A Classroom Simulation to Teach Economic

E D U C AT I O N I N I N D U S T R I A L E C O L O G Y

A Classroom Simulation to Teach Economic Input−Output Life Cycle Assessment Troy R. Hawkins and Deanna H. Matthews

Keywords: education and training environmental assessment environmental education industrial ecology supply chain management sustainability assessment

Supplementary material is available on the JIE Web site

Online Open Re-use of this article is permitted in accordance with the Creative Commons Deed, Attribution 2.5, which does not permit commercial exploitation

Summary Life cycle assessment (LCA) methods and tools are increasingly being taught in university courses. Students are learning the concepts and applications of process-based LCA, input−output-based LCA, and hybrid methods. Here, we describe a classroom simulation to introduce students to an economic input−output life cycle assessment (EIO-LCA) method. The simulation uses a simplified four-industry economy with eight transactions among the industries. Production functions for the transactions and waste generation amounts are provided for each industry. Students represent an industry and receive and issue purchase orders for materials to simulate the actual purchases of materials within the economy. Students then compare the simulation to mathematical representations of the model. Finally, students view an online EIO-LCA tool (www.eiolca.net) and use the tool to compare different products. The simulation has been used successfully with a wide range of students to facilitate conceptual understanding of one EIO-LCA method.

Address correspondence to: Troy Hawkins Industrial Ecology Program Norwegian University of Science and Technology Realfagsbygget E1-137, Høgskoleringen 5 NO-7014 Trondheim, Norway [email protected] c 2009 by Yale University

DOI: 10.1111/j.1530-9290.2009.00148.x Volume 13, Number 4

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Journal of Industrial Ecology

www.blackwellpublishing.com/jie


Introduction The field of life cycle assessment (LCA) has experienced a shift in recent years from an analysis method used by academic researchers to an important practice for decision makers in business and policy. As businesses demand environmental responsibility from suppliers and as policy makers evaluate more complex scenarios, firms hiring for positions that previously had no relation to environmental issues now want staff who are able to competently address social and environmental issues related to their role within the organization. Thus, demand for workers trained in LCA methods is increasing. Employees are expected to have a range of experience with process-based methods (Baumann et al. 2006), input−output (IO) methods (Hendrickson et al. 1998; Joshi 2000; Albino et al. 2003; Hendrickson et al. 2006; Peters and Hertwich 2006), hybrid approaches (Suh et al. 2004; Udo de Haes et al. 2004; Hawkins et al. 2007), commercial software packages (NIST 2007; PE International 2008; Pr´e Consultants 2008), and various data sources (NREL 2008; Swiss Center for LCI 2009). Many universities now offer courses in LCA and environmental analysis to train students in these methods and tools. One IO-based LCA approach that has become part of a number of graduate-level LCA curricula is the economic IO LCA (EIO-LCA) tool developed at Carnegie Mellon University (Hendrickson et al. 1998; Hendrickson et al. 2006). The EIO-LCA tool is based on Wassily Leontief’s (1970) IO method for environmental analysis. The approach uses transactions between industry sectors, along with environmental emissions data (e.g., sulfur dioxide, particulate matter, carbon dioxide) and natural resource consumption data (e.g., coal, natural gas, petroleum products), to determine the environmental impacts throughout supply chains within the economy. The EIO-LCA tool, based on national IO tables and a variety of environmental, energy, and material data sources, has been widely used and extended by LCA researchers and practitioners for analyzing consumer products (MacLean and Lave 1998; Williams 2004), infrastructure (Horvath and Hendrickson 1998; Ochoa et al. 2002), emerging technologies (Lloyd et al. 2005),

industry sector impacts (Matthews and Hendrickson 2002; Marriott and Matthews 2005; Sharrard et al. 2007), and the international impacts of U.S. household consumption (Weber and Matthews 2007). The EIO-LCA method is available as an Internet tool (www.eiolca.net) with a simple user interface to provide wide access to the method. Currently, the Internet tool includes models of EIO-LCA for the United States (1992 and 1997), Canada, Germany, and Spain as well as models based on producer and purchaser prices and custom-designed sectors. The availability and simplicity of the online tool led to its use with students in undergraduate classes as well as in an educational outreach program for high school students. Through these experiences, our team at Carnegie Mellon University discovered the importance of having a working understanding of the method for appropriately interpreting the user interface and results of the tool. In response to the need to teach students the EIO-LCA method, we created a simulation exercise to be done in a classroom setting to provide students with a hands-on representation of the method and its results. The simulation uses a simplified economic model consisting of only four industry sectors, with only eight transactions between them. Students simulate the transactions between the industries, then determine the amount of two environmental emissions from the transactions. The simulation replicates the mathematical steps of the EIO-LCA method and the results of the online tool. Our primary purpose in this article is to provide a description of the classroom activity we have developed so that it can be easily used by others in their own teaching. Our secondary purpose is to discuss what we have learned through the development and implementation of this activity to provide a basis for the creation and improvement of activities intended to convey concepts of industrial ecology in a way that is accessible to a general audience. In this article, we describe the simplified model and simulation exercise for use in a classroom setting, discuss outcomes we have observed working with students, and reflect on our experience with the simulation exercise. The goal of the simulation activity is to illustrate how environmental impacts occur along the

Hawkins and Matthews, Teaching Economic Input−Output Life Cycle Assessment

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entire supply chain of a product, represent the complexity of the relationships between industries, and demonstrate how industry transactions can be used to estimate environmental impacts. After performing the simulation and the related activities, students should be able to • describe the environmental impacts of a product in terms of its supply chain and economic circularity, • explain how industry purchases can be used to estimate the economic activity and environmental impacts associated with a product, • discuss advantages and limitations of the EIO-LCA method, and • describe how the model results can help decision makers target efforts to reduce environmental impact. The simulation emphasizes the potential complexity within the supply chain or, more appropriately, supply web of a product; the circularity of transactions among suppliers; and how matrixbased methods can be used to account for all inputs into a product or process. In this way, the simulation demonstrates how difficulties in accounting for boundary conditions can be overcome with an IO LCA approach.

Design of the EIO-LCA Simulation Exercise The basis of the simulation is a hypothetical economy made up of four industries: a soft drink producer, a water treatment facility, a can manufacturer, and an aluminum manufacturer, as

Figure 1 Four-industry, eight-transaction model economy for the simulation. Note that soda is another term for soft drink.

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shown in figure 1. The soft drink producer packages its soft drinks only in 12-ounce cans. The can manufacturer makes empty aluminum cans. The aluminum manufacturer makes aluminum. The water treatment facility produces clean, drinkable water. The arrows in the figures represent the transactions between industries. For example, the soft drink producer requires water from the water treatment facility and empty cans from the can manufacturer. Each of these eight arrows indicates that one industry purchases materials from another. In an attempt to mimic actual production requirements, we assigned realistic physical units to the transfers between industries when feasible. A summary of these transfers can be found in table 1. The soft drink producer consumes 1 gallon (128 ounces) of water to produce ten 12-ounce cans of soft drink, and it needs ten empty cans to produce ten 12-ounce cans of soft drink. The can manufacturer requires 1 pound of aluminum sheet to produce 32 empty cans (Can Manufacturer’s Institute 2007). The aluminum manufacturer needs 1.58 gallons of water to produce a pound of aluminum (IAI 2003). We used gallons and pounds in an attempt to keep the exercise as simple as possible for U.S. high school students, for whom these measures are most familiar. In another context, we would suggest converting to SI 1 or other locally familiar units. In certain cases, the actual transactions between industries are unknown or result in very small values (thus ending the simulation too quickly). To provide interesting numerical results in the simulation, we have taken some liberties in inventing transactions. Therefore, the can manufacturer requires 5 gallons of water for


Table 1 Direct requirements matrix for the four-industry simulation Soft drink producer

Can manufacturer

Aluminum manufacturer

Water treatment facility

0

0

0

1 empty can 1 can of soft drink 0

0

1 empty can 2 pounds Al 0

5 cans of soft drink 10,000 gallons water 0

Industry Soft drink producer Can manufacturer Aluminum manufacturer Water treatment facility

1 gallon water 10 cans of soft drink

1 pound Al 32 empty cans 5 gallons water 1,000 empty cans

1.58 gallons water 1 pound Al

5 pounds Al 1,000 gallons water 0

Note: Al = aluminum.

every 1,000 cans produced (this value is more than the actual amount). The aluminum manufacturer purchases scrap and low-quality cans from the can manufacturer—the equivalent of one can’s worth of recycled scrap material goes into two “new” pounds of aluminum. The actual amount of recycled material in a pound of aluminum varies widely and originates from a number of sources in addition to postconsumer aluminum cans. Finally, although the values for the water treatment facility are artificial, we have found that, with some justification, they are acceptable to students. First, the water treatment facility purchases soft drinks for its workers—five cans for every 10,000 gallons of water produced. Clearly, the workers are tired of seeing water all day and want something else to drink. Next, the water treatment facility purchases 5 pounds of aluminum for every 1,000 gallons water produced for the replacement of pipes that wear out in the course of normal use. As shown in table 1, each industry’s use of the others’ products is presented in the form of a direct requirements matrix used in IO models. We also designate environmental impacts for the facilities in terms of wastewater and mixed

solid wastes, as shown in table 2. These figures represent waste generated within a given industry in production of the single product in that industry. Again, we used actual data when they were available or created realistic data on the basis of production requirements. The premise of the simulation is to have a group of four students work together, each representing a single industry. During the simulation, an industry receives a request from another industry for its product. This request requires the industry to request materials from other industries in its own supply chain. To represent this ongoing series of requests through the supply chain, we created “purchase orders” for each industry to complete and present to other industries (see figure 2). These purchase orders allow students to monitor incoming requests and determine the amount of goods they, in turn, need to purchase. Students are also given a log sheet (see figure 3) for their industry to record both incoming purchase orders and outgoing requests for raw materials. The purchase orders and log sheet require students to perform the necessary calculations for determining the flow of materials through the

Table 2 Waste production per unit output for the four-industry simulation Industry Soft drink producer Can manufacturer Aluminum manufacturer Water treatment facility

Wastewater

Mixed solid waste

8 ounces/10 cans 5 gallons/1,000 empty cans 1.58 gallons/pound Al None

1 pound/100 cans None 2.7 pound/pound Al 1 pound/1,000 gallons water

Note: Al = aluminum.


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Figure 2 Purchase order for the simulation. Students complete purchase orders for materials needed and give them to the representative of the appropriate industry.

supply chain. Students then use results from the transactions to calculate the amount of wastewater and mixed solid waste generated at each facility. After the simulation, students participate in a discussion of the results, analyzing the circularity of the supply chain and identifying the overall impact on the environment. We then present the simulation in mathematical terms—first algebraically, then in matrix form. Finally, we present the online version of the EIO-LCA tool, selecting an example analysis to run and discussing the results.

Using the Simulation in a Classroom Setting In this section, we describe the inclusion of the simulation in a classroom setting. We have divided the activity into three parts: (1) calculation

and discussion of production and waste totals, (2) comparison of simulation logs with mathematical equivalents, and (3) use of the Web-based EIOLCA tool. Instructors can use either all three parts or parts 1 and 3 together, depending on the background of the students. For each part, we list required materials and an approximate time in boxes 1, 2, and 3. The Supplementary Material available on the Web includes copies of the student worksheets and spreadsheets listed in the materials required. In class, we divide the students into groups of four and present them with the four-industry model. During this part of the activity, groups are asked to focus their attention on the industry transactions sheet (see figure 1; see also W2 in the Supplementary Material on the Web). We present the students a text describing the eight interindustry transactions and ask each group to add the numerical ratios to the industry transactions sheet (W2). We then discuss the transactions and the accompanying units, emphasizing that the units of the denominator are the units for the purchasing industry (e.g., cans of soft drink for the soft drink producer, empty cans for the can manufacturer). Next, we ask students to respond to simple transaction requests. For example, knowing that the soft drink producer requires 1 gallon water for 10 cans of soft drink, we ask for the amount of water the producer must purchase directly to produce 100 cans of soft drink (answer: 10 gallons); knowing that the water treatment facility requires 5 cans of soda for every 10,000 gallons of water delivered, we ask for the number of

Figure 3 Log sheet for the simulation. Students record information from purchase orders received on the left, then calculate the materials needed to fulfill those purchase orders on the right. Then they write purchase orders for those materials. Note that there are no horizontal lines in the portion the students fill out, because different industries will record more or fewer purchase orders as a result of each purchase order received. 626



Box 1. Part A: Calculation and Discussion of Production and Waste Totals Materials Required: • Calculator (1 per student) • Pencil (1 per student) • Industry Transactions Sheet, W1 (1 per group) • Log Example Sheet, W2 (1 per group) • Log Sheet, W3 (1 per student) • Purchase Order Organizer, W4 (1 per student) • Purchase Orders, W6 (approximately 15 per student) • Final Total Sheet, W5 (1 per group) Approximate Time Required: • Activity introduction and completing Industry Transaction Sheet—10 minutes • Initial round of simulation—5 minutes • Group simulation—10 minutes • Calculating total production and environmental impacts—10 minutes • Discussion—10–15 minutes Note: It is helpful to have one or more assistants who have performed the simulation themselves to observe and guide the individual groups.

cans of soft drink purchased for 25,000 gallons of water delivered (answer: 12.5 cans of soft drink). Next, we introduce the purchase orders (W6), the purchase order organizer (W4), and the log (W3). Students exchange purchase orders to represent requests for materials. Each participant places his or her purchase order organizer (W4) toward the center of the group so that others can place their requests in the form of purchase orders on the “received” side of the purchase order organizer belonging to the participant representing the industry they are purchasing from. An industry selects a purchase order, records the request for materials on the left side of the log sheet (W3), uses the production ratios calculated earlier and recorded on the industry transactions sheet (W1) to calculate the amounts of materials that must be purchased to fulfill the purchase order, issue the appropriate purchase orders, and moves the original purchase order to the “completed” side of the organizer (W4). We have found it is best to demonstrate this process once in painstaking detail to avoid confusion later in the simulation. We begin the actual simulation by presenting the soft drink producer with a purchase order

from an outside industry, the soft drink distributor, for 1 million cans of soft drink. Participants are then asked to log the resulting purchase order requests and issue purchase orders for necessary supplies. For younger students, it may be necessary to have them perform the first set of transactions as a group to ensure that each student sees how the initial purchase order for the 1 million cans of soda results in an entry on the log sheet for the soft drink producer and two purchase orders issued—one for water, and one for empty cans. For university-level students, we ask them to perform calculations only for the first two tiers of transactions: soft drink producer to water treatment facility and can manufacturer (Tier 1), then water treatment facility to soft drink producer and aluminum manufacturer (Tier 2), and then can manufacturer to aluminum manufacturer and water treatment facility (Tier 2). We then pause to orally check results to verify that students are following the simulation correctly. Students then continue the simulation, receiving and logging purchase orders given to their industry, then determining materials needed and issuing purchase orders for those materials. All purchase order requests should be logged and calculations for materials completed by the student representing the appropriate industry. We ask students to stop issuing purchase orders when the amount of material that would be requested becomes less than one unit. The supply chain ends at that point. The students perform calculations and issue purchase orders until all requests are less than one unit or a time limit has been reached. A completed log sheet for the soft drink producer is shown in figure 4. Note that purchase orders are received only from the water treatment facility, whereas purchase orders are issued to both the water treatment facility and the can manufacturer. The order in which the purchase orders are recorded and written is not important, although it can be interesting to see the transactions proceed in tiers. Once students complete the exchange of purchase orders, each student (or industry) determines his or her total production. This is the sum of amounts on purchase orders received that has been recorded on the left side of the log sheet. Students transfer this value to the final totals sheet, where they use the information on solid


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Materials required to Complete Purchase Orders

P ur c ha s e O r d er s R ec ei v e d Customer Name

Amount requested

Soft Drink Distributor

1,000,000 cans soft drink

Water Treatment Facility



Total Production

Material Needed

From Customer Name

Production Function

Amount requested

empty cans

Can Mfr

1 empty can 1 can soft drink

1,000,000 empty cans

water

Water

1 gallon water 10 cans soft drink

100,000 gallons water

empty cans

Can Mfr


50 empty cans

water

Water


5 gallons water

empty cans

Can Mfr


3 empty cans

water

Water
