Supply Curves for Eco‐efficient Environmental Improvements Using Different Weighting Methods

Eco‐efficiency implies environmental improvement at the lowest possible cost. When several environmental measures are possible, these can be ranked according to their cost per unit of environmental improvement, after which an eco‐efficient set of measures can be selected that yields a given level of environmental improvement at least cost. This procedure can be visualized as a supply curve for environmental improvement. Such a curve plots cumulative cost or cost per unit of environmental improvement against cumulative environmental improvement, with measures ordered according to increasing cost per unit of environmental improvement. This paper presents supply curves for environmental improvement on the basis of a set of possible environmental measures for a company in the Dutch oil and gas producing industry. To measure aggregated potential environmental improvement for a given measure, different environmental impacts are lumped together using weighting factors. We compare five methods for weighting environmental impacts, covering a wide range of current practices. The supply curves that were determined for each of the five weighting methods show relatively small differences, except for one (the distance‐to‐target method). The ranking of measures differs significantly, though, and as a result, so do the measures that are selected if total costs are restricted to a certain budget. Also, the consequent reduction in emissions of specific substances, in particular nitrogen oxides (NOx), depends on the weighting method selected.