Cost benefit analysis for implementation of environmental management systems

ISO 14001 is "good business" because it can lead to greater efficiencies and reduced materials and operating costs. The very definition of "environment" is all-inclusive: it means anything that consumes energy and produces waste. Environmental issues span the entire management spectrum: material costs, productivity, quality, liability, health and safety. An efficient and cost effective systems approach to managing these variables of doing business impacts bottom-line profitability. The cost-benefit analysis is used to determine the feasibility to obtain profit to implement environmental management systems. The determination of Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit to Cost Ratio (B/C) confirms that after 4 years of implementation of environmental management system, benefits can be obtained. CBA is a normative tool, not a description of how management is making decisions. The technical limitations may make it impossible to quantify and then monetize all relevant impacts as costs and benefits. Nevertheless, CBA is often a useful yardstick for measuring efficiency, even when it is not an appropriate decision rule