Sustainability Concepts in Decision-Making: Tools and Approaches for the US Environmental Protection Agency (2014)

Summary

In its current strategic plan, the US Environmental Protection Agency (EPA) describes a cross-agency strategy to “advance sustainable environmental outcomes and optimize economic and social outcomes through Agency decisions and actions, which include expanding the conversation on environmentalism and engaging a broad range of stakeholders.” EPA relies on the definition of sustainability provided in Executive Order 13514: “to create and maintain conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic, and other requirements of present and future generations. The definition indicates that the term sustainability is both a process and a goal. In this report, the committee focused its efforts on sustainability as a process, rather than a goal or a prescriptive end state.

The agency’s pursuit of sustainability is fully compatible with its mission to protect human health and the environment. The agency recognizes that its traditional approaches to risk reduction and pollution control cannot fully achieve many of its current objectives and long-term and broad environmental- quality goals. Such megatrends as population growth, climate change, the rapid growth of urban areas, greater consumption of natural resources, and continuing demands for existing and newer materials for industrial applications in a global economy are causing EPA and other organizations—both public and private—to re-examine their roles and capabilities.

Sustainability has evolved from a theory and an aspiration to a growing body of practices. The evolution includes a transition from the development of broad goals toward the implementation of specific policies and programs for achieving them and the use of indicators and metrics for measuring progress. Without losing focus on its existing regulatory mandates, EPA is incorporating sustainability considerations into its decision-making about potential environmental, social, and economic outcomes, and this involves shifting from a focus on specific pollutants in an environmental medium (air, water, or land) to a broader assessment of interactions among human, natural, and manufactured systems. For example, a sustainability assessment of drinking water resources would go beyond water quality and quantity and perhaps assess the efficiency of water use, influences of wetlands and other ecosystems, competing societal demands for water (including domestic use and production of food and biofuels), sources of water contaminants (including land use), and climate change scenarios that impact supply and quality. EPA has indicated that it will need to consider the use of a variety of analytic tools and approaches for assessing the potential sustainability-related effects of its decisions and actions in response to complex environmental challenges.

EPA asked the National Research Council to convene a committee to examine applications of scientific tools and approaches for incorporating sustainability considerations into assessments that are used to support EPA decision-making. In response, the National Research Council convened the Committee on Scientific Tools and Approaches for Sustainability. The committee evaluated case studies of the application of sustainability tools, examined a variety of public–private partnerships to assess new methods of collaboration for research and development and problem solving, and assessed emerging issues to identify opportunities for EPA to incorporate sustainability concepts and tools into its decision-making process.

(The statement of task is presented in Appendix A.) More specifically, the committee examined the application of scientific tools and approaches in the Sustainability Assessment and Management process. That process was recommended in the 2011 National Research Council report Sustainability and the U.S. EPA¹ and is intended to assess options for optimizing environmental, social (including human health), and economic outcomes in EPA decisions. The committee was not asked to recommend specific policy choices.

TOOLS AND METHODS TO SUPPORT ENVIRONMENTAL PROTECTION AGENCY DECISION-MAKING

The committee found that a broad array of sustainability tools and approaches are potentially applicable in assessing possible environmental, social, and economic outcomes in EPA’s decision-making context. EPA should use concepts of sustainability to strengthen a systems-thinking approach in using current and future tools and approaches, as necessary, to support EPA decision-making. The agency has many opportunities to incorporate sustainability considerations by applying those tools and approaches across the spectrum of its activities and it should do so rapidly. (Recommendation 3.1.1) The scientific foundation and analytic tools used to support decisions in a sustainability context will benefit from new knowledge and better use of existing knowledge.

A recent EPA report, Sustainability Analytics: Assessment Tools and Approaches, summarizes 22 types of tools and methods for conducting sustainability assessments. Some tools are well developed and have been widely used throughout EPA, and others are in the development stage or have been used in the agency only recently. Box S-1 briefly describes some of the tools included in the EPA report to illustrate the diversity available. EPA has taken a good first step in developing this initial report. It provides a reasonable and informed baseline survey of sustainability tools.

EPA’s Analytics report discusses the strengths and limits of specific tools, but it does not apply a consistent set of criteria to them. To address that need, the committee developed an approach for rating each tool presented in the Analytics report, which involves applying general evaluation criteria that are relevant to the current state of development and use of the tools for sustainability analyses. Examples of the criteria include the adequacy of support for the tool, on the basis of existing methodological references, and the degree of consensus among stakeholders and the scientific community as to how the method should be used. In general, a few tools—benefit–cost analysis, life-cycle assessment (LCA), and risk assessment—are relied on much more than others, and they tend to have solid scientific bases and a long history of use. Those tools are mature and accepted, their use is supported by data, and EPA uses them in its decision processes. The committee considers them to be promising for use by EPA in supporting integrative sustainability decisions, especially in the near term. Although there are differences in the extent to which the tools have been developed and applied in EPA, the committee found no basis for designating any tools to be generally more appropriate than others for sustainability analyses. The choice of a tool should be based on matching of its attributes to the needs for a given situation.

EPA should consider using a consistent set of criteria to evaluate sustainability tools and carry out assessment exercises that are similar to the one conducted by the committee (see Chapter 3) and should periodically update its views and experiences in using relevant sustainability tools. (Recommendation 3.2.2) That approach would help to identify opportunities for improvement and identify considerations in selecting tools for a particular decision or application. In addition to involving internal users of the tools, EPA may find it valuable to involve external users, for corroboration.

Ecosystem-services valuation is an example of a critical and emerging tool in support of sustainability considerations that needs improvement. EPA has developed a number of programs and guidance documents regarding the valuation of ecosystem services. Using those, the agency can continue to lead the development of the tool. EPA should continue to develop ecosystem service valuations to characterize, quantify, and monetize the types of ecosystem services that have been difficult to valuate in the past (for example, nutrient cycling and biodiversity). (Recommendation 3.3.4) In particular, these

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¹The report is often referred to as the Green Book.

efforts should focus on the development and use of ecological production functions that can estimate how effects on the structure and function of ecosystems will affect the provision of ecosystem services that are directly relevant and useful to the public. Where ecological production functions do not exist, research and development efforts should seek to improve and strengthen the current methods on the basis of ecological indicators.

The EPA Analytics report indicates that the tools and approaches currently included should not be considered the only ones that could be applied to a particular decision. A potentially important approach that was not included is the consideration of the social cost of carbon. It is an estimate of the monetized damage (usually expressed on a per ton basis) associated with the effects of an incremental increase in greenhouse gas (GHG) emissions and based on a particular climate-change scenario at a particular point in the future. It allows government agencies to evaluate and incorporate the social benefits of reducing GHG emissions as part of the development of ways to mitigate climate change. Given the prominence of climate-change mitigation issues for EPA and the fact that the estimation of the social cost of carbon focuses explicitly on future benefits and costs of current decisions—an important component of sustainability—EPA should include it in its Analytics report in the near future. (Recommendation 3.2.3)

EPA should develop guidelines for preparing a sustainability assessment that is analogous to its report Guidelines for Preparing Economic Analyses.²(Recommendation 3.3.1) That could be accomplished, particularly in the near term, by adding a chapter to the existing guidelines that addresses sustainability tools and their inclusion in benefit–cost assessments. It will be important for EPA to identify a home for the responsibility to maintain and update the guidance on the use of sustainability tools.

APPLYING SUSTAINABILITY APPROACHES TO ENVIRONMENTAL PROTECTION AGENCY DECISION-MAKING

Decision-making and most other activities undertaken by EPA are driven by congressional mandates, presidential directives, and voluntary or discretionary initiatives stemming from policy priorities. The committee evaluated case studies and other examples of leading sustainability practices to illustrate the use of sustainability tools in a variety of agency and non-EPA activities. Some tools were used at a screening level, and others were applied with more quantitative rigor and depth.

Sustainability Thinking

On the basis of the case studies, the committee found that EPA could incorporate sustainability considerations into a wide variety of its activities, including ones that are driven by legal requirements. For example, through its Design for the Environment (DfE) program, the agency joins with manufacturers to apply collaborative problem-solving and various screening-level and quantitative analytic tools (such as chemical-alternatives assessments and LCAs) to help buyers to identify products that perform well and are cost-effective and relatively safe for the environment. Although the DfE program is independent of the Toxic Substances Control Act (TSCA), it uses many of the same tools. The goal of determining whether alternative chemicals are safe for the environment augments the goal of the pre-manufacture notice (PMN) evaluations that are required under TSCA, but the goals of assessing cost effectiveness and performance go beyond the TSCA evaluations. The lessons learned from the DfE program could be applied to the PMN process as it evolves. Before considering the requirements and constraints relevant to a particular activity, EPA should use a systems thinking approach for incorporating sustainability concepts and applying the appropriate tools, at least at the screening level or in identifying alternative actions.³(Recommendation 4.1) The applicability of the tool depends on the context of the problem.

A case study on site remediation (see Chapter 4) illustrates how consideration of the sustainability pillars (social, environmental, and economic dimensions) can be incorporated into the application of specific selection criteria used for remedy selection. LCA was used to evaluate remediation alternatives by considering GHG emissions, water pollution effects (eutrophication), air pollution effects (particulate matter emissions), and natural-resource depletion (water consumption) related to each remediation alternative. Economic and social factors included cost effectiveness of the remedy and its effects on the local community, such as increased traffic associated with transporting materials to the site.

For every major decision, EPA should incorporate a strategy with the goal of assessing the three dimensions of sustainability (economic, social, and environmental) in an integrated manner. EPA should apply tools and approaches in a manner best suited to the type of problem being addressed. The selection of a particular tool for an application should be informed by the type, adequacy, and availability of the data needed, and other criteria suggested by the committee in this report. (Recommendation 3.1.2)

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²The report provides guidelines for performing economic analyses for environmental regulations and policies, including the analysis of benefits, costs, and economic effects.

³Generally, systems thinking involves a comprehensive understanding of the mechanisms and feedback effects of interrelated parts or subsystems that work together—in either a coordinated or uncoordinated fashion—to perform a function

Life-Cycle Considerations

In a sustainability context, a value chain consists of all the major business functions from product research and development and extraction of raw materials to the post-consumer fate of a product. EPA traditionally focuses on reducing emissions or waste releases from individual source categories or individual sources within a geographic region irrespective of their relationship to, or effect on, the sustainability performance of the business functions that comprise the larger value chains. Systematic life cycle considerations over a full value chain can identify potential effects that may not be accounted for through traditional approaches that focus on individual source categories. For example, the increasing use of natural gas instead of coal for electricity generation can result in an aggregate reduction in GHG emissions from the electricity-production sector, because combustion of natural gas results in less GHG emission, per unit of energy released, than combustion of petroleum or coal. However, if methane (the primary constituent of natural gas and a potent GHG) leaks along the natural-gas value chain, much of or all its GHG advantage over the use of coal can be lost. EPA should use approaches that allow consideration of potential life-cycle effects associated with business functions along the entire value chain. (Recommendation 4.2)

To facilitate the further use of life-cycle thinking and the development and use of LCA, EPA should:

• Continue educational and research support programs to develop and implement guidance that illustrates how a variety of qualitative to quantitative LCA approaches can be utilized within EPA decision-making. (Recommendation 3.3.2)

• Develop quantitative guidance for applications of combined probabilistic risk assessment and LCA approaches, which can be used in concert to examine a fuller array of issues relevant to a decision. (Recommendation 3.3.2)

• Collaborate with other federal agencies, the private sector, and other non-governmental organizations to promote and support the development of new datasets for LCA relevant to major agency decisions, such as those related to water and land use, and continue development of and encourage use of life-cycle impact assessment methods. (Recommendation 3.3.3)

Uncertainty Analyses

Uncertainty analyses are notably lacking in the application of many of the tools. For example, according to the Renewable Fuel Standard (RFS)⁴ EPA must ensure that renewable fuels meet lower life cycle GHG emission thresholds than traditional petroleum-based fuels. Corn-based ethanol must achieve performance standards of 20% lower life cycle GHG emissions than gasoline. EPA compared point estimates of the life cycle GHG emissions of petroleum-based gasoline and of fuels derived from renewable biomass and determined that corn-based ethanol meets the RFS threshold criteria. As part of a case study (see Chapter 4), the committee considered the results of a risk analysis of the likelihood that corn ethanol could meet the policy target of a 20% reduction from the baseline of petroleum gasoline. The results indicate that a substantial range in potential values surrounded the point values for GHG emissions used by EPA. If uncertainty and variability are accounted for, corn-based biofuels may result in life cycle GHG emissions closer to (or greater than) those of gasoline, with respect to the 20% reduction required by the RFS. Similar results were observed for other biofuels. EPA should develop a process to determine when uncertainty analysis is an essential component of the use of a tool. Such a process also would determine what level of an uncertainty analysis can be supported by the data in the use of a given

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⁴Through the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, EPA was given the authority to set regulations in support of a national Renewable Fuel Standard. EPA’s role is to ensure that transportation fuels have at least a minimum content of renewable fuels that are produced from renewable biomass.

tool, the relative importance of such an analysis for a specific decision, and whether the uncertainty analysis should be qualitative or quantitative. (Recommendation 4.3)

Tracking Updates and Documenting Past Experiences

EPA should arrange for the use of a publicly available Internet-based mechanism (for example, an electronic wiki) to track updates about existing and emerging tools. (Recommendation 3.2.1) This process should allow visitors to suggest updates of documentation for existing tools and to identify new tools for EPA’s consideration. Such a mechanism would help the agency update its tool descriptions and applications for specific tools in a more timely manner. In addition, EPA should document and compile its experiences in developing and applying sustainability tools. (Recommendation 4.4) The descriptions should comment on how the tools were used, their strengths and weaknesses, and data requirements. The insights gained from this compendium would inform the development of general guidance on the selection and application of the tools.

PRIVATE-SECTOR EFFORTS AND PRIVATE-PUBLIC PARTNERSHIPS

The last decade witnessed a dramatic expansion in the number and kinds of collaborative relationships created by non-government organizations (NGOs) and global companies in the context of addressing sustainability challenges. Using such tools as collaborative problem solving and LCA, these efforts introduced sustainability strategies and practices into companies’ global value chains. That approach has been increasingly necessary as a fuller understanding of carbon, water, and other environmental footprints has revealed that a growing portion of a company’s sustainability concerns (for example, air pollution, GHG releases, waste generation, and water consumption) are associated with activities that occur outside its own manufacturing operations, including activities associated with materials sourcing, supply-chain management, packaging, and consumer use of products.

Substantial advancement toward a sustainable future, however, requires the effective participation and leadership of government. Effective collaboration of government with institutions in the private sector and the NGO community will provide government officials with new insights and leveraged capabilities to improve performance on key sustainability indicators by defining performance requirements through a combination of regulatory and non-regulatory approaches. EPA should use its ability as a convener to assemble non-governmental participants to define and implement value-chain–wide goals and performance outcomes. EPA should also use that ability to develop and deploy stakeholder engagement in diagnosing and addressing the most urgent environmental challenges and to assist in scaling efforts of the private and public sectors for broad application. (Recommendation 5.2)

Driven primarily by a quest for value creation— and through efforts to reduce waste and other business costs, gain access to new markets, and bolster brand image—many leading companies have spent considerable time and resources over the last 2 decades in attempting to integrate sustainability considerations into their day-to-day operations. A select number of successful enterprises in specific business sectors have undertaken more transformational sustainability initiatives. Many of these were already successful enterprises that had a history of innovation and sustained value creation. EPA should leverage the sustainability experience of leading companies both to strengthen its decision-making and to incorporate sustainability performance, more broadly. (Recommendation 5.1) For example, as EPA develops its GHG management policies, it should strive to learn from private sector experiences how well-designed economic incentives can approach sustainability objectives.

Learning how successful firms have used sustainability tools and approaches can provide an important incentive for other companies to do the same. It can also inform EPA’s efforts to amplify the successes of private-sector sustainability initiatives, without inhibiting the creativity and commitment that has made such efforts possible. EPA should seek to engage businesses that have not made as much progress in incorporating sustainability concepts into their business models as generally larger

firms that have high-visibility brands. (Recommendation 5.3) EPA can help to inform those firms and other stakeholders about best sustainability practices and lessons learned by publicizing case studies on its Website and convening meetings of thought-leaders during which private-sector, government, and NGO participants share their experiences to improve the performance of these businesses.

One concept that business and industry have come to understand is that data are the fuel of sustainability assessments, programs, and progress. Higher-quality data make assessment and program implementation more effective. Many firms already engage in a great deal of voluntary reporting on a variety of sustainability indicators, but the full capabilities of mining the data for insights into advancing more sustainable strategies are still evolving. Important insights that could drive value to business, communities, and ecosystems are possible. To the extent practicable under budget constraints, EPA should provide data-analysis capability for synthesizing large quantities of data from the private and public sectors. (Recommendation 5.3)

IDENTIFYING AND ADDRESSING NEW ISSUES

The ability to anticipate, assess, and manage challenges is at the heart of sustainability practices, and therefore plays a major role in addressing new issues and evaluating strategies that can minimize deleterious effects. With the continuation and strengthening of various global megatrends, the United States will probably undergo substantial economic, environmental, and social changes in the coming decades. Not only are the expected changes complex, but their occurrence is expected to be rapid. For example, advanced next-generation materials involving the use of nanomaterials or synthetic biology are likely to have substantial effects on our society. The rate at which challenges are likely to arise and their increased complexity will afford progressively shorter periods in which to assess the issues and, if necessary, to devise strategies to address them. EPA should develop screening tools to assess new issues rapidly to support the selection of appropriate sustainability tools and approaches. Existing screening approaches, tools, and formal sustainability assessments should be automated further to accommodate the rapid throughput that new-issue responses will require. (Recommendations 6.1.1 and 6.1.2)

The considerable computing research and development already underway in EPA provide an excellent base for improving many sustainability tools and approaches and the capacity to create new approaches, tools, and models to support new issue identification and assessment. EPA should leverage and enhance its advanced information-technology capabilities for integrating sustainability tools so that the outcomes of the combined use of tools and approaches can be simulated in a sustainability context in real time. (Recommendation 6.2)

Social-media platforms constitute new and effective forums that can engage stakeholders, allow rapid analysis and categorization of stakeholder input, and provide transparency to stakeholders on how the agency uses their input in its decision-making. EPA should consider piloting “electronic jams” that reach out to the public in monitored on-line chat sessions that allow public input to be analyzed and additional value to be derived from it. In addition to the public-comment aspect of this approach, passive “crowd sourcing” can be useful in identifying new issues. (Recommendation 6.3)

SUSTAINABILITY AND ENVIRONMENTAL PROTECTION AGENCY DECISION-MAKING: AN EVOLVING FRAMEWORK

Through a combination of statutory mandates or through its own initiatives, EPA uses various decision frameworks for the application of analytic tools and approaches (examples of frameworks are risk assessment and risk management, market-based control programs, and voluntary programs). The various frameworks function in parallel and are in different states of transition or development. Integrating the frameworks on the basis of sustainability concepts would enhance EPA’s ability to make decisions effectively to match the degree and scale of current and future challenges. As EPA continues to evaluate and update its current decision-making tools and frameworks, it should strive to use sustainability con-

cepts as an integrating principle for its strategic plan and implementation of its program responsibilities. The committee urges EPA to continue in its efforts to adopt or adapt the sustainability framework recommended in the 2011 National Research Council report Sustainability and the U.S. EPA. (Recommendation 7.1) Benefits of using sustainability concepts as an integrating principle include enabling EPA to achieve greater clarity of purpose throughout its various regulatory and non-regulatory programs, and to align its sustainability tools and approaches and their implementation with global, regional, and local megatrends; market developments; and expectations of stakeholder leaders.

In many instances, EPA has adapted its identification of priorities to recognize new generations of problems, modified its implementation strategies to take account of innovative thinking, and developed new tools and approaches for managing public health and environmental challenges. EPA has a good opportunity to embed sustainability considerations further into its decision-making and to communicate and disseminate its application of sustainability tools and approaches outside the agency. EPA should embed the application of sustainability tools and approaches in its major activities in a manner that is consistent with its statutory authorities and programmatic experience. (Recommendation 7.2) The committee has identified four kinds of activities in which EPA has substantial opportunities to apply sustainability tools and approaches more fully. Each of them builds on initiatives that EPA has implemented previously:

• Evaluation of regulatory policies for public health and environmental protection and approaches to emerging challenges. To ensure effectiveness and accountability, regulatory standards and their enforcement are periodically reviewed to account for new scientific information, technologic innovation, and reviews of program effectiveness. Supplemented by such tools as data-quality management, risk assessment, LCA, economic analysis, peer review, management systems, public participation, and other forms of transparency, the integration of sustainability tools into EPA’s standard-setting and enforcement role provides an important basis for advancing toward more sustainable health, environmental, and economic outcomes.

• Extending EPA’s role in data management and synthesis to aid the investment community in collecting and synthesizing public comment and to provide advice on public-health and environmental issues that are material to the performance and governance of corporations. That would include filling information gaps in the commercial economy related to the ultimate disposition of economically valuable materials that can present health and environmental risks if they are not subject to a system of recovery and reuse and the monitoring and identification of problems and trends, many of which emerge in a non-regulatory context.

• Serving as a convener for collaboration in system-level solutions to leverage knowledge and problem-solving beyond the capability of any single institution or group, to foster cross–business-sector collaboration and, public–private partnerships and to design system-level evaluation approaches for specific value chains. This activity would build on EPA’s experience with such issues as development of clean fuels, development of clean-burning wood stoves, and research on hormonally active agents (chemicals that have hormone-like activity).

• Using appropriate assessment approaches to identify new opportunities for incorporating sustainability concepts. Such approaches include those for identifying opportunities for material recovery or reuse over a life cycle, for evaluating pollution-related risks and risk-reduction opportunities by considering an entire value chain (not only individual sources or sectors), for integrating assessments of multiple individual risks that apply to cities, and for incorporating resilience assessments of urban infrastructure and other applications.

EPA has decades of experience in applying risk-assessment and risk-management decision tools to public-health and environmental challenges. Agency decision-makers need an expanded array of tools to understand relevant trends emerging from the changing dynamics of the economy (locally, regionally, nationally, and globally). By integrating sustainability tools and an existing suite of risk-assessment

methods, EPA will become better informed about the changing nature of risks that it is responsible for reducing and will gain a system-level view of key interrelationships among economic–environmental–societal spheres of activities. The committee agrees with the National Research Council report Sustainability and the U.S. EPA recommendation that EPA include risk assessment as a tool, when appropriate, as a key input into sustainability decision-making. Applying an expanded array of risk assessment and other sustainability tools and approaches would enhance EPA decision-makers’ understanding of the changing dynamics of the economy and risks associated with the change. EPA should develop an integrated sustainability and risk-assessment–risk-management approach for decision-makers. Such an integrated approach should include an updated set of appropriate tools and methods for specific issues and scenarios, examination of how EPA can apply risk assessment and other sustainability tools throughout specific value chains, and selected postdecision evaluations to identify lessons learned and new opportunities to inform future decision-making. (Recommendation 7.3)

CONCLUDING REMARKS

Sustainability tools and approaches can play an increasingly influential role in decision making throughout EPA. Their application can provide a greater understanding of the environmental, social and economic implications of the agency’s activities. The complexity of the challenges facing the agency and the nation make the use of these tools vital for protecting current and future generations, encouraging innovation in problem solving, and building solutions relevant to the scale of the problems encountered. The committee recognizes that incorporating sustainability tools into EPA’s activities will take time and resources. The committee also recognizes that some of its recommendations may be difficult to undertake, and that sufficient resources may not be available to undertake them all in the near term. Therefore EPA will need to set priorities and develop a strategy for addressing them.