Valuing Impact released a significant update to its natural capital valuation factors, which were already in the public domain as part of the eQALY method publication.
This new version of the valuation factors covers 5,916 data points across 204 countries and regions, and across 18 impact drivers aligned with Life Cycle Assessment (LCA) method ReCiPe. Plastic in the oceans was added as an addition indicator not traditionally addressed in LCA methods.
Some of the impact indicators are further split for different contexts:
· Air pollution – Particulate matter emissions split for rural and urban locations
· Freshwater and marine eutrophication split for direct and diffused emissions
· Land use split per occupation type of pasture/meadow, arable and permanent cropland
LCA is a methodology that is widely used across businesses and investors to assess companies, business units, investments, services, or products. Those valuation factors represent an opportunity to build on a robust and mature method to account for natural capital. In our experience, LCA is used in most of the natural capital accounting case studies across the world.
The factors are published as part of an impact valuation tool template, which serve as the foundation of most Valuing Impact projects. This encompasses various datasets to facilitate the speed of developing those impact valuations for an organization. The datasets include the Health Utility of Income and Taxes (to value employment and wages for instance), the Global Living Wage Dataset published by Valuing Impact, the wages database per skill level, and so on. This allows us to assess investments and companies in a period as short as 3-4 days for due diligence or a month for a full, in-depth impact valuation of a more complex organization.
At the moment, very few open-sourced valuation factors exist in the field of impact valuation (GIST, WIFOR, CE Delft, and IFVI have published some). In order to continue lowering the barrier of entry and scaling up the adoption of impact valuation to inform decisions and strategies, it is important for us to share knowledge and data so that any organization can get started on the topic and internalize the knowledge.
The dataset is available together with the eQALY methodology report here. A short description of the main changes from the eQALY methodology and new features are provided here below.
Contact us to learn more or for any questions you may have.
Methodology summary
The main update to the valuation factors were done in terms regionalization and translation into the eQALY unique impact indicator: the change in well-being. The summary of the impact framework for natural capital is repeated here below from the eQALY publication.
For each impact indicator (or driver), we apply the following decision tree to select an appropriate valuation factor that translates the health and/or economic outcome into a change in human well-being. Some of the impact indicators are already expressed in change of health or DALY (or eQALY), such as the particulate matter emissions (air pollution). Those are directly expressed in terms of eQALY.
Approximately two-thirds of the impact indicators are expressed in terms of change of ecosystem quality and resources, which are expressed first in economic cost (based on CE Delft study, which has initially been initially developed for European countries only).
The question we are aiming to answer is who bear the cost of this change of natural capital and how does it change the well-being locally in our society? Depending on who we expect to pay for those economic costs (individual or government, depending in part on the level of income of a country, and depending on the geographical reach of the impact, at local, regional, or global level), different valuation factors are selected among the Health Utility of Income and Taxes (HUI and HUT). Those latter express a change of economic value into a change of well-being, depending on the main stakeholder group that bears the cost (individual vs. government).
The final matching table provided here below allows us to visualize for each impact indicator and country’s income group, the valuation factors that we chose to regionalize the valuation factors, as illustrated in the figure below.
The factors are available in Excel format through the impact valuation tool template of Valuing Impact, which is available here. Below is a screen shot of the view of the tab that contains all the valuation factors.
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