Stochastic Technology Choice Model for Consequential Life Cycle Assessment

Discussions on Consequential Life Cycle Assessment (CLCA) have relied largely on partial or general equilibrium models. Such models are useful for integrating market effects into CLCA, but also have well-recognized limitations such as the poor granularity of the sectoral definition and the assumption of perfect oversight by all economic agents. Building on the Rectangular-Choice-of-Technology (RCOT) model, this study proposes a new modeling approach for CLCA, the Technology Choice Model (TCM). In this approach, the RCOT model is adapted for its use in CLCA and extended to incorporate parameter uncertainties and suboptimal decisions due to market imperfections and information asymmetry in a stochastic setting. In a case study on rice production, we demonstrate that the proposed approach allows modeling of complex production technology mixes and their expected environmental outcomes under uncertainty, at a high level of detail. Incorporating the effect of production constraints, uncertainty, and suboptimal decisions by economic agents significantly affects technology mixes and associated greenhouse gas (GHG) emissions of the system under study. The case study also shows the model’s ability to determine both the average and marginal environmental impacts of a product in response to changes in the quantity of final demand.