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An Introduction to Circular Economy

Life Cycle Costing: Methodology and Applications in a Circular Economy


Life cycle thinking is important for holistically measuring the environmental and economic costs and benefits of activities in a circular economy. This helps to avoid shifting problems among different stakeholders and different stages of the life cycle. Through methods such as life cycle assessment (LCA) and life cycle costing (LCC), the environmental and monetary flows of a product or service that passes through different life cycle stages and stakeholders can be mapped. This chapter focuses on LCC, a method for quantifying the economic performance of products, services, and other activities in a circular economy. We provide a brief introduction on the three types of LCC which are conventional LCC, environmental LCC, and societal LCC and their respective relevant stakeholders. This chapter mainly focuses on conventional LCC as its methodology can be applied directly in economic decision-making for consumers and businesses. The principles of LCC are explained and a step-by-step procedure is provided on how to conduct a conventional LCC of a product or service. We provide two case studies of a conventional LCC to help understand how the LCC methodology explained in this chapter is applied. Finally, this chapter discusses the relationship between LCC and LCA.


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