Opportunistic versus Life Cycle Oriented Decision Making in Multi-Loop Recovery - An ECO-ECO Study on Disposed Vehicles
CentER Discussion Paper Series No. 2009-83
20 Pages Posted: 26 Oct 2009
Date Written: October 14, 2009
Multinational companies have recently been encouraged by government policies to implement Extended Producer Responsibility, defined as 'a policy approach in which producers accept significant responsibility, financial and/or physical, for the treatment or disposal of products'. One objective is to stimulate high level recovery, the other is to introduce life cycle thinking. This paper studies decision making in recovery, comparing opportunistic decision making with short term optimizing versus a life cycle perspective. After comparing the problem with the literature, a model is presented optimizing NPV of revenues and calculating environmental impact with cumulative energy demand. Sensitivity analysis tests strategies on various sources of uncertainty. Based on the results it is concluded that life cycle thinking, which materializes through multi-loop recovery, is preferred both economically and environmentally. Moreover, advises are formulated for industry and governments to improve their policies. Finally, future research is mapped based on handles and delineations of the study.
Keywords: disposition, life cycle, net present value, environmental impact, legislation, automotive
JEL Classification: Q28, K32, L62
Suggested Citation: Suggested Citation