United States
                Environmental Protection
                Agency
Risk Reduction
Engineering Laboratory
Cincinnati, OH 45268
                Research and Development
EPA/600/SR-92/226    April 1993
EPA        Project  Summary
                 Life Cycle  Design   Manual:
                 Environmental  Requirements
                 and the  Product System
                Gregory A. Keoleian and Dan Menerey
                  The U.S  Environmental Protection
                Agency's (EPA) Risk Reduction Engineer-
                ing Laboratory and the University of Michi-
                gan are cooperating in a project to reduce
                environmental impacts  and  health risks
                through product system design. The re-
                sulting framework for life cycle design is
                presented in Life Cycle Design Manual:
                Environmental Requirements and  the
                Product System.  Environmental require-
                ments in life cycle design are chosen to
                minimize aggregate resource depletion,
                energy use, waste generation, and delete-
                rious human and ecosystem health ef-
                fects.
                  The manual adopts a systems-oriented
                approach based on the product life cycle.
                A product life cycle includes raw materi-
                als acquisition, bulk and engineered ma-
                terials processing, manufacturing/assem-
                bly, use/service, retirement, and disposal.
                Design activities address the  product sys-
                tem, which includes product, process, dis-
                tribution, and management/information
                components.
                  Integrating environmental requirements
                into the earliest  stages of  design  is a
                fundamental tenet of life cycle design. Con-
                cepts such  as concurrent design, total
                quality management, cross-disciplinary
                teams, and total cost assessment are also
                essential elements of the framework. A
                multilayer requirements matrix is proposed
                to  balance  environmental, performance,
                cost, cultural, and legal requirements. The
                following design  strategies for pollution
                prevention and resource conservation are
                presented:  product life extension, mate-
                rial  life extension, material selection, re-
                duced material  intensiveness, process
management, efficient  distribution, and
improved business management (which
includes information provision).  Environ-
mental analysis tools for developing re-
quirements and evaluating design alterna-
tives are outlined.
  This Project Summary was developed
by the University of Michigan for the EPA's
Risk Reduction Engineering Laboratory,
Cincinnati, OH, to announce key findings
of the research project that is fully docu-
mented in a separate report of the same
title (see Project Report ordering informa-
tion at back).

Overview
  The purpose of  the Life Cycle Design
Project is to promote environmental impact
and risk reduction through design. This project
complements the EPA's Life Cycle Assess-
ment Project which  is developing guidelines
for life cycle inventory analysis. The frame-
work developed in this project guides design-
ers to reduce aggregate impacts associated
with  their products.  Successful low-impact
designs must also satisfy performance, cost,
cultural, and legal criteria.
  Investigation of the design literature and
interviews with 40 design professionals con-
tributed to the development of a basic frame-
work for life cycle design. The interviews were
conducted to identify barriers and  the infor-
mation and tools needed to achieve environ-
mental objectives. Life Cycle Design Demon-
stration Projects  are being conducted w'rth
AT&T Bell Labs and Allied Signal to test the
design framework.
  A summary of the seven chapters con-
tained in Life Cycle Design Manual: Environ-
                                                               ;2yO Printed on Recycled Paper

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mental Requirements and the Product Sys-
tem follows.

Chapter 1. Introduction
  Most environmental  impacts  result from
design decisions made long before manufac-
ture or use.  Yet environmental criteria often
are not considered at the beginning of design
when it is easiest to  avoid  impacts. As a
result,  many companies channel resources
into fixing problems rather than preventing
them.
  In the past 15 yr,  companies  began to
focus more  on pollution prevention  and re-
source conservation. Innovative firms are now
adopting ambitious environmental policies in
response to  changing public perceptions. But
translating these policies into successful ac-
tion is a major challenge. Without proper sup-
port, environmental design programs may be
launched without specific  objectives, defini-
tions, or principles.
  Such practices demonstrate the need for a
design framework that helps reduce total en-
vironmental  impacts while satisfying other cri-
teria When design considers all stages of the
life cycle from raw material acquisition to final
disposal of  residuals, the full consequences
of product development can be understood
and acted on.

Purpose
  The manual seeks to:
     •   provide guidance on reducing impacts
       and  health risks caused by  product
       development
     •   encourage   the   inclusion    of
       environmental  requirements  at the
       earliest stage of design rather  than
       focusing on end-of-pipe solutions
     •   integrate environmental, performance,
       cost, cultural, and legal requirements
       in effective designs

Scope
   Environmental requirements for  product
design are the main focus of the manual. In
life cycle design,  products  are defined  as
systems that  include  the following  compo-
nents: product, process, distribution  network
(packaging and transportation), and manage-
ment  (including information  provision). Life
cycle design can be applied to:
   • improvements, or minor  modifications of
     existing products and processes;
   • new features associated with developing
     the next generation of an existing product
     or process; and
   • innovations characteristic of  new designs.
   No  single design method or set of  rules
applies to all types of products. For that rea-
son, the manual provides general guidelines
rather than prescriptions. Designers should
use the manual to develop tools best suited
to their specific projects.
Audience
  Each participant in product system devel-
opment has an important role to play in achiev-
ing impact reduction. The manual is primarily
targeted for the following decision makers:
  •  product designers
  •  industrial designers
  •  process design engineers
  •  packaging designers
  •  product development managers
  •  staff  and  managers in: accounting,
    marketing, distribution, corporate strategy,
    environmental health  and  safety, law,
    purchasing, and service

Chapter 2. Life Cycle Design
Basics
  Several key elements form the foundation
of life cycle design. First,  design takes  a
systems approach based  on the  life  cycle
framework.  Every activity related to making
and using products is included in design. As
a result, the product is  combined with pro-
cessing, distribution, and management to form
a single system  for design. When the full
consequences of development are identified,
environmental goals can be better targeted.

The Life Cycle Framework
  The term product life cycle has been ap-
plied  to both business activities and material
balance studies. In business use,  a product
life  cycle begins with the first phases of de-
sign and proceeds through the end of pro-
duction. Businesses track costs, estimate prof-
its,  and plan strategy based on this type  of
product life cycle.
  In  contrast, environmental  inventory and
impact analysis follows the physical system
of a product. Such life cycle  analyses track
material and energy flows and transforma-
tions  from raw materials acquisition  to the
ultimate fate of residuals.
   Life cycle design combines the standard
business use of a life cycle with the physical
system. By taking a systems approach, life
cycle design seeks to avoid the cross-media
transfer of pollutants or the shifting  of impacts
from  one life cycle stage to another.

 Life Cycle Stages
   The product life cycle can be  organized
 into the following stages:
  •  raw material acquisition
     bulk material processing
     engineered materials production
      manufacturing/assembly
      use and service
      retirement
     disposal
   A  genera! flow diagram of the product  life
 cycle is presented in Figure 1. The net effect
 of each product life cycle is the  consumption
 of  resources and the conversion of these
resources into residuals which accumulate in
the earth and biosphere.

Product System Components
   Life cycle design addresses the entire prod-
uct system, not just  isolated components.
This is the most logical way to reduce total
environmental impacts. The product system
can be decomposed into four primary com-
ponents:                   '•
   • product
   • process                '
   • distribution network
   • management
   The product component consists of all ma-
terials in the final product and  includes all
forms of these  materials  from acquisition to
their ultimate fate. Processing transforms ma-
terials and energy into intermediary and  final
products. Distribution consists of packaging
systems and transportation networks used to
contain, protect, and transport items. Man-
agement responsibilities  include administra-
tive services, financial management, person-
nel, purchasing, marketing, customer services,
and training and educational programs.  The
management component  also develops infor-
mation and conveys it to others.
   The process, distribution and management/
information components can be further clas-
sified into the following subcomponents: facil-
ity or plant, unit operations or, process steps,
equipment and  tools, labor, secondary mate-
rial inputs, and energy.

Goals of Life Cycle Design
   The primary objective of life cycle design is
to reduce total  environmental impacts  and
hearth risks caused by product development
and use. This objective can only be achieved
in concert with  other life  cycle design goals.
Life cycle design seeks to:   :
     conserve resources
     prevent pollution        '•-
     support environmental equity
     preserve diverse, sustainable ecosystems
     maintain  long-term, viable  economic
     systems
   Resource conservation, pollution preven-
tion, and the equitable distribution of resources
and risks are essential to preserve the sus-
tainable ecosystems that comprise the planet's
life support system. For this reason, product
systems must be developed that balance hu-
 man resources, natural resources, and  capi-
tal while preserving healthy ecosystems.

 Chapter 3. The Development
 Process
   Design  actions translate  life cycle goals
 into high-quality, low-impact products. As Fig-
 ure 2 shows, product development is  com-
 plex. Many elements in the diagram  feed

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                                                                                            Closed-loop
                                                                                             recycling
                    Engineered &
                      Specialty
                      Materials    I
                                                                                                    Open-loop recycling

                                                                                                    Material downcycl/ng
                                                                                                    into another product
                                                                                                    system
                                          The Earth and Biosphere
                            Fugitive and untreated residuals

                            Airborne, waterborne, and solid residuals

                            Material, energy, and labor inputs for Process and Management

                            Transfer of materials between stages for Product; includes
                            transportation and packaging (Distribution)
Figure 1.  The product life cycle system.
back on others. This emphasizes the con-
tinual search for improved products.
  Life cycle goals are located at the top to
indicate their fundamental  importance. Un-
less these goals are embraced by the entire
development team, true life cycle design is
impossible.
  Management exerts a major influence on
all phases of development. Both  concurrent
design and total quality management provide
models for life cycle design. In addition, ap-
propriate corporate policy, strategic planning,
and measures of success are  needed  to
support design  projects.
  Research and development discovers new
approaches for  reducing environmental im-
pacts. The state of the environment provides
a context for design.  In  life cycle design,
current and future environmental needs are
translated into appropriate designs.
  A typical design project begins with a needs
analysis, then proceeds through formulating
requirements, conceptual design, preliminary
design, detailed design,  and implementation.
During the needs analysis, the purpose and
scope of the project are defined, and custom-
ers are clearly identified.
  Needs are then expanded into a full set of
design criteria that includes environmental re-
quirements.  Successful designs balance en-
vironmental, performance, cost, cultural, and
legal  requirements.  Design alternatives  are
proposed to meet these requirements. The
development team continuously evaluates al-
ternatives throughout design. If studies show
that requirements cannot be met or reason-
ably modified, the project should end.
  Finally, designs are implemented after final
approval and  closure  by the development
team.

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                                                      Life Cycle Framework
                                                           and Goals
                                                          (Chapter 2)
                                                             Management
                                                              (Chapter 3)
                                              • Concurrent design   • Team coordination
                                              • Life cycle quality     • Policy and strategy
                                              • Measures of success
           c
Technical Developments
                  Life Cycle
                  Strategies
                  (Chapter 5)
     Needs Analysis
       (Chapter 3)

• Significant needs
> Scope & purpose
• Baseline
                                                                               State of Environment
                                                          Requirements
                                                            (Chapter 4)

                                                     • Environmental
                                                     • Performance
                                                     ' Cost
                                                     • Cultural
                                                     • Legal
                                                             Design
                                                    ' Concept
                                                    • Preliminary
                                                    - Detailed
                                           discontinue
                          Continual reassessment
                                                                               refine
                                                            Implement

                                                     • Production
                                                     • Use & Service
                                                     • Retirement
                                                                                  Evaluation

                                                                                  • Environmental     -
                                                                                        (Chapters)  :

                                                                                  ' Cost
                                                                                        (Chapter 7)  ,

                                                                                  • Decision Making
                                                                                        (Appendix D)
                                                                   Monitor, plan improvements
Figure 2.  Life cycle design process.

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Management
  Commitment from all levels of manage-
ment is a vital part of life cycle design. Corpo-
rate environmental policy must be translated
into specific criteria to have a significant effect
on product and process design activities. Ob-
jectives  and guidelines need to be  estab-
lished in enough detail to provide useful guid-
ance in design decision making.
  The progress of life cycle design programs
should be  monitored and assessed using
clearly established environmental and finan-
cial measures. Appropriate measures of suc-
cess are necessary  to motivate individuals
within development teams to pursue environ-
mental impact and health risk reductions.

Concurrent Design
  Life cycle design  is a logical extension of
concurrent manufacturing, a procedure based
on simultaneous design of product features
and manufacturing processes. In contrast to
projects that isolate design groups from each
other, concurrent design  brings participants
together in a single team. By having all actors
in the life cycle participate in  a project from
the outset, problems that develop between
different disciplines can be reduced. Efficient
teamwork also reduces development time,
lowers costs, and can improve quality.

Life Cycle Quality
   Environmental  aspects are closely linked
with quality in life cycle design. Companies
who look beyond quick profits to focus on
customers, muttidisciplinary teamwork, and
cooperation with  suppliers provide a model
for life cycle design. The life cycle framework
expands these horizons to include  societal
and environmental needs. Life cycle  design
may thus build on total quality management,
or be incorporated in a TQM program. In life
cycle design, the environment  is also seen as
a customer. Pollution and other impacts are
quality defects that  must  be reduced. Ulti-
mate  success depends on preserving envi-
ronmental quality while satisfying traditional
customers and employees.

Team  Building
   Life cycle design depends  on  cross-disci-
plinary teams. These teams may  include any
of the following  life cycle  participants: ac-
counting, advertising, community, customers,
distribution/packaging, environmental re-
sources staff,  government regulators/stan-
dards setting organizations, industrial design-
ers, lawyers, management, marketing/sales,
process designers and engineers, procure-
ment/purchasing, production workers, re-
search  and development  staff,  and  service
personnel.  Effectively coordinating these
teams and balancing the  diverse interests of
all  participants presents  a significant  chal-
lenge.
Needs Analysis
  Design projects customarily begin by rec-
ognizing the need for change or uncovering
an opportunity for new product development.
The first step in any project should be identi-
fying customers and their needs.  Avoiding
confusion between trivial or ephemeral de-
sires and actual needs is a major challenge
of life cycle design.
  Once significant needs have  been identi-
fied, the project's scope can be defined. This
entails choosing system boundaries, charac-
terizing analysis methods, and establishing a
project time line and budget. In addition, de-
velopment teams should decide whether the
project will focus on improving an existing
product, creating the next generation model,
or developing a new product.
  In choosing an appropriate system bound-
ary for design,  the development team must
initially consider the full life cycle.  More re-
stricted system  boundaries must be properly
justified. Beginning with the most comprehen-
sive  system, design and analysis can  focus
on the:
  • full life cycle,
  • partial life cycle, or
  • individual stages or activities.
  Choice  of the full  life cycle system will
provide the greatest opportunities for environ-
mental impact reduction.
  Narrowly bounded systems may provide
useful  results,  but the  limitations  must be
recognized  and clearly  stated. Stages may
be omitted  if they are static or not affected by
a new design. In all cases, designers working
on a more limited scale should  be aware of
potential upstream and downstream impacts.
  Comparative analysis, also referred to as
benchmarking,  is necessary to demonstrate
that a new design or modification  is an  im-
provement over competitive or alternative de-
signs.

Requirements
  Requirements define the expected design
outcome.  Design alternatives are evaluated
on how well they meet requirements. When-
ever possible, requirements should  be stated
explicitly to help the design  team translate
needs into  effective designs.
  Successful development teams  place re-
quirements before design. Rushing into de-
sign before objectives  are defined often re-
sults in failed products.

Design Phases
  The following phases of development are
not significantly altered  by life cycle design:
conceptual  design, preliminary design, de-
tailed  design,  and implementation. During
these phases, the development team synthe-
sizes various requirements  into a coherent
design. Because life cycle design is based on
concurrent practices, activities  in  several
phases may be occurring at the same time.

Limitations
  Lack of data and models for determining
life cycle impacts makes analysis difficult. Lack
of motivation can also be a problem. When
the  scope of design is broadened from that
portion of the life cycle controlled by individual
players to other participants,  interest in life
cycle design can dwindle. It can be difficult for
one party to take actions that mainly benefit
others.

Chapter 4. Requirements
  Formulating requirements  is one of the most
critical activities in life cycle design. A well-
conceived  set  of requirements translates
project objectives into a defined solution space
for design.
  In life  cycle design, environmental func-
tions are critical to overall system quality. For
this reason, environmental  requirements
should be developed at the same  time as
performance, cost, cultural, and legal criteria.
All  requirements  must be  balanced in  suc-
cessful designs.  A product that  fails in the
marketplace benefits no one.

Key Elements
  Requirements define products in terms of
functions, attributes,  and constraints. Func-
tions describe what a successful design does.
Functions should state what a design does,
not  how it  is accomplished.  Attributes are
further details that provide useful description
of functions.  Constraints are conditions that
the design must meet to satisfy project goals.
Constraints  provide limits  on functions that
restrict the design search to manageable ar-
eas.
  Considerable  research and analysis are
needed to develop proper requirements. Too
few requirements  usually indicates  that the
design is ambiguous.
  The level  of detail expressed in  require-
ments depends on the type of development
project. Proposed requirements for new prod-
ucts are  usually  less detailed than those set
for  improving an  existing product.

Use of Requirements  Matrix
  A multilayer requirements matrix provides
a systematic tool for formulating a thorough
set of environmental, performance, cost, cul-
tural, and legal requirements. A schematic of
this multilayer matrix is shown in Figure  3.
  A  practical matrix should be formed  by
further subdividing the rows and columns of
this conceptual matrix. Matrices allow product
development teams to carefully study the  in-
terdependencies and interactions between life
cycle requirements. They also provide a con-
venient tool for identifying conflicts between
requirements and clarifying trade-offs that must

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be made. Issues that can assist designers in
defining environmental  requirements are in-
troduced in the manual.

Ranking and Weighing
Requirements
  Ranking and weighing requirements pro-
vide designers with an  understanding of the
relative importance of various requirements.
An example of a useful classification scheme
follows.
  • Must requirements are conditions that
    improvements and design alternatives
    have to meet. No design alternative is
    acceptable  unless it satisfies all must
    requirements.
  • Want requirements are desirable traits
    used to select  best alternatives from
    proposed  solutions that meet  must
    requirements. Want requirements  help
    designers seek the best solution, not just
    the  first  alternative that  satisfies
    mandatory conditions. These criteria can
    play a critical role in customer acceptance
    and perceptbns of quality.
  • Ancillary functions are bw ranked in terms
    of relative importance and can therefore
    be relegated to a wish  list. Designers
    should be aware that these desires exist
    and try to incorporate  them  in designs
    when  it   can  be  done   without
    compromising more critical parameters.
    Customers or clients should  not  expect
    to find many  ancillary  requirements
    included in the final design.

Chapters. Design Strategies
  Effective strategies can only be adopted
after project objectives  are defined  by re-
quirements.  Deciding on a  course of action
before the destination is known can  be an
Invitation to disaster. Strategies flow from re-
quirements, not the reverse.
  A successful  strategy satisfies the entire
set of design  requirements, thus promoting
integration of environmental requirements into
design. No strategy is exclusive. Most devel-
opment projects should  adopt a range  of
strategies to satisfy  requirements. For this
reason, no single strategy should be expected
to satisfy all project requirements.
  The following  strategies are outlined in the
manual:
  Product system life extension
    •  appropriately durable
    •  adaptable
    •  reliable
    •  serviceable
    •  remanufacturable
    •  reusable
  Material life Extension
    •  recycling
  Material selection
    •  substitution
    • reformulation
  Reduced material intensiveness
  Process management
    • process substitution
    • process control
    • improved process layout
    • inventory control and material handling
    • facilities planning
  Efficient distribution
    • transportation
    • packaging
  Improved business management
    • office management
    • information provision
       labeling
       advertising

Chapters. Environmental Analysis
Tools
  A systematic means of gathering and ana-
lyzing data in varying depths is needed from
the very beginning of a development project
through implementation. In  particular,  envi-
ronmental  analysis   is   needed  for
benchmarking and the evaluation  of design
alternatives.
  Environmental assessments are based on
the following two components:
  • Inventory analysis
  • Impact analysis
  An inventory analysis identifies and quanti-
fies all inputs and outputs for a product sys-
tem. Information about material and energy
inputs and waste (residual) outputs for every
significant step included in the system under
study are compiled during the inventory analy-
sis.
  The purpose of impact assessment is to
evaluate impacts  and risks associated with
the material and energy transfers and trans-
formations quantified in the inventory analy-
sis.

Scope of the Analysis
  A full life cycle  assessment may not be
essential for many design  activities. Scope
can vary from complete quantification  of all
inputs, outputs, and their impacts to a simple
verbal description of inventories and impacts.
Boundaries for analysis may range from the
full life  cycle system  to  individual activities
within a life cycle stage. The development
team  should be able to justify reducing the
scope for design to a partial  life cycle system.
  The following factors related to analysis
should also be considered when setting spe-
cific  system boundaries:  basis,  temporal
boundaries (time  scale), and  spatial bound-
aries  (geographic). In general, the basis for
analysis should be equivalent use. The time
frame or  conditions under which data were
gathered should be clearly  identified. A data
collection  period should  be chosen that is
representative  of  average system perfor-
mance.  Spatial boundaries should also  be
noted because the same  activity can  have
radically different effects in different locations.

Inventory Analysis
  The inventory analysis should be conducted
to satisfy requirements of the impact analysis.
Two main tasks are involved in an inventory
analysis:
  •  Identifying material and energy input and
     output streams and their constituents
  •  Quantifying these inputs and outputs
  Allocation problems can occur in processes
with multiple useful outputs. Proportioning im-
pacts according to the  total  weight of the
main product relative to the coproducts is a
commonly used allocation method.
  The EPA publication,  Life Cycle Assess-
ment: Inventory Guidelines  and  Principles
(EPA/600/R-92/036) provides more detailed
instructions for conducting an, inventory as-
sessment.                   ;

Impact Assessment
  The final result of an impact analysis is an
environmental profile of the product system.
The translation of inventory data into environ-
mental effects or impacts is achieved through
a wide range of impact assessment models,
including hazard and risk assessments mod-
els.                         ;
  Impact analysis represents one of the most
challenging analysis functions of product sys-
tems development.  Although current meth-
ods for evaluating environmental impacts are
incomplete, impact assessment  is important
because it enables designers and planners to
understand the environmental consequences
of a design more fully. The development team
must recognize that analysis tools for assess-
ing environmental impacts  and risks are con-
stantly improving. Designers,  however, can-
not wait for the "ultimate"  environmental  as-
sessment models. Decisions should be based
on  the  best available data and methods of
assessment.                 •
   Environmental impacts  can;be  organized
into the following categories:
  •  resource depletion       :
  •  ecological degradation
  •  human health effects  (health and safety
     risks)
  •  other human welfare effects
   Resource  acquisition  has  two basic envi-
ronmental consequences:
  •  ecological degradation from  habitat
     disruption (e.g., physical disruption from
     the mining)
  •  a reduction in the global resource base
     that effects sustainability
   Ecological  risk assessment includes many
of the elements of human health risk assess-
ment but is much more complex. The eco-
logical stress agents  must be  identified as

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f legal V Cultura! ^



. I 	 ,".1"'. 	 f Performance ^

i

Product
• Inputs
• Outputs
Process
• Inputs
• Outputs
Distribution
• Inputs
• Outputs
Management
• Inputs
• Outputs
Raw
Material
Aquisition




Bulk
Processing




Engineered
Materials
Processing




Assembly &
Manufacturing




Use&
Service




Environmental ^ — |
Retirement




Treatment &
Disposal




Figure 3.  Conceptual requirements matrix.
well as the ecosystem potentially impacted.
Ecological stress agents can be categorized
as chemical (e.g., toxic chemicals released to
the environment), physical  (e.g., habitat de-
struction through logging), and biological (in-
troduction of an exotic species) agents.
  Human health risk assessment  includes
hazard identification, risk assessment, expo-
sure assessment, and risk characterization.
Human health and  safety risks can also be
assessed using models that  evaluate pro-
cess system reliability.

Chapter 7. Life Cycle Accounting
  Traditional accounting practices need to be
modified to more fully reflect the total costs of
pollution  and  resource  depletion. Improved
accounting practices can be a key element in
facilitating life cycle design. Accounting meth-
ods outlined in this chapter are based on the
total cost assessment model.
  At  present,  most cost systems  used in
business are based on  financial accounting.
Because these systems are designed to serve
reporting rather than management functions,
environmental costs are usually gathered on
the facility level. These costs are  added to
overhead and then assigned to specific prod-
ucts for management purposes. Allocation
methods vary in accuracy, but future advances
may allow gathering of much more  accurate
product-specific costs.
   Life cycle design  benefits from an accurate
estimate of costs related to developing and
using  products. Material  and energy flows
provide a detailed template for assigning costs
to individual products. Following the total cost
assessment model, life cycle accounting adds
hidden, liability,  and less tangible costs to
those costs  usually gathered. This expanded
scope matches the range of activities included
in  life cycle design. Time scales are also
expanded to include all future costs and ben-
efits that might result from design.

Usual Costs
   Life cycle accounting first identifies tradi-
tional capital and operating expenses and
revenues  for  product  systems.  Many low-
impact designs offer benefits when evaluated
solely by usual costs. Such cost savings can
be achieved through material and energy con-
servation, elimination or reduction of pollution
control equipment, nonhazardous and haz-
ardous waste disposal costs, and labor costs.

Hidden Costs
   Hidden costs  consist mainly of regulatory
costs associated with product  system devel-
opment.  Many hidden  costs  incurred by a
company  are gathered for entire facilities and
assigned to overhead.
   Hidden regulatory costs include the follow-
ing (this is only a partial list):
   Capital costs
     • monitoring equipment
     • preparedness   and    protective
       equipment
     • additional technology
   Expenses
     • notification
     • reporting
     • monitoring/testing
     • record keeping
     • planning/studies/modeling
    • training
    • inspections
    • manifesting
    • labeling
    • preparedness   and    protective
      equipment
    • closure/post closure care
    • medical surveillance
    • insurance/special taxes

Liability Costs
  Liability costs include fines due to noncom-
pliance and future liabilities for remedial ac-
tion, personal injury, and  property damage.
Avoiding liability through design is the wisest
course.  Because estimating potential  envi-
ronmental liability costs is difficult, these costs
are often understated.

Less Tangible Costs
  Many less tangible costs and benefits may
be  related to usual costs, hidden regulatory
costs, and  liabilities.  Estimating  intangibles
such as corporate image or worker morale is
difficult, as is projecting improvements in mar-
ket share or benefits derived from improved
customer loyalty.

Limitations
  The main difficulties in life cycle accounting
arise  in estimating costs for many nontradi-
tbnal items and properly allocating those costs
to specific  products/processes. Liability  and
less tangible costs are the  most difficult to
estimate.
  Some low-impact designs have probably
not been implemented because life cycle costs
were not accurately calculated.
                                                                                             •U.S. Government Priming Office; 1993 — 750-071/60237

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  Externalities (costs borne by society rather
than the  responsible parties) also present
problems. These costs are beyond the scope
of accounting at present. As long as costs for
pollution, resource depletion, and other exter-
nalities do not  accrue to firms, accounting
systems will not reflect these costs, and life
cycle accounting will remain incomplete.
  The full report was submitted in fulfillment
of Cooperative  Agreement No. 317570 by
the University of Michigan under the sponsor-
ship  of the U.S. Environmental Protection
Agency.                   i
   Gregory A. Keoleian and Dan Menerey are with the National Pollution Preven-
     tion Center, University of Michigan, Ann Arbor, Ml 48109-1115
   Mary Ann Curran is the EPA Project Officer (see below).
   The complete report, entitled "Life Cycle Design Manual: Environmental
       Requirements and the Product System" (Order No. PB93-164507AS; Cost:
       $27.00, subject to change) will be available from:
          National Technical Information Service
          5285 Port Royal Road
          Springfield, VA 22161
          Telephone: 703-487-4650
   The EPA Project Officer can be contacted at:
          Risk Reduction Engineering Laboratory
          U.S. Environmental Protection Agency
          Cincinnati, OH 45268
    United States
    Environmental Protection Agency
    Center for Environmental Research Information
    Cincinnati, OH 45268

    Official Business
    Penalty for Private Use
    $300
                                                       BULK RATE
                                                  POSTAGE & FEES PAID
                                                           EPA
                                                     PERMIT No. G-35
    EPA/600/SR-92/226

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