Environmental costs and benefits in life cycle costing

Purpose – From a methodological point of view, life cycle costing (LCC) is well developed with respect to conventional costs. However, when it comes to costs related to environmental issues, neither the items nor their estimation have been well developed. This paper aims at investigating the possibilities of using life cycle assessment (LCA) results to identify and estimate environmental costs or benefits in an LCC.Design/methodology/approach – The paper begins by looking at the driving forces for introducing environmental costs in companies, continues by identifying external and internal environmental cost issues, and concludes with an attempt to estimate the internal costs.Findings – Some of the items of an LCC have to do with increased/decreased sales, others with good will. Both are difficult to estimate, but LCA or LCA‐like investigations may be helpful in identifying relevant issues. Future costs to the product system may also be estimated, for example, with a distance‐to‐target type of weighting. L...