Integrating external effects into life cycle costing

Book chapter, 2008

This chapter addresses the issue of external costs. These are, specifically, nonreal monetary flows that can become relevant and be monetized in the decisionrelevant future or for which an economic assessment is preferred. As such, the issue of externalization has its principal bearing on societal LCC. The issue of how to account for, and possibly aggregate, a large number of social indicators (more than 200) is elaborated. The business link to sustainability, as well as the effect of a vanguard position in regard to societal and environmental behavior for firms, is presented. As societal assessment is in its infancy, and societal LCCs are few in number, this chapter, more than any other in this book, underlines the fundamentals while also proposing means to internalize costs for an idealized washing machine case.