As pointed out in section three of this report, there are competing ideas about how to best assess the monetary value of the environment each with their own merits and demerits. There is at present no consensus in society as to which is the better approach, but with such research continuing in several fields of environmental science today, the results of these various assessment methodologies can be useful in informing environmental policy.

In this section, we will discuss the extent of human impact on the environment, and one particular approach to measuring it -theLife Cycle Impact Assessment (LCIA).

The LCIA was first developed as a method to evaluate the impacts of a product or service over its entire life, but it has since grown to be used in evaluating the environmental impacts of a business' activities or a nation's economic activity as well. LCIA can provide a simple, yet comprehensive, evaluation of environmental impacts covering many divergent environmental aspects. One of the greatest merits of the LCIA is that the results of the evaluation are expressed in such a way that non-experts can understand them. It is important to note, however, that even the methods described here are not completely comprehensive or accurate, and they require adjustments based on further study.

Many of the currently recognized environmental issues can be broken down into the five areas covered in this report and may be further broken down into the areas listed in Table 1 -ranging from global issues such as climate change (global warming) or ozone layer destruction, to local issues such as photochemical oxidants or eutrophication. In addition, we can identify issues that affect the social economy such as resource exhaustion, or pollution issues affecting quality of life such as noise and vibration.

Life Cycle Assessment (LCA) was developed as a method to measure how a product of economic activity impacts the environment. As the first step in that assessment, Life Cycle Impact Assessment (LCIA) is used to look at the entire lifecycle of the product. In addition to being able to assess over ten varieties of environmental problems, the resulting impacts can, depending on the method, be integrated into a single index.

LCIA

A product or industrial process developed with the intent to reduce a particular environmental impact may end up causing larger problems in some other area. For example; using silver, copper, zinc, and tin in electronics helps to avoid the dangers of lead, but their increased consumption has led to a different set of environmental problems related to the production and exhaustion of these materials. The LCIA assessment application can be used to run simulations predicting the impacts of a product over its entire life cycle on a raw-material basis, allowing for more environmentally intelligent product planning and production.

A new LCIA method developed in Japan, known as LIME (Life-cycle Impact assessment Method based on Endpoint modeling), is able to assess human health and biodiversity impacts (LIME calls this "amount of damage"). Recently, the usefulness of this type of "damage calculation" assessment is becoming more apparent. Other recent methods such as Eco-indicator99, EPS, and ExternE are all using damage calculation as well. However, since the actual amount of environmental damage differs depending on environmental variables such as climate and population density, there was a need to develop an LCIA method for use in Japan.

The National Institute of Advanced Industrial Science and Technology, in collaboration with the LCA Project1 and Research Center for Life Cycle Assessment, developed LIME amidst much debate and discussion. Since its unveiling in March of 2003, many companies have started using this LCA method, and it is continuing to grow in popularity for use with environmental efficiency, full-cost assessment, environmental accounting, and various other environmental management tools. The general concept of LIME is shown in Figure 1.

Environmental impacts are assessed by first using natural sciences such as epidemiology, ecology, mathematical biology, toxicity, atmospheric science, and forestry in order to integrate environmental impacts. Next, a project is assessed using economics, sociology, psychology, and other social science analyses.

We have given a brief introduction to environmental impact evaluation techniques, but how suitable are these for assessing the economic costs of negative environmental impacts?

Figure 2 shows the monetary equivalent of the environmental impact of Japan's economic activity for one year. The results shown were derived from a LIME assessment, based primarily on results and studies from natural science. Economic value is estimated by evaluating the cost of damage, such as placing a monetary value on, for example, the loss of human longevity. Such an assessment is fraught with moral dilemmas and is representative of the many difficulties and questions involved in measuring environmental value. However, due to LIME's ability to integrate a variety of other tools, such as cost-benefit analysis, or environmental accounting, it is highly appraised for its use in medical and environmental economics, as well as for use in policy evaluation.

According to the results (shown below), the economic loss from environmental impacts occurring in Japan have exceeded 15 trillion yen per year -almost 3% of Japan's GDP.

This report provides only a very brief introduction to a small part of what has become an extensive scientific effort to measure environmental impact for application in industry and policy. To conclude this section, let us once more consider the value of such impact assessment. Measuring environmental impacts of industrial production in accurate and, when possible, numerical terms, is important in order to develop substitute technologies and industrial systems. At the same time, it is useful for developing business strategies and forming administrative policies. The assessments introduced here still have many remaining issues to solve, but taking better stock of the damage society is inflicting on the earth is crucial as we aim to shift to a path of sustainable development. The further research into impact assessment techniques is expected to support and stimulate this societal and economic transition.