyses. Furthermore, the spreadsheet helps and makes it easy to simulate different scenarios.
In the end of the report a number of relevant issues are brought into focus. These issues are:
| When is it relevant to bring the Danish TCA into the decision making process |
| Who is the user of TCA |
| Does the use of TCA benefit the environment |
| How to strengthen the use of TCA |
However a final solution to these matters is not presented, but different approaches and solutions are suggested.
Author/ institution
Heidi K. Stranddorf og Johnny Iversen, dk-TEKNIK
Bo Danielsen og Mikkel Vinther, Andersen Management International A/S
Birgit Munck-Kampmann og Jens Peter Mortensen, Water Quality Institute
This report is subsidised by The National Council for Recycling and Cleaner Technology
ISSN no. 0908-9195
ISBN no. 87-7810-827-6