Allocation of Environmental Impacts in Circular and Cascade Use of Resources—Incentive-Driven Allocation as a Prerequisite for Cascade Persistence

In cascade use, a resource is used consecutively in different application areas demanding less and less quality. As this practically allows using the same resource several times, cascading contributes to resource efficiency and a circular economy and, therefore, has gained interest recently. To assess the advantages of cascading and to distribute the environmental impacts arising from resource extraction/processing, potentially needed treatment and upcycling within the cascade chain and end-of-life proesses represent a difficult task within life cycle assessment and highlight the needs for a widely applicable and acceptable framework of how to allocate the impacts. To get insight into how the allocation is handled in cascades, a systematic literature review was carried out. Starting from this status quo, common allocation approaches were extracted, harmonized, and evaluated for which a generic set of criteria was deduced from the literature. Most importantly, participants must be willing to set up a cascade, which requires that for each participant, there are individual benefits, e.g., getting less environmental burdens allocated than if not joining. A game-theoretic approach based on the concept of the core and the Shapley value was presented, and the approaches were benchmarked against this in a case-study setting. Several of the approaches laid outside the core, i.e., they did not give an incentive to the participants to join the cascade in the case study. Their application for cascade use is, therefore, debatable. The core was identified as an approach for identifying suitable allocation procedures for a problem at hand, and the Shapley value identified as a slightly more complex but fair allocation procedure.