To stimulate the use of harmonised terms across different teaching materials and courses, the International Life Cycle Academy maintains this glossary of internally consistent terms and definitions recommended for use in the field of Life Cycle Assessment and Cost Benefit Assessment
If you have comments or additions please contact the coordinator of the ILCA Common Glossary Prof. .
Accumulated system result – See Life cycle assessment result.
Activity – Doing or making something. Example: “International Standard Industrial Classification of All Economic Activities”. Etymology: Latin: actio (“‘doing or making’”). Activities include Human activities and Environmental mechanisms, irrespective of their economic significance. (Synonym: Process).
Activity class – Group of activities classified together under a heading in a statistical classification of activities, such as ISIC (International Standard Industrial Classification of All Economic Activities).
Activity dataset – Set of data on Exchanges all referring to the same activity or group of activities.
Activity input – Exchange entering an activity from another activity or from the Environment. Also land transformation, land occupation, and working hours are exchanges from (services provided by) the Environment. Also inputs of primary production factors of the economy (labour costs, net taxes, net operation surplus, and rent) are exchanges from the environment even when measured as the economic costs of these inputs.
Attributional – A system modelling approach in which Exchanges are attributed to the Functional unit of a Product system by linking and/or partitioning the Unit process of the system according to a normative rule. (Modified from UNEP/SETAC 2011: Shonan Database Guidance; modification: input and outputs –> Exchanges)
Benefit – Value (utility) obtained from an Activity (related to a specified time period or Product). Divided in Revenue (income) and external benefits (positive Externalities), the sum of which is the Social benefit.
By-product – Product output from an Activity, that is not a Determining product. Product outputs that can displace determining products from other activities are always by-products. Materials for treatment can classified as either by-products or Wastes, but the distinction has no practical implications. (Synonym: dependent Co-product).
By-product elimination by substitution – See System expansion.
By-product technology model (input-output economics) – See System expansion.
Capital good – See Infrastructure.
Characterisation factor (GB) or Characterization factor (US) – Factor derived from a characterisation model. Applied to convert a Life cycle inventory analysis result to the common unit of the (Impact) category indicator (ISO 14040) by describing the relative contribution to the Impact category endpoint from one or more Elementary exchanges or other (intermediate) impact category endpoints.
Characterisation model (GB) or Characterization model (US) – Model that describes a relationship between a Life cycle inventory analysis result and its subsequent Impact(s) as represented by the Impact category endpoint(s).
Co-product – Any of two or more Product outputs coming from the same Unit process or Product system. (Source: ISO 14040 clause 3.10). Co-products may be Determining products or By-products (dependent products).
Co-product allocation – Partitioning the Input or output flows (see: Exchange) of a process or a Product system between the product system under study and one or more other product systems (Source: ISO 14040). The partitioning results is as many partitioned systems as there are co-products in the original system. The sum of the partitioned systems equals the system before the partitioning.
Combined production – A production, where the relative amounts of co-products can be varied independently.
Consequential – A system modelling approach in which Activities in a Product system are linked so that activities are included in the product system to the extent that they are expected to change as a consequence of a change in demand for the Functional unit.
Consumption – An Activity that you cannot have others do for you (examples: physical exercise, enjoying art, eating, sleeping, attending social and religious events) as opposed to Production (work). The basis of this definition is Margaret Reid’s third party criterion.
Contingent valuation – Stated preference valuation method where the marginal value of a Non-market product is identified from the stated Willingness to pay or accept compensation for a specified change in the availability of the non-market product.
Cost-Benefit Assessment (CBA) – Life Cycle Sustainability Assessment with monetary valuation of the externalities (synonym: Cost-Benefit Analysis (CBA)).
Dependent product – See By-product.
Direct requirements table – Transformed and linked version of a Supply-use table representing a linear, homogeneous steady-state model of the economy (and optionally also the environment). In a “product-by-product” direct requirements table, each column represents a single-product, interlinked implementation of an Activity dataset. A direct requirements table therefore contains the specification of as many Product systems as it contains activity datasets. The transformation from supply-use table to direct requirements table is described by a System model.
Disability-Adjusted Life Year (DALY) – Unit of measurement for health Externalities, expressed in loss of person-years weighted by the severity (the health state) on a scale from 0 to 1, where 1 is a state of full health. See also Quality-Adjusted Life Year.
Discount factor – Ratio of the future value of a currency at constant prices and the present value of the same currency. Used as a multiplier to amounts in future values of a currency to convert these to the present value of the same currency.
Discount rate – Rate at which a discount factor is reduced over a time period, typically a year (the annual discount rate). The discount rate can vary over time.
Distance-To-Target method (DTT method) – Weighting method that weight impacts by the ratio of the current level of each impact and a target level for the same impact.
Eco-balance – See Life cycle impact assessment result.
Eco-efficiency – The ratio between the Value added of an Activity or Product and one or more of its Externalities. When applied to a product, it is the ratio of LCC/LCIA results. The concept may be applied to any physical measure of environmental Impact, and may then be used to identify hotspots in a Product system with high environmental impacts relative to the value added (low eco-efficiency). While relevant as a tool to increase value added, it is less relevant to support overall cost reductions, since it simply provides an incentive to increase private (internal) costs and reduce external costs. This becomes obvious when expressing environmental Costs (and Benefits) in monetary units: the relevant measure to minimise is not internal/external costs but internal+external costs, i.e. total costs. Thus, when it is possible to express environmental costs (and benefits) in monetary units, eco-efficiency simply measures the level of Internalisation of costs, and loses its relevance as a tool to compare systems. Sometimes the term eco-efficiency is used for the inverse ratio, i.e. the ratio between the environmental impacts and the value added, which implies – somewhat illogically – that a low eco-efficiency would be desirable. This use is dissuaded.
Elementary exchange – Exchange between an Activity and the natural, social or economic Environment. Examples: Unprocessed inputs from nature, emissions to air, water and soil, physical impacts, working hours under specified conditions.
Elementary flow – Elementary exchange with mass or energy properties. ISO 14040: Material or energy entering the system being studied that has been drawn from the environment without previous human transformation, or material or energy leaving the system being studied that is released into the environment without subsequent human transformation.
Environment – Surroundings in which an organisation operates, including air, water, land, natural resources, flora, fauna, humans, and their interrelation (Source: ISO 14001). Often divided in the social environment (humans), biophysical environment (nature) and economic environment (resources). Etymology: French: environ (“around”).
Environmental Life Cycle Costing (LCC) – Assessment of all Costs associated with the Life cycle of a product that are directly covered by any one or more of the actors in the Product life cycle, with complementary inclusion of Externalities that are anticipated to be Internalised in the decision-relevant future (Source: Hunkeler et al. 2008). Thus, LCC covers the internal (Private) costs, as opposed to the external costs (and benefits) covered by a monetarised LCIA result. The LCC covers the value added in each Unit process of the life cycle, and the cumulated LCC result is equal to the price of the product (the sum of the value added in the life cycle) when including any costs occurring during use and disposal. The adjective “environmental” refers to the life cycle costing analysis being performed consistent with the system boundaries of the environmental analysis, as prescribed by the ISO 14040 series.
Environmental profile – See Life cycle impact assessment result.
Exchange – Causal, directional relationship between a Human activity and another human activity or between a human activity and the natural, social or economic environment or between environmental mechanisms (synonym: Flow; Input or output).
Expenditure – See Cost.
External cost – Negative externality. Cost arising from an Activity of one economic actor which is experienced by another economic actor without this cost being part of the price of the Good or Service supplied by the first actor.
Externality – Cost and/or Benefit arising from an Activity of one economic actor which is experienced by another economic actor without this cost or benefit being part of the price of the Good or Service supplied by the first actor. Externalities can arise not only from activities, but also by a failure to act (typically for example, a government failure to ensure a regulated market). Externalities can be divided into positive (external benefits) when they constitute a gain of human wellbeing and negative (external costs) when they constitute a loss of human wellbeing. If an optimal resource allocation is to be reached, externalities must be Internalised (e.g., the value of a loss of welfare should be paid by the agent causing the externality by an amount equal to the damage cost).
Flow – See Exchange.
Functional unit – Quantified performance of a Product system for use as a reference unit (Source: ISO 14040).
Good (noun) – A Product with a mass (a tangible product). In economics, the term “good” is often used to cover both tangible goods and intangible goods (Services), i.e. in parallel to what in LCA is termed “product”.
Impact assessment – Calculation of the amount of one or more impact category indicators to express the potential environmental impacts of an Activity or a group of activities.
Impact assessment dataset – Impact category dataset or Impact assessment method dataset.
Impact assessment method dataset – Set of impact categories with documentation and rationale for this set.
Impact category – “Class of Impacts possessing some common quality or qualities (ISO 14040: Class representing environmental issues of concern to which Life cycle inventory analysis results may be assigned)”.
Impact category endpoint – Attribute or aspect of the Environment affected by the Impacts of an Impact category (ISO 14040: attribute or aspect of natural environment, human health, or resources, identifying an environmental issue giving cause for concern).
Impact category indicator – Quantifiable representation of an impact category endpoint (modified from ISO 14040 by adding the word “endpoint”).
Indirect – Occurring backwards in the life cycle relative to the Activity studied, i.e., towards the raw material extraction and production of the product(s). (Synonym: Upstream).
Infrastructure – Product with a lifetime in active use exceeding one year. In the ecoinvent database typically modelled as a Service, and identified by the property “capacity” or “lifetime capacity”.(synonym: Capital good; Investment).
Input or output – See Exchange.
Intermediate exchange – Product, material or energy flow occurring between Unit processes (ISO 14040 adds: …of the product system being studied) (Synonym: Intermediate flow (ISO 14040); Product or Waste).
Internal cost – See Private cost.
Investment – See Infrastructure.
IO activity dataset – Activity dataset corresponding to a column in a Make-use table or Direct requirements table, typically representing the average, linear production function of an activity class, i.e. what production factors (inputs) are used to produce the Product outputs of the activity class.
Life cycle – see Product life cycle.
Life Cycle Assessment (LCA) – Compilation and evaluation of the inputs, outputs (see Exchanges) and the potential environmental Impacts of a Product (system) throughout its life cycle (ISO 14040 clause 3.2). Note that according to the ISO definition of Environment, LCA includes social, biophysical and economic impacts.
Life cycle assessment result – Elementary exchanges and potential environmental Impacts of a Product system, i.e., the LCI result and LCIA result presented together.(Synonym: Accumulated system result).
Life cycle costing (LCC) – Assessment of all Costs associated with the life cycle of a product, sometimes restricted to the cost perspective of the end user of the Product. See also Environmental Life Cycle Costing.
Life Cycle Impact Assessment (LCIA) – Phase of Life Cycle Assessment aimed at understanding and evaluating the magnitude and significance of the potential environmental Impacts for a Product system throughout the life cycle of the Product (Source: ISO 14040 clause 3.4).
Life cycle impact assessment result (LCIA result) – Potential environmental Impacts of a Product system expressed in amounts of one or more Impact category indicators (synonym: Product footprint; Environmental profile; Eco-balance).
Life Cycle Inventory analysis (LCI) – Phase of Life cycle assessment involving the compilation and quantification of inputs and outputs (see Exchanges) for a product throughout its life cycle (Source: ISO 14040 clause 3.3).
Life cycle inventory analysis result (LCI result) – Elementary exchanges of a Product system (ISO 14040: Outcome of a life cycle inventory analysis that catalogues the flows crossing the system boundary and provides the starting point for life cycle impact assessment).
Life Cycle Sustainability Assessment (LCSA) – Complete assessment of all Costs and Benefits, internal and external, related to a Product system. Divided in an LCC (covering the Internalised costs) and an LCA (covering the Externalities, monetarised or not). Any externalities “anticipated to be internalised in the decision-relevant future“ that are included in the LCC should not also included in the LCA, in order to avoid double-counting.
Lifetime of a product – Period between the time of production and the time of initiating waste treatment of the product.
Market activity – Activity representing a market for a specific Product, mixing similar intermediate product outputs from the supplying Transforming activities and providing the resulting Consumption mix to the transforming activities that consume this product as an input.
Market share – That share of the Product outputs from a market which is supplied by an Activity, typically measured by its annual production volume relative to the total annual product output from the market.
Material Flow Cost Accounting (MFCA) – Management tool that accounts for the internal, Private costs of a system (which may be a Product system). If the system is a product system, MFCA can be seen as an LCC embedded in a Plan-Do-Check-Act management cycle. Standardised in ISO 14051.
Material for treatment – By-product/Waste that no other Activity in the same geographical area has as its positive Determining product, and which therefore cannot substitute a determining product as an input to an activity (modified from ecoinvent; modification: reference product –> determining product).
Module dataset – Set of Exchanges with fixed mathematical relationships and documentation, for use as plug-ins in Activity datasets and/or in Impact category datasets during linking and/or Impact assessment.
Monetary valuation – The practice of converting measures of social and biophysical Impacts into monetary units so that they can be compared against each other and against the Costs and Benefits already expressed in monetary units (Synonym: Monetarisation (GB) or Monetarization (US)).
Multi-Criteria Decision Analysis (MCDA) – Method for analysing and structuring complex decision-making problems, explicitly considering multiple decision criteria.
Net (economic) output – See Value added.
Non-market product – Product that is not bought or sold directly. Therefore, a non-market product does not have an observable monetary value.
Normalisation factor – Factor applied to an amount of an Impact category indicator to express the amount relative to a normalisation reference.
Normalisation reference – Amount of an Impact category indicator for a specific Activity or group of activities (typically the aggregated per capita production or consumption for a geographical area) for use as a reference to which a Life cycle impact assessment result can be compared.
Partitioning – See Co-product allocation.
Private cost – Cost paid by an actor in order to produce or obtain a specified amount of a product (internal cost, as opposed to External cost). See also Environmental Life Cycle Costing.
(Synonym: Internal cost).
Process – See Activity.
Product – Activity output with a positive either market or non-market value (utility). Sub-divided in Goods (tangible products) and Services (intangible products). Examples of products with a non-market value: Household childcare; internal by-products that later are transformed to products with a market value. Products of one activity can be intermediate inputs to another activity.
Product footprint – See Life cycle impact assessment result.
Product life cycle – The production, use and final disposal of a product. In marketing, the term is used with a different meaning (introduction, growth, maturity, decline). (Synonym: Product chain).
Product system – System of consecutive and interlinked Unit processes which models a product life cycle (disentangled from the circular definitions of “Product system” and “life cycle” in ISO 14040, section 3.1 and 3.34).
Production mix – Production-volume-weighted average of the suppliers of a specific product within a geographical area.
Quality-Adjusted Life Year (QALY) – Unit of measurement for wellbeing, expressed in person-years Weighted by the severity (the degree of wellbeing) on a scale from 0 to 1, where 1 is a state of full wellbeing. Differs from Disability-Adjusted Life Years in having a positive sign (i.e. wellbeing loss is measured as a reduction in QALY) and in also considering other aspects of wellbeing than health.
Reference activity dataset – A dataset representing a default description of an Activity intended to be close to the global average for the most recent year for which data is available, when applied as Parent dataset for other datasets for the same activity but with other specific geographical and/or temporal and/or scenario settings.
Reference product (ecoinvent) – See Determining product.
Residual activity dataset – Resulting Activity dataset when subtracting data for all available Unit process datasets within an activity class from the data in the activity dataset for the same activity class in a Supply-use table, for the same year and geographical area.
Revenue – The income from the sale of a Product output.
Service – Product without mass.
Stock – Amount of a Product existing at a specified point in time.
Supply mix – A Production mix with the addition of the import of the specified product to the geographical area.
Supply-use table – A combination of a supply table and a use table, each with Activities on one axis and Products on the other. The supply table stores data on the supply of products from each activity, and the use table stores data on the use of products by each activity. Together, the two tables can be interpreted as providing the average, linear production function of an activity, i.e. what production factors (inputs) are used to produce the outputs of an activity. The transpose of the supply table is sometimes referred to as a make table.
Sustainable development – Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (Source: United Nations, 1987: “Our common future”).
System expansion – Procedure for avoiding Co-product allocation by eliminating By-products as activity outputs, instead including them as negative inputs, thereby including the additional functions related to the by-products and modelling the resulting changes (substitutions) in the Product system. (synonym: By-product elimination by substitution; By-product technology model (synonym used in input-output economics)).
System model – A conceptual model describing a procedure for linking Activity datasets to form Product systems, or more generally for transforming a Supply-use table to a Direct requirements table. (Synonyms used in input-output economics: technology model/assumption/construct).
Technology model – See System model.
Transforming activity – Activity that transforms inputs, so that the product outputs of the activity are different from the inputs, e.g. a hard coal mine that transforms hard coal in ground to the marketable product hard coal, as opposed to a Market activity. Including extraction, production, transport, consumption, and treatment activities.
Treatment activity – Transforming activity with a Reference product with a negative sign, which means that the activity is supplying treatment or disposal of the reference product.
Unit process – Smallest Activity considered in the Life cycle inventory analysis for which input and output data are quantified (Modified from ISO 14040 clause 3.34; modification: element –> activity).
Upstream – See Indirect.
Value added – The value of the Product output of an Activity or group of activities (including subsidies) minus the costs of intermediate product inputs for the same activity or group of activities (related to a specified time period or Reference product). When summed over a Product system, this is equal to the Life cycle costs. Value added is often sub-divided into labour costs, net taxes (taxes minus subsidies), net operation surplus, and rent. (Synonym: Net (economic) output).
Value of Life Year (VOLY) – Willingness to pay value for a marginal improvement in life expectancy.
Value of Statistical Life (VSL)- Willingness to pay value for a marginal change in the probability of death. In a simple approach without Discounting, VSL can be converted to the value of a life year by dividing by the number of life years expected to be lived without the premature death.
Variable property – Property of an Exchange which is included as a variable in a mathematical relation of another exchange of the same dataset.
Waste – There are many different definitions of waste, some of which have legal implications. In a neutral physical modelling, it is therefore preferable not to make a distinction between waste and By-products. However, the definition of a Product implies that an output of a human Activity that has zero or negative market or non-market value (utility) is not a product and would therefore have to be classified as waste.
Weighting – Characterisation based solely on value choices describing the relative contribution to an Impact category endpoint from other (intermediate) impact category endpoints.
Weighting factor – Characterisation factor based solely on value choices describing the relative contribution to an Impact category endpoint from other (intermediate) impact category endpoints.
Welfare economics – The study of economic efficiency, i.e. how to maximise social wellbeing. When this wellbeing is sought to be maximised among equal and autonomous agents in and across generations, the goal of welfare economics becomes identical to the goal of Sustainable development.
Willingness to pay – A measure of the utility of a Product. The value that an individual would be willing to pay, sacrifice, or exchange in order to obtain a product.
Willingness-To-Pay method – Monetary valuation method seeking to assess changes in utility (as opposed to abatement cost methods, that are not appropriate to estimate value, since they assess potential, hypothetical, future costs costs of marginal abatement activities, without evidence that an individual or a public body would commit to these abatement activities).