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Investments in material efficiency: the introduction and application of a comprehensive cost–benefit framework

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  • Florian Flachenecker
  • Raimund Bleischwitz
  • Jun E. Rentschler

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.

Suggested Citation

  • Florian Flachenecker & Raimund Bleischwitz & Jun E. Rentschler, 2017. "Investments in material efficiency: the introduction and application of a comprehensive cost–benefit framework," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 6(2), pages 107-120, April.
    • Handle: RePEc:taf:teepxx:v:6:y:2017:i:2:p:107-120
    DOI: 10.1080/21606544.2016.1211557
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    Cited by:

    1. Florian Flachenecker & Jun Rentschler, 2019. "From barriers to opportunities: Enabling investments in resource efficiency for sustainable development," Public Sector Economics, Institute of Public Finance, vol. 43(4), pages 345-373.
    2. Joris Baars & Mohammad Ali Rajaeifar & Oliver Heidrich, 2022. "Quo vadis MFA? Integrated material flow analysis to support material efficiency," Journal of Industrial Ecology, Yale University, vol. 26(4), pages 1487-1503, August.
    3. Rentschler, Jun & Kornejew, Martin, 2017. "Energy price variation and competitiveness: Firm level evidence from Indonesia," Energy Economics, Elsevier, vol. 67(C), pages 242-254.
    4. Rentschler, Jun & Kornejew, Martin & Bazilian, Morgan, 2017. "Fossil fuel subsidy reforms and their impacts on firms," Energy Policy, Elsevier, vol. 108(C), pages 617-623.

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