Environmental

Cost and Benefit

PRESENTED BY:

1. Nur Afifah binti Shaberi (2016727981)

2. Nurul Fatin Nabihah binti Hamdan (2016564911)
3. Nurul Syafina binti Arif (2016283326)
Environmental cost
Costs that an organization incurs to
prevent, monitor and report
environmental impacts, and the cost
of failing to comply with
environmental regulations.

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 Categories in Environmental Cost
Prevention Cost Detection Cost
• Cost incurred to •Cost incurred to determine whether product or
prevent poor quality in services are conforming
product or service
•Cost to identify defective products before shipped to
from being produced
customer-
• E.g : Marketing
• Product acceptance: sample finished goods
research, vendor
certification, workers • Process acceptance: sample goods while in
training, quality process
engineering • Cost that associate with the activities that are
perform during manufacturing, process to ensure the
quality of the product
•E.g : Inspection of material, auditing environment
activities, field testing

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 Categories in Environmental Cost
Internal Failure Cost
• Cost incurred because products or
services do not conform that
discovered prior to delivery
• Cost incurred to remove defective
from the product before shipped to
customer
• E.g : Maintaining pollution
equipment, re-inspection,
recycling scraps
External Failure Cost
• Cost incurred because products or
services do not conform that
discovered after delivery
• Cost incurred when defective products
has been shipped to the customer
• Will dissatisfy the customer, reduce
the sale and profit
• E.g: warranties, cleaning up polluted
take, discount due to defects
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 TIERS IN ENVIRONMENTAL COST
Conventional cost
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• Direct cost that are associated with capital
expenditure, raw materials and other operating
and maintaining cost which can be found in the
accounting system.
- Ex: cost of purchasing equipment that has less
5-TIERS environmental impact

Hidden cost
2 • Hidden regulatory cost firm activities. This cost
can be found in accounting system but not easy
to find as it is hidden in the various overhead
account.
- Ex: Cost of monitoring and reporting
environment activities and emission, cost of
searching environmentally suppliers.
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 TIERS IN ENVIRONMENTAL COST

Contingent cost
3 • Contingent liability arising from failure to
clean up contaminates sites, fines and
penalties for non-compliance with regulations.
- Ex: cost of cleaning up toxic waste, oil spill,
5-TIERS hazardous waste

Relationship and image cost

4 • Less tangible cost and benefits that relate to
customer perceptions, employees and
community relations. It also reflect perception
from various stakeholder which are rarely
measured in standard information systems.
- Ex: cost of preparing environmental report.

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 TIERS IN ENVIRONMENTAL COST

Societal cost
5 • Costs that are imposed on environment and
society for which they may not be held legally
responsible and cannot be compensated for in
the legal systems.
5-TIERS • very difficult to measure and recognize
because need to estimate the environmental
impacts and need specialised environmental
knowledge.

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Environmental
Benefit
The benefits incurred when we
succeed to minimize the
environmental impacts.
Environmental benefits are often
difficult to quantify and may not
receive as much consideration as
those which are easily
quantifiable.
Save money
Can help the organizations to minimise the
expenses and saving more money as they can
avoid any fine or penalty charges towards them if
they ignore the environmental regulations set to
them.
Sustainable business or green business
Can create value for customers and investors.
Support the public values outcomes
Public values is the values that the organisations
contributes to the society.
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 Support Public Values Outcomes
Improve air quality
The capacity that leaf Climate changes
cover and vegetation Trees and parks can
have for filtering air offset or even reverse
pollutants such as dust, the heat-island effect,
gases and soot both directly and
indirectly.

Biodiversity and
habitat protection Improve water
quality

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Do you have
any question?

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Thank You.

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