A New Look at Environmental Action: the Net Impact Ratio

Forty-nine years ago to the day today, on Earth Day 1970, the recycling symbol was debuted as a way for companies to label their products as containing some recycled content, and to signal their joining up with the eco-consciousness movement as it began to grow worldwide. The symbol is a series of three arrows that fold over on themselves to form a M?bius strip, or a single ribbon twisting back on itself with no beginning and no end. The clockwise circle always closes back in on itself, producing no output, emphasizing that there is no waste produced in this ecosystem.

But it’s the very closedness of the system implied by the recycling symbol that, as it has worked its way into our cultural consciousness over the past fifty years, that is its limitation. A closed system is a symbol of futility, because there is no way in and no way out. There’s no acknowledgement of the cause-and-effect interaction of human choices, for worse and for better. This symbol of infinitude only reinforces that our actions are tiny and seemingly meaningless when compared to the enormity of the environmental crisis we face. 

Our team wants to create an evidence-based decision-making tool to be superimposed onto these symbolic conceptions of environmentalism, a tool that will work to render the philosophical underpinnings of a movement quantifiable. It is only by working through our decisions in an objective, quantifiable way that we will be able to truly, and with any hope of accuracy, measure the impacts that we have on our environment. 

The tool we propose to create is the net Impact Ratio (nIR), a simple formula that can help inform and regularize environmental-economic decisions. A net Impact Ratio is, simply, the benefit of any given action divided by its cost, which produces a unitless number by which you can judge the impact of the action being assessed. In this case, the bigger the number, the better—the more benefit it has when compared with its cost. 

Let’s elaborate on these terms a little bit. We’re defining “benefit” and “cost” as each having three parts, “net environmental,” “net economic,” and “net social.” That makes the total equation look like this:

Each of these factors will receive much more thorough attention in forthcoming articles, but we’ll briefly touch on each here. 

Economic cost and benefit are perhaps the most straightforward. It’s what things cost, hard currency, dollars and cents. Economic as well as social factors do “discount” in the financial sense: their present values need to be figured in terms relative to their potential future growth. An example of a social factor would be an impact that included job creation or educational enrichment opportunities, something with a net ameliorative effect on a human life. 

In other words, both economic and social factors in the nIR must be viewed like investments when they’re in the numerator, as benefits: they’re areas where we can take a long-term view on how we’re investing our capital and how we might maximize the dividends they pay. Likewise, the economic and social costs in the denominator of the equation will compound, like interest on a debt.

Environmental costs and benefits are absolute. This is critical. Unless the impact or half-life is in the extreme short-term, the environmental factor does not discount. This is because, in most cases, environmental changes operate on a timescale incommensurately disproportionate to that of a human life. The carbon we emit today will still be whizzing around, heating the atmosphere or acidifying the oceans for centuries to come, and it will continue to influence the environment until then. Once released, its effect on human life cycles stays constant—which is why no discount rate is applied to it or anything like it in our net impact ratio equation. 

It is only by working through our decisions in an objective, quantifiable way that we will be able to truly, and with any hope of accuracy, measure the impacts that we have on our environment.

There are so many possible impacts to consider in this system, and we’re sure you’re wondering how you’d ever possibly account for them all. The simple fact is that you won’t—you can’t—and that’s okay. Part of the hopelessness of the current environmentalist movement comes from overwhelm, and futility, as we’ve been arguing. Viewing the entire system as a whole counteracts a dangerous anthropocentric myopia, but we believe it had the unintended consequence of engendering a certain all-or-nothing attitude. We’re all waiting to act until we find the best solution that addresses every problem, but while we wait and agonize, the crisis only gets worse. Perfect, as they say, is the enemy of done.

Part of our making this tool, and creating it to be as simple and nimble as possible, was to shift the perspective on environmentalist efforts to seeing how to maximize the impact of as many small, carefully chosen actions as possible. niR works equally well for communities and corporate entities as it does for individuals and families—each of those agents, as varied as they are, has to do some good action much more than they need to do the perfect action if the environmental crisis is ever to be solved. 

People in business will be familiar, perhaps, with Pareto’s principle, otherwise known as the 80/20 rule: 80% of your results will come from 20% of your inputs. Identifying the biggest levers and focusing on how to move them, rather than accounting for every lever imaginable, is the way to move forward, we argue. In the case studies that we’ll publish over the coming weeks, we’ll walk you through how to identify the biggest impacts in given situations, as a way to get started in that process.

https://flic.kr/p/iBW7ud 

The power of the net impact ratio as a decision-making tool is multiple. First, as is implicit in any ratio, is its interconnectedness. You can change the result for the better either by making the quantity in the numerator as big as possible, or by making the quantity in the denominator as small as possible—to maximize the benefit and minimize the cost—or to figure out how best to offset one with the other. It emphasizes that this is a system of cause and effect, interaction, in which we have the power to make real and palpable change, if only we carefully think of how to maximize our leverage. 

Second, as much as the nIR is a tool intended to guide individuals to make decisions in an objective and evidence-based manner as possible, it is a tool that also allows for relative, personalized solutions. When calculating impact ratios in the mining industry, there’s often huge regional variation in resource costs, particularly of water, for example. The nIR allows you to price things, as you make your calculations for yourself, in a way that leaves room for your own values—and in going through the math on them, might make you question those values, as well. 

We all hold a lever and we use it when we interact with our world, even with the smallest action.

That’s the power of an nIR, though, is knowing exactly the impact that choice will have. These ratios are tools meant to be used every day, for choices big and small. They’re more than just motto or even heuristics. They’re a whole new way of thinking about and living with environmentalism. We can counter the hopelessness engendered by our present ecological crisis, and its omnipresent symbol, by taking up this tool that encourages us to think about how we can maximize our positive benefit on our environment, and then take that action. We all hold a lever and we use it when we interact with our world, even with the smallest action. Let’s figure out how to maximize that leverage.

Respectfully signed,

The Outotec Structured Services Team,

Benjamin Cox and Jenna Routenberg.

We would also like to thank our colleague Ben Murphy from Outotec, as well Rob Stephens from Teck Resources’ ART team, for their assistance in developing this idea over the last two years.