Flachenecker, F; Bleischwitz, R; Rentschler, JE; (2016) Investments in material efficiency: the introduction and application of a comprehensive cost–benefit framework. Journal of Environmental Economics and Policy , 6 (2) pp. 107-120. 10.1080/21606544.2016.1211557.

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Abstract

Increasing material efficiency is considered to yield multiple economic and environmental benefits. This paper firstly introduces a comprehensive cost–benefit framework to systematically assess the viability of investments in material efficiency. The framework comprises several components by (1) comparing a business-as-usual scenario with a scenario of scaling up investments in material efficiency, (2) covering economic and environmental dimensions, and (3) considering direct and indirect effects. In a second step, we match the framework to existing evidence from the literature, followed by an application of the framework to a microeconomic investment project financed by a multilateral development bank. Our results suggest that material efficiency investments can yield positive net benefits, which typically increase when non-monetary dimensions are additionally taken into account. Overall, our analysis calls for a more comprehensive approach towards material efficiency investment appraisals, the internalisation of externalities, and further empirical research to better understand the implications of moving towards material efficient economies.

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