Environment, Development and Sustainability (2005) 7: 363376

DOI 10.1007/s10668-004-2377-z

Springer 2005

ENVIRONMENTAL OPTIMISATION IN FRACTIONATING

INDUSTRIAL WASTES USING CONTRIBUTION MARGIN
ANALYSIS AS A SUSTAINABLE DEVELOPMENT TOOL
JAN STENIS1
Department of Construction and Architecture, Lund University, Arkeologvagen 11, SE-226 54 Lund,
Sweden; 1Present address: Jan Stenis, Department of Technology, University of Kalmar, SE-391 82
Kalmar, Sweden
(e-mail: jan.stenis@telia.com; fax: +46-46-139-458; tel: +46-46-189-457)
(Received 9 February 2004; accepted 17 August 2004)

Abstract. This paper describes a method of estimating the true internal costs of industrial
waste, aimed at promoting environmentally friendly waste management. The study employs contribution margin analysis and a model The Model for Ecient Use of Resources for Optimal
Production Economy (EUROPE) introduced by the author for assigning industrial costs to
waste. In a business sense, waste is regarded as having the same basic status as any normal
industrial product the equality principle. Application of the method is suggested to create
incentives for environmental improvement and protability improvement in companies.
Although the results of two case studies show the generation of waste to have a substantial negative impact on the nal operating income, due to the internal shadow price costs it creates, this
is regarded as an unavoidable consequence of the companies acting in accordance with the
principle of sustainable development.
Key words: contribution margin analysis, industrial waste management.

1. Introduction
During the past decade, the amount of waste generated in Europe has grown by
approx. 10% per year. It is clear that this trend must be stopped and reversed if
the Europeans want to avoid being submerged by rubbish (European Commission,
Environment DG, 2000). Total waste generation increased by about 15% in
Europe between 1995 and 1998, while the GDP in the same period grew by about
10% (Wallstrom, 2001). Despite the fact that extensive waste recycling is employed,
waste generation in Europe is still increasing steadily. Approx. 740 million tonnes
of waste are generated by the manufacturing industry in Europe every year. This
corresponds to roughly one tonne of manufacturing waste per person per year. In
Western Europe (i.e. The European Union (EU), Iceland, Liechtenstein, Norway,
Switzerland (EFTA) and the small states, Andorra, Monaco and San Marino),
Readers should send their comments on this paper to: BhaskarNath@aol.com within 3 months of publication of this issue.

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JAN STENIS

industrial waste accounts for about 15% of the total waste generated. For comparison, municipal waste accounts for about 14% of the total waste generated in Western Europe. Levels of manufacturing waste have increased since the mid-1990s in
most European countries for which data are available. (European Environment
Agency (EEA), 2003). This is not compatible with the concept of sustainable development; sustainability generally being dened as capable of being maintained at a
steady level. In terms of natural resources, sustainability implies balance in their
use and replenishment (Reijnders, 2000). In 1992, the United Nations dened sustainable waste management in Chapter 21 of Agenda 21 as, the application of the
integrated life cycle management concept in waste management (United Nations
Conference on Environment and Development, 1992).
The European Commission considers it necessary to take suitable action in
order to avoid wastes being abandoned, dumped or disposed of in an uncontrolled
way. The dierent categories of waste included are municipal waste, hazardous
waste, non-hazardous waste and inert waste (European Council, 1999). Waste prevention should be the rst priority for all rational waste policies in order to reduce
the quantity of waste requiring disposal and to conserve natural resources
(European Council, 1997). Measures to prevent waste must, rst and foremost, be
taken at the source for both municipal solid waste (MSW) as well as industrial
waste (Wallstrom, 2001). Originally, in the EU waste management hierarchy, prevention was followed by waste minimisation, reuse, recycling, energy recovery
and, nally, disposal (European Council, 1975, 1991). The programme areas presented in Agenda 21 were later developed into a waste management hierarchy
which has been widely adopted today (Chung and Lo, 2003). This hierarchy gives
priority to waste avoidance, recycling, composting, waste-to-energy conversion
and safe disposal and collection options (United Nations Conference on Environment and Development, 1992).
To full waste reduction ambitions and to avoid long-term environmental problems caused by industrial waste, companies must better understand how their
prots and losses, in both the short and long term, are linked with the avoidance
as well as the commercial utilization of waste. In terms of waste management economics, economic incentives of the carrot type have yet to be instituted for
most waste generators (Chung and Lo, 2003). Therefore, this paper promotes the
use of what is termed the equality principle, or equating industrial waste with normal products, primarily in terms of assigning costs. A model, termed The Model
for Ecient Use of Resources for Optimal Production Economy (EUROPE), is also
introduced for assigning costs to industrial waste. It is shown how this model can
be used in conjunction with the equality principle to provide long-term recommendations regarding waste.
Another, related approach explored here, is directed towards short-term recommendations concerning waste, and involves the use of the contribution margin analysis (CMA) theory. This theory has been scrutinized regarding its advantages and
disadvantages by, e.g., Frenckner (1953). The use of CMA in a global context for
making short-term estimates for products within industry is widespread. This fact

CONTRIBUTION MARGIN ANALYSIS

365

motivates the recommendation eort of this work. However, the results of a recent
survey carried out by the author, mainly of large Swedish industrial companies,
showed CMA to be rarely utilized in a waste management context. A telephone
interview survey was carried out by the author and involved senior business managers and/or chief production managers in the top ten major Swedish industrial companies (with respect to their annual turnover). The survey showed that (mainly xed)
costs and/or revenues are presently not assigned to residual products using advanced
economic models of any kind, to the same extent as for normal products. This is
mainly due to conservatism. These facts were conrmed by another recent telephone
survey, carried out by the author, directed towards the chief nancial ocers of the
two largest Swedish waste management companies, Ragnsells and SITA (with
respect to their annual turnover). These telephone surveys thus show that the application of advanced economic models to waste management, and in particular to
CMA theory, is a promising eld of research with high potential.
There are moreover very few references to CMA in the environmental and/or
the economic literature in the context of waste management specically. In the
context of an economic model, waste management is regarded from a macro-economic point of view, if mentioned at all (e.g. Masui et al., 2000). Business economic aspects of waste management, when considered, mainly deal with such
terms as capital costs (Valentini et al., 2001), cost per tonne (Ness and
Bramryd, 2001), avoided and total costs (Bonoli et al., 2001), etc. More
advanced economic model approaches are not usually considered.
Industrial waste management models mainly deal with technical aspects, recent
examples being the U.S. Environmental Protection Agency (USEPA) Industrial
Waste Management Evaluation Model (IWEM) and the Industrial Waste Air
Model (IWAIR). The former model determines whether waste management plant
designs are protective of ground water resources (USEPA, 2003a) while the latter
is used to determine whether specic wastes and management practices may pose
an unacceptable risk to human health (USEPA, 2003b).
Among other waste management trends, the Best Practicable Environmental
Option (BPEO) can also be mentioned. This is a methodology for decision making
which, for a given waste stream, is dened as . . . the optimum combination of
available methods of disposal so as to limit damage to the environment to the
greatest extent achievable for a reasonable and acceptable total combined cost to
industry and the public purse. (Royal Commission on Environmental Pollution,
1976). However, not even the BPEO concept uses advanced economic models in
any form. It essentially involves ranking of dierent waste management options
according to certain decision criteria; cost aspects being just one parameter among
others (e.g. Department of the Environment, 2001). It is hence very dicult to
nd explicit publications on the use of CMA in an economic waste management
perspective in particular regarding the possibility of using and modifying CMA to
improve the environment and increase companies prots.
Thus, the equality principle appears to be a novel concept, also in combination
with CMA. This phenomenon can contribute to the development of environmen-

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JAN STENIS

tally related industrial rationalisation eorts and improved business opportunities,

as the eco-industries in the European Union supply about half of the world market for environmental technologies and services. This market is expected to
increase from around 300 billion in 2000 to 740 billion by 2010 (European
Commission, 2003). There is thus a substantial economic potential for the
approach described here since it oers improvements in the industrial environmental situation as well as in the industrial economic situation.
Economic instruments can be very eective means of providing incentives for
greener production and consumption. They may even be the only instruments
that can bring about fundamental changes in production and consumption patterns (Linher, 2002). The method that is presented in the present work is based on
economic incentives and is hence an economic instrument. Particularly in the area
of economic instruments, greater imagination is required to ensure that European
waste management initiatives are adequate, and to avoid multiple distortions of
competition (Hannequart, 2002). Economic instruments should serve not only to
identify and penalise undesirable waste management practices, but also to complement, encourage or reward desirable practices, namely waste prevention, minimisation, reuse, recycling and recovery (European Environment Agency (EEA), 2003).
In this context, attempts to present imaginative developments and modications
of commonly used economic models and methods such as cma are important.
However, the emphasis in the present work is on the presentation of a new environmental management concept intended to achieve a more sustainable development, rather than on the presentation of new economic models and methods,
despite the fact that the contribution margin analysis economic theory is the factual basis for the method proposed here.
Therefore, the objective of this paper is to show how the cma method can be
modied in accordance with the equality principle so as to provide environmental
management guidelines for short-term product cost and investment assessment.
Two practical case studies will illustrate the general principle of application of this
approach and the nancial implications.

2. Methodology
Contribution margin analysis has been considered as a means of optimising industrial waste management in order to reduce and better deal with industrial waste.
In this context, an approach to apportioning costs to industrial waste fractions is
described.
Two case studies concerning the applicability to two widely diering industrial
scenarios are presented. The rst is of a company manufacturing a very limited
number of bulk products, all based primarily on the same raw material (A), while
the second concerns a company manufacturing many dierent, mechanically complicated, products (B). Through these two case studies it was possible to investigate whether there are specic obstacles to the application of the equality principle

CONTRIBUTION MARGIN ANALYSIS

367

at the very extreme ends of the spectrum of industrial waste production. This, in
turn, allows conclusions to be drawn regarding the general applicability of the
proposed method to industrial companies producing waste. Real products, manufactured by real companies, are thus involved. The data used in the case studies
are from 1997. This year was chosen as the target companies had exhibited production conditions more suitable for case study purposes than in later years due
to changes in their product range. Also, there is no direct need to compare the
production equipment of the companies studied with those of other similar companies. Neither was it considered necessary to discuss such issues as current industrial trends or EU directives in a context relevant for the case study, although the
current legislative context is of course of general importance. Finally, conclusions
are drawn regarding the suitability of the approach described for industrial waste
management; the main objective of using case studies here being to demonstrate/
illustrate the general applicability of the method.

3. Basic rationale
Optimising industrial waste management requires that sorting of the waste be optimised in terms of the cost-eectiveness of each waste management option in use
and the economic soundness of the waste management strategy (Chung and Lo,
2003). The cost of sorting is likely to increase with the number of fractions
involved (e.g. Asplund et al., 1994). Therefore, a method optimising both the
number and the kinds of waste that are separated will provide a sound basis for a
waste management system that is economically advantageous and environmentally
friendly. This is consistent with the fact that there are numerous examples in the
literature of how a preventive environmental protection strategy within industry
can result in substantial savings (Lidgren, 1993).
The approach developed in this work involves considering dierent production
scenarios and the waste fractions associated with each. These waste fractions are
analysed separately, the costs and revenues associated with each being assessed in
order to determine the protability of the waste fraction in question and its shadow price. In general terms, a shadow price represents the true marginal value of a
product or the opportunity cost of a resource, both of which may dier from the
market price (Dorfman et al., 1958). The reason for using a shadow price here is
that if companies were actually charged the shadow price associated with pollution, they would adjust their production processes, resulting in the desired environmental standard being met. Shadow prices thus serve as a basis for creating
environmental improvement incentives for a company. The assumption is made
that a given waste fraction can be regarded as a kind of product, and that as such
it should contribute, just as other products do, to fully bearing the companys
costs; its failure to do so resulting in losses that must be met by prots from other
activities in the company. This is the equality principle referred to above.

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JAN STENIS

Although waste in a production process should ideally be entirely avoided

through total reduction at the source, this is hardly possible in practice. Thus,
waste can only be minimised. Minimisation of waste generation is among the
major challenges to be tackled in future years (European Environment Agency
(EEA), 2003). Therefore, the waste produced should be transformed into products
that are protable by, for example, using the raw material that is purchased for
production of the current products as much as possible. If these products are suciently protable, most of the problems associated with waste will disappear. This
somewhat extreme manner of assessing waste nancially may be necessary to force
industrial companies to take the true costs of waste and waste management into
account through giving them the incentive to do so. Figure 1 presents the basic
concept. The section below deals with the contribution margin analysis method
and how it can be adapted for use in this context.

4. The contribution margin analysis method and its modication

Contribution margin analysis is a method of fundamental importance in the business context. It involves the assumption that, within certain limits, the xed cost
of a product is basically independent of the number of units manufactured or
sold, and only the variable cost changes (Johansson and Samuelsson, 1992). The
contribution margin of a product can be dened as the dierence between the
sales revenue and the variable cost of the product in question (Horngren et al.,
2002). The contribution margin tends to be internationally calculated as follows
(Johansson and Samuelsson, 1992).
1. The unit sales price of the product is estimated.
2. The variable cost of a single unit of the product is estimated.
3. The contribution margin for a single unit of the product is estimated as the
dierence between the sales price and the variable cost for that unit.
4. The nal assessment of protability is based on the relation of the estimated
contribution margin to either the resources required or the minimum contribution margin acceptable to the company.

Inputs

Products
Company

Waste
Figure 1. Illustration of the concept of equating wastes with normal products in terms of costs and
revenues.

CONTRIBUTION MARGIN ANALYSIS

369

In contrast to cost-benet analysis, CMA is used mainly for short-term decisions concerning the resources available at the time. Accordingly, it is assumed
that, for the use of CMA to be reasonable, the following conditions should remain
relatively constant within the period of time involved (Olsson and Skarvad, 2000):

the product mix or product assortment,

the demand for the product, or consumer preferences for it, and

the manufacturing capacity, where the maximum amount that can be produced
remains basically the same.
It is usually a question, therefore, of making use of existing plants and the existing workforce in as protable a way as possible. The crucial issue is whether the
income from the waste fraction in question fully covers the xed cost connected
with it. If it is assumed that sucient manpower is available, the decision of
whether to commercialise a given waste fraction can be facilitated by assessing the
contribution margin connected with it, in the manner shown in Table I (cf.
Horngren et al., 2002).
If a positive value is obtained in the bottom line, this generally means that the
waste fraction in question should be turned into a product and not simply be
dumped or discarded. Assessment of the specic income and the specic xed and
variable costs, which is an important step, can be carried out with the use of the
traditional economic theory. The problem can be described as follows (Olsson and
Skarvad, 2000):
TC fx FC VC FC k1  x; where k1 dy=dxfor VC

TR fx k2  x; where k2 dy=dx for TR

where TC total cost, FC xed cost, VC variable cost and TR total

revenue.
Setting TC TR allows one to obtain the critical point for the quantity of
waste (in litres, kg, tonnes, etc.) required in purely economic terms, to justify collection of the fraction in question. This is the point at which, as prot increases,
the revenue equals the total cost.
Examples of the kinds of FC that may be involved are depreciation, interest,
rent, electric power and wages, each or some of which may have to be divided
TABLE I. Scheme for estimating the contribution margin, shown here for the fraction of waste sold.
Income from sale of the fraction sold
)
=
)
=

Variable cost of the fraction sold

Contribution margin covering the xed cost
Specic xed cost of the fraction in question
Contribution margin after deduction of costs traceable to the
fraction = Operating income

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JAN STENIS

between dierent waste fractions. This can be done in terms of the volume or
weight of the waste fraction, the time normally required to produce it, or the
quantity or cost of raw materials used.
Treating each waste fraction as a product involves adding the quantities of the
various waste fractions to the output, as is done in the denominator of Equation
(3), which is used for apportioning costs to separate fractions for a particular production or administrative unit which may be the entire company, separate divisions or workshops, individual machines, etc. This assignment involves
multiplying Equation (3) by the total FC to obtain the FC for the waste fraction
in question. Equation (3) represents a model introduced here and which is called
The model for Ecient Use of Resources for Optimal Production Economy
(EUROPE):
A
BC

where A is the quantity of the waste fraction in question produced, B is the quantity of normal product output, C is the sum of the quantities of the dierent waste
fractions considered
The VC of a particular waste fraction depends on such factors as the manpower
or handling time required for collecting it, and the cost of the raw materials or
energy consumed in the process in which it is produced. If the VC directly attributable to a given fraction cannot be determined, costs can be allocated, just as for
the FC above, in proportion to the weight or volume of the fraction, or to the
amount of raw material or time consumed in producing it, by multiplying the
respective VC by Equation (3). The term k1 in Equation (1) is obtained by dividing the estimated total cost of the waste fraction by the amount produced, for the
time period and the production unit in question or whatever involved. It is not
unusual, due to economies of scale, for the VC to either increase or decrease progressively (more commonly the latter) as the quantity involved increases (e.g.
Johansson and Samuelson, 1992). If such is found to be the case, this should be
taken into account.
If the TR for a particular fraction cannot be determined, the recommended procedure is either to implement Equation (3), in a manner similar to that for FC
and VC above, or to calculate k2 in Equation (2) by estimating the income stemming from the waste fraction in question and divide this by the number of units,
in tonnes, litres etc., of the waste fraction produced during the corresponding
period.
After FC, VC and TR have been obtained for a given waste fraction, the operating income (or contribution margin), is estimated, for example, as income per
unit of waste produced. This operating income is then incorporated into current
wastes, after all relevant internal estimates have been made of short-term character, such as those for product costs. In this way, the existence of the waste fraction
in question aects the estimate of the desired operating income.

CONTRIBUTION MARGIN ANALYSIS

371

In the case of n waste fractions, the total contribution margin can be calculated
as follows:
CMtot

CMj xj

where CMtot total contribution margin of the n waste fractions, CMj contribution margin per unit of waste fraction j calculated using Equation (3) involving
shadow prices, xj the amount of tonnes, litres, etc. of waste fraction j,
xj  0; j 1; 2; 3; . . . ; n.
The total contribution margin or operating income according to Equation (4),
when calculated for a certain waste management scenario, can be used as input
for short-term product cost and investment assessment in order to deal with a
more complex waste management situation involving many waste fractions.
Although the application of the EUROPE equation as expressed in (3) to the
CMA method discussed above redistributes some of the cost of normal products
to wastes, without this necessarily resulting in any increase in total cost for the
company, it does not directly link the avoidance of wastes with the incentive to
reduce total costs, as specied in the consolidated prot and loss account used for
business purposes. However, weighting can be used to adjust the costs associated
with a particular type of waste to its environmental impact, based on scientic evidence and/or in terms of overall societal aims. What can be termed environmental shadow prices should thus be used in combination with the cost allocation
principle in dening environmental standards. Even without the use of such environmental impact weighting, the cost allocation principle is useful internally as a
means of redistributing costs associated with waste between dierent departments
of a company. This results in a form of competition between dierent production
units, enhancing environmental improvement and prot. This gives companies an
incentive to reduce wastes in order to improve their contribution margin estimates.
This improvement incentive has impact on short-term product cost estimates, for
example, and thus on budgets and on forecasts used as a basis for loan applications, for example, and on information to company stakeholders.

5. Case studies
5.1. The Two Companies
The two case studies presented concern two major Swedish companies. For reasons of condentiality, these are denoted simply as company A and company
B. Company A manufactures paper, i.e. a limited number of products; all of
them bulk products, largely through the use of a single raw material. Company B,
in contrast, manufactures submersible pumps, i.e. many dierent products, all
mechanically complicated, requiring many dierent parts.

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JAN STENIS

5.2. Data Collection

Interviews were conducted with the relevant business and production manager of
each of the two companies to obtain economic information about the companies.
Use was also made of certain production statistics to which access was provided.
In addition, information retrieval encompassed sources such as annual reports,
information brochures and homepages.

5.3. Application of the Proposed Method

All data used and the gure presented pertain to the year 1997. Numerical values
are approximated. An exchange rate of $1 SEK (Swedish crowns) 7.70 is
assumed.
Regarding the rst case, the waste fraction from company A represents a loss of
some 73,000 tonnes of mainly solid input material, including approx. 7000 tonnes
of the actual type of waste considered here. Normal paper product output is about
654,000 tonnes/y. For the waste fraction considered, use of Equation (3) above,
the EUROPE model, gives the following: 7000/(654,000 + 73,000) 0.96%. This
gure is termed the proportionality factor. The xed cost (FC) and the variable
(VC) cost amount to $110 million and $195 million, respectively. From these, the
proportions of FC and VC allocated to waste can be estimated as follows:
FC $110 million 0:96% $1:056 million, and
VC $195 million 0:96% $1:872 million
Note that the real VC for the waste is unknown and is included. The total revenue
of $642,000 consists of income from the following: The value of the energy from
incineration of waste ($167,000), the value of the consequent avoidance of landll
fees ($227,000), the value of the avoidance of transportation costs ($227,000) and
the value of the saving of recycled materials ($21,000). Assuming the waste management capacity available to be sucient and the quantity of waste available to
be sucient for collection, the contribution margin can be estimated in accordance
with Table II. As can be seen, this waste yields a negative operating income of
approx. $2.3 million, indicating that avoiding the waste entirely would have been
the best option.
Regarding the second case, the waste from company B consists of stainless steel
metal cutting chips from the workshop. The total pump product output for the
manufacturing division in question is roughly 4280 tonnes. Applying the EUROPE model (Equation (3) to this metal waste fraction gives a proportionality
factor of (26/(4280 + 636)) 0.52%. The xed and variable costs amount to
$4.545 million and $8.052 million, respectively. This gives the following proportions of FC and of VC to be allocated to the pure stainless steel metal cutting
fraction (where k$ represents thousands of dollars):

CONTRIBUTION MARGIN ANALYSIS

373

FC $4:545 million 0:52% k$24; and

VC $8:052 million 0:52% k$43
Note that the real VC for the steel chips is unknown, as for company A. The total
revenue consists of income from selling this fraction to the scrap metal recycling
industry at a price of $532 per tonne, which gives a total revenue of $13,832.
Again, assuming a sucient waste management capacity and a sucient quantity
of waste for collection to be available, the contribution margin is estimated in
accordance with Table II. As can be seen, the stainless steel cutting chips waste
gives rise to a negative operating income of k$53, indicating that here too the total
avoidance of waste would have been best.
As already pointed out, environmental impact shadow price weighting is not
employed in these two case studies, due to the inherent triviality, in strictly mathematical terms, of the multiplication procedure. Suitable weights are usually multiplied by a cost * proportionality factor term. Such environmental shadow prices
serve to punish rms that produce waste that is not utilised productively.
Nor is the multi-fraction approach case exemplied in the form of a case study.
This is due to the inherent triviality, in strictly mathematical terms, of the addition
procedure as expressed in Equation (4) and to the equality principle approach
being suciently generally exemplied by the single fraction case study examples.

6. Discussion and conclusions

The paper shows how the principle of equating (in a business sense) industrial
waste with normal products the equality principle can be applied to traditional
cost-revenue methods so as to provide a nancial basis for environmentally
friendly waste management. As the case studies show, applying this principle and
a full-cost proportionality principle, according to the proposed EUROPE equation, to the CMA method produces a substantial negative impact on the nal
operating income. This is due to the internal shadow price cost associated with

TABLE II. Estimation of the contribution margin (k$) for the case studies of company A (paper
producer) and B (pump producer).

)
=
)
=

Case

Income from sale of the fraction sold

Variable cost of the fraction sold
Contribution margin covering the xed cost
Specic xed cost of the fraction in question
Contribution margin after deduction of costs traceable to
the fraction = operating income
Operating income per tonne of waste fraction = amount
allocated to each tonne of the waste fraction

642
)1872
)1230
)1056
)2286

14
)43
)29
)24
)53

)0.327

)2

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JAN STENIS

(solid) wastes. This in turn is due to the FC and VC assigned to the waste
fractions in question.
The case studies demonstrated a staggeringly large negative operating income of
$327 per tonne and $2000 per tonne of waste for the 7000 tonnes and 26 tonnes
of waste produced in companies A and B, respectively. Although these gures
may be somewhat extreme since environmental impact weights are not included
and the estimated VC may be rather high the examples are nevertheless illustrative of the logical consequences of applying the equality principle.
The equality principle can equally well be applied to the bulk industry and to
the manufacture of products that are technically complex, as in the case studies.
However, the approach described should not be regarded as being limited to companies of the types considered here. It appears that the methodology suggested is
applicable to any industrial company producing solid waste. It may also be possible to apply the same approach to liquid and gaseous wastes.
Through creating a direct link between budgetary costs and the production of
waste, i.e. the redistribution of costs between normal products and waste, economic pressure is exerted on the industry to introduce environmentally friendly
measures which are as eective as possible in reducing waste at source; measures
that also tend to enhance production eciency and thus protability. So that forecasts, company budgets and consolidated prot and loss accounts for external use
that companies present, for example, will be aected in a way that punishes the
excessive occurrence of waste and the failure to utilise it productively, both ocial
recommendations appropriate in character and voluntary environmental
agreements regarding the assessment of industrial wastes are needed.
The study will contribute to eecting a change in the perceived status of industrial waste through emphasising the nancial implications of the costs and revenues involved and the use of shadow prices. It is hoped that the basic approach
advocated here will be adopted by industry generally, and will be accompanied, to
a certain extent, by a paradigmatic shift towards sustainable production in longterm development regarding the perception of industrial waste, together with better ways of reducing waste and of utilizing those waste fractions which are
unavoidably produced. In this way, a concrete contribution can be made to the
fullment of the waste reducing ambitions of, for example, the central European
authorities, the overall goal being the achievement of a more sustainable development.

Acknowledgements
The author would like to thank Professor William Hogland, Department of Technology, University of Kalmar (Sweden) and Dr. Anne Landin, Department of
Construction and Architecture, Lund Institute of Technology, Lund University
(Sweden) for their constructive comments on this work. The author is also grateful
to the University of Kalmar, the Kalmar Research and Development Foundation

CONTRIBUTION MARGIN ANALYSIS

375

Graninge Foundation [Kalmar kommuns forsknings och utvecklingsstiftelse

Graningestiftelsen], the Knowledge Foundation [KK-stiftelsen], The Swedish Association of Graduate Engineers [Sveriges Civilingenjorsforbund (CF)], The AF
Group [AB Angpanneforeningen (AF)], The Swedish Research Council for Environment, Agricultural Sciences and Spatial Planning [Forskningsradet for miljo,
areella naringar och samhallsbyggande (FORMAS)] and The Development Fund
of the Swedish Construction Industry [Svenska Byggbranschens Utvecklingsfond
(SBUF)] for nancial support.

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