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Introduction to the concept of the EVR

The Ecocosts / Value Ratio, EVR, is an indicator which fulfills 3 different functions in the EVR model:
1. it is an indicator for sustainability in LCA (additional to the eco-costs) in cases where the quality of products (with the same functionality) differs
2. it is an indicator which is relevant to corporate strategies and governmental policies: it links the consumer side with the production side
3. it is a parameter in economic allocation of LCA calculations

1. The EVR brings the quality aspect in the LCA

The aim of an LCA is often to compare two products (or services). A prerequisite is then that the two products have the same functionality and the same quality (in the broad sense of the word).
In practice, however, new innovative 'green' designs often have the same functionality, but differ from the classical design. In such cases the quality is not the same.
It is a widespread misunderstanding that the design with the lowest eco-costs (or millipoints, or carbon footprint) is always the best choice in terms of sustainability
. When the eco-costs of the new design is lower and the quality is better, there is no doubt that the new design is more sustainable. However, when the quality of the new design is lower, it remains to be seen which design alternative is the best choice in terms of sustainability.

In cases where the quality differs, the Ecocosts / Value Ratio, EVR, appears to be a better indicator for sustainability. This is because " value" (fair price) is a good indicator for the quality in the broad sense.

2. The EVR links the production side and the consumers side of our economy

The Ecocosts / Value Ratio has a much wider background than "just dividing the eco-costs by the value". This ratio appears to be the crucial factor in a sustainable society.
The EVR is an E/E indicator, which means that it is an indicator to describe the eco-efficiency of a product and/or service. The EVR is a dimensionless number which indicates to what extent a (design of a) product contributes to the de-linking of economy and ecology. The EVR is about 2 P's of the Triple P model.

The roots of the EVR are in the Bruntland Report, and in the definition of sustainability of the World Business Counsel of Sustainable Development. See for details tab general.
The basic idea is to link the value chain, see tab value,
to the ecological product chain, see tab eco-costs.
In the value chain, the added value (in terms of money) and the added costs are determined for each step of the product "from cradle to grave".
Similarly, the ecological impact of each step in the product chain is expressed in terms of money, the eco-costs. See Fig. 4.1a .

The eco-costs and the value in the chain can preferably be depicted in a two dimensional graph, see Fig. 4.1b
Note: This example shows the chain only from "the cradle to gate (=the retail shop)": the use phase and the End of Life phase are not depicted, since these phases depend heavily on choices on the habits of the user; for details see tab LCA.

For one step in the production+distribution chain, the eco-costs, the costs and the (market) value can be depicted as in Fig. 4.1c.
So a product (and service) has 3 separate dimensions: the costs, the eco-costs and the value. These dimensions have all € as unit, but must strictly be kept separate (it is obvious that adding components of the cost to the value has no practical meaning at all; the same applies to the eco-costs).

An interesting aspect of the EVR is that it links the producers side with the consumers side (see also tab FAQs question 3.1):
- industry must develop products and services with minimum EVR
- consumers must spend their money on products / services with a low EVR

It is essential to understand that the consumer preferences are key to a sustainable solution. Therefore, the EVR model has its focus on the value of products as perceived by the customer (most other E/E models focus on costs instead of value). This focus on value in relation to eco-costs opens the eyes of the designer to a wide variety of new solutions.

The reader should read pages "consumer expenditures", "design alternatives" and "product innovation" to get a real sense of what the EVR means in practice.

3. The EVR for economic allocation in LCA

The EVR can act as a parameter for "economic allocation" in LCA calculations, especially for services ("eco-costs per euro" instead of "eco-costs per kg").
The issue is that services are characterised by shared use of facilities (for transport, offices, equipment etc.) which is complicating the LCA, since materials and emissions are shared as well. Materials and emissions must then be allocated to a specific service in line with the economic importance of that specific service. It called "economic allocation" in LCA. This is an issue for LCA specialists. For a further explanation and details on this rather difficult subject, see tab LCA, allocation.
Although this application of the EVR is fully in line with the ISO for LCA, it has to be applied with care (see tab FAQs question 1.3).

Literature: see under tab data, reference 1.0 and 1.3.