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Re: Papers on P2 Payback Needed



Some industries (such as automotive suppliers) are presently looking for a 1 year 
payback period on P2 and E2 measures.  However, this position only makes sense if 
you do not plan on remaining in business for more than a year.  

Otherwise, you are better off borrowing the money and recovering the annual savings.  
As North American industries are experience slight or even negative growth in value, it 
seems strange to be ignoring all opportunities with less than a 100% annual rate of 
return.  As an investor, I would be hesitant to invest in inefficient firms that leave such 
"low hanging fruit" unharvested.

In addition to the above argument, I have also had success arguing that although a P2 
measure may have a 2 or 3 year payback, the alternative (often end-of-pipe treatment) 
has negative payback due to added capital and operating costs.  For example, I have a 
client who is presently implementing all 7 of the recommendations included in my P2 
assessment based on the comparative cost of an end-of-pipe approach.  The P2 
measures range in payback from 0 to 1.5 years.  

Bruce Taylor, P.Eng.
President
Enviro-Stewards Inc
1 Union Street
Elmira, Ontario
N3B 3J9

Phone: (519) 578-5100
Fax:     (519) 669-5002

www.enviro-stewards.com

On 30 Sep 2003 at 13:08, Magnuson.Leif@epamail.epa.gov wrote:
> 
> Greetings P2ers,
> 
> Does anyone recall a paper from about 5-7 years ago which found that
> really good P2 projects often lost out to other investments because the
> payback periods were too long?
> 
> Also, is anyone aware of a good paper that argues for longer payback
> periods for P2 projects? Financial and/or moral arguments relevant.
> 
> I've got pretty good info. on Full Cost Accounting, Total Cost
> Accounting, Environmental Management Accounting, etc. What I'm looking
> for assumes you've done the accounting right, but the payback is still
> greater than 3-5 years. Then what? What arguments/data/case studies are
> there for investing in P2 anyway.
> 
> Thanks.
> 
> Best...
> 
> Leif Magnuson
> Pollution Prevention Coordinator
> U.S. EPA Region IX, WST-7
> 75 Hawthorne St.
> San Francisco, CA  94105
> (415) 972-3286 Tel
> (415) 947-3530 Fax
> magnuson.leif@epa.gov
> www.epa.gov/region09/p2
> 
> 
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