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P2/CP for enviro consultants
- Subject: P2/CP for enviro consultants
- From: Listman <firstname.lastname@example.org>
- Date: Mon, 04 Mar 2002 09:42:49 -0600
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- Delivered-To: firstname.lastname@example.org
- List-Name: p2tech
- Reply-To: Listman <email@example.com>
Forwarded on behalf of Burton Hamner. Please respond directly to
Mr. Hamner or firstname.lastname@example.org.
Do not reply to this message.
One more comment on estimating cost of pollution control:
Most managers complain about the cost of pollution control. But in
cases they don't think the cost is really high enough to devote serious
attention to it, so they don't have the motivation for Pollution
Prevention / Cleaner Production (P2/CP). So it is helpful to have a
quick way to get their attention with money. Let's use an
Firm X estimates that their wastewater treatment or other pollution
control system costs $50,000 a year to run.
1. Every study done on the true cost of pollution control (this is
cost, not fuzzy stuff) shows that for every dollar they do recognize,
another dollar AT LEAST is hidden in the overhead. References are
available (you will have to be nice to me to get them).
SO! It is not $50K, it is more like $100k, counting all the hidden
costs. In my experience, most managers will unhappily agree with
that the cost is double what they know on paper.
2. That $100k is money being spent on waste, not on production or
investment. So there is lost profit because the money is not making
more money. How to estimate this cost? Many firms have some
Internal Rate of Return that they demand if they are going to invest in
new production. Most of the time they say it is about twice the
cost of capital. Say you can get money for 15% interest, so you
make at least 30% on any investment. BUT! Here is the awful
They don't want to make 30%, they want AT LEAST 50%, and most of the
time they want 100%. Or more. Really, just ask an owner some
that $100k spent on waste management is costing another $100k in lost
profits if the money was spent usefully elsewhere. So this is a
3. The cost will go up at least 10% every year because of inflation
new regulations. And many regulations now sure to affect them will
coming into effect in the next five years. So let's forecast for
years. At 10% inflation, after five years, that $200k annual cost
be $292,820 per year. The total five year cost of this pollution
control system will be $1,221,020 under our assumptions (which are
So! Unless they do something about their pollution generation, they
will spend $1.2 million over the next five years to treat their
Now, we began with them thinking they had a $50,000 problem. Now we
have them thinking about a $1.2 million problem. Do you think we
their attention now about reducing pollution? Well it's a start.
In case you think I am being flip, two days ago I visited the oldest
hospital in Peru (200 years old). It serves the poorest people, who
have no money. In the laundry room where they wash all the linens
other cloths, the old machines are leaking boiling water onto the floor
in large amounts. Sick and dying people are lined up outside
they don't have enough doctors. Sometimes they die while in
held a bucket under one machine and timed how long it took to fill it,
and then did some rough estimates against the other machines. Then
found the hospital accountant. To make a short story shorter, they
be spending about the cost of 4 full time doctors to heat the water they
are leaking on the floor. How would you feel about their water
conservation practices if you were at the back of that line of patients,
waiting for a doctor?
As I said earlier, if you can't do a total cost of waste estimate
quickly, you should not be a P2/CP consultant. And no, I will not
any more details on the hospital, we have a lot of work to do yet.
to the back of that line and look at the children waiting there, and I
am more motivated to get the math right.
Hamner and Associates LLC
5534 30th Ave NE
Seattle, WA 98105