Critical Analysis of Methods for Integrating Economic and Environmental Indicators

The application of environmental strategies requires scoring and evaluation methods that provide an integrated vision of the economic and environmental performance of systems. The vector optimisation, ratio and weighted addition of indicators are the three most prevalent techniques for addressing this need. The vector optimisation evaluates the original indicators independently in a dominance check. No real integration is performed, as the method seeks the optimisation of both indicators at once. This technique reveals win-win situations and can also identify, but not solve, the trade-off situations involved in economy versus ecology. The ratio method establishes a relation among the original indicators. This concept is suitable when one dimension has to be optimised against the other. A number of conceptual problems in the definition of the sense of direction of the ratio method make its interpretation ambiguous. The weighted-addition provides a fair evaluation of the integrated performance of a system, with regard to the decision-maker's preference for ecology and economy. This is crucial to reconcile trade-offs between conflicting criteria. Special attention must be paid to the selection and definition of weighting factors, being a source of potential inconsistencies.