Final Report: Exploring the Environmental Impacts of the E-merging Digital Economy: Towards an Informational Ecology for the Greening of Electronic Commerce

EPA Grant Number: R827582
Title: Exploring the Environmental Impacts of the E-merging Digital Economy: Towards an Informational Ecology for the Greening of Electronic Commerce
Investigators: Sui, Daniel Z.
Institution: Texas A & M University
EPA Project Officer: Packard, Benjamin H
Project Period: October 1, 1999 through September 30, 2000
Project Amount: $69,777
RFA: Futures: Detecting the Early Signals (1999) RFA Text |  Recipients Lists
Research Category: Water , Sustainability , Land and Waste Management , Ecosystems , Ecological Indicators/Assessment/Restoration

Objective:

The objective of this research project was to address the following three questions:

1. To what extent and under what circumstances is the electronic delivery of goods and services going to substitute, complement, or synergistically integrate with traditional ways of doing business?

2. What are the environmental consequences, measured in terms of energy/material consumption and waste production, of using the Internet to deliver information-based products or services (such as online banking/trading, newspaper delivery, or insurance purchase etc.)?

3. What are the environmental consequences, measured in terms of energy/material consumption and waste production, of using the Internet to facilitate the retailing of tangible goods and products (such as books, automobiles, and other merchandises)?

Summary/Accomplishments (Outputs/Outcomes):

Using a modified version of life-cycle analysis, coupled with input-output analysis and stochastic modeling, we concluded that e-commerce can make marked improvements and savings in the way we use our environmental resources and can reduce the environmental burdens associated throughout the life cycle of a product from the initial bill of materials required for the manufactured product to the receipt and utilization of the final goods by the consumer. Four major industries were examined: software, computer hardware, groceries, and music. Each industry has its own unique characteristics and must be examined separately and the benefits and consequences of e-commerce vary substantially between industries. One consistent observation is the attainment of vast environmental benefits through the Internet-delivery of consumer products such as software and music.

Software. For the software industry, a 24-month life cycle model of the traditional method of software CD manufacturing and subsequent distribution to 4,000 retail facilities and their corresponding customers was compared to the environmental benefits with the direct digital download of software at low (10 percent), medium (25-50 percent), and high (75-100 percent) e-commerce traffic scenarios. Environmental savings were in direct proportion to the percentage of software downloaded. Energy savings for 25 percent download could supply the annual energy requirements for 3.6 million households. Further, 25 percent download of software could reduce carbon dioxide emissions equating to the removal of almost 900 automobiles off the road for an entire year. In the high traffic scenario, the electricity savings would exceed the entire monthly output of the average United States power plant. The transportation sector is the primary contributor to polluting emissions and fuel consumption. The savings from reduced construction of warehouse and retail facilitates accounts for the majority of electricity savings and a quarter of the energy savings. Electricity production and the transportation sector are the other major contributors to energy expenditures and also obtain the most savings when software is downloaded rather than purchased in the traditional manner.

Groceries. The e-grocery industry has many variations. The traditional method of grocery shopping is compared to the e-grocery methods of delivery by van from the local grocery store, a medium size warehouse (100,000 square feet) or a large automated warehouse (330,000 square feet). Within the variations of grocery origin, the types of delivery (attended or unattended) were varied, depending on the methods available to keep the refrigerated items at a prerequisite temperature through delivery or refrigerated boxes. For the direct supermarket of hybrid e-commerce technique and the delivery of 14,000 grocery orders each month for a year from a grocery store, the most environmentally favorable method is the e-commerce method with energy savings of 5 percent for three 2-hour window next day service attended delivery and both insulated box alternatives for next day unattended 6-hour window. In addition, vehicle emissions and pollutants are sharply reduced with these latter e-commerce methods with benefits of 5-51 percent. Coincidentally, Tesco, the only profitable online grocer, employs this model today.

The 100,000 square foot medium sized grocery warehouse is compared to 2.5 stores in the traditional sense with 11,000 orders per month. In most energy and environmental evaluating criteria categories, the attended next day service demonstrated savings of 7 percent (CO) to 59 percent (HC). For unattended delivery systems, the annual aggregate energy and electricity consumption for the traditional method was less than the e-grocery method. This could be attributed to the energy requirements in the construction of specifically designed refrigerated boxes to facilitate this unattended delivery. However, the e-commerce method of unattended delivery with a six-hour window next day service and the least cost insulated box method proved to produce the least amount of vehicle emissions among all the alternatives.

In the e-commerce Webvan model, a 330,000 square foot automated warehouse is compared to the output of 11 traditional supermarkets. In almost all the alternatives, the traditional method produced less vehicle emissions and less energy on an annual life cycle basis. Annual electricity and energy savings for the e-commerce technique were observed for both the attended three 2-hour windows delivery method and the insulated box unattended alternatives. However, when considering only vehicle pollutants, the traditional method is quite superior to e-commerce due to large amount of vehicle emissions from the transportation distribution system from the warehouse to the many cross-dock points and subsequent van delivery system.

Computers. The traditional model of ordering and delivery of personal computers such as the Compaq method, conducted at a local retail facility was compared to the online method of digital order and direct drop off at one's establishment (e.g., Dell) was compared. The number of computers sold ranged from 800 (low), 8,000-16,000 (medium) to over 42,000 (high). The e-commerce method demonstrated substantial environmental savings when comparing the life cycles of the personal computers, in most cases, improvements ranged from 20 percent to 80 percent reduction of harmful pollutants and expenditures of energy and electricity. In terms of environmental emissions and energy expenditures when looking at solely the transportation and distribution networks of the two modes of commerce, e-commerce is better at larger levels of computer sales with generally 10-25 percent environmental savings, but at levels below 15 percent airfreight. However, in the case of a small company, at the 800-computer sale level, the traditional method is more environmentally beneficial. When volume is increased to cover a 48-month period and includes all the impacting phases of the personal computer supply system life cycle, the environmental benefits favored the e-commerce method with savings between 40 percent and 80 percent, despite increases in the percentages of airfreight shipped. This is primarily due to the impact of the inventory held in the traditional method, plus the pollutants emitted by trucks and passenger cars in the transportation and delivery systems.

Music. The environmental benefits from the direct download of music from the Internet are compared with the traditional method of music purchasing from a retail store. The study looked at over 600 stores based on a nation-wide music distribution system. Based on the simulation output, a 10 percent download of music annually eliminates 4,850 metric tons of CO2. This equates to taking 808 cars off the street or planting 1,200 acres of trees (EPA, 2001b). CO2 reductions alone for 25percent download of music equate to having 2063 less cars on the road or planting over 3,000 more trees. Also with 25 percent download of music, we save 474.58 TJ, which equates to the annual energy needs to supply 4.134 million households according to EPA (1999). This amount of energy exceeds the annual energy requirements for the entire city of New York, whose population is slightly over 8 million. Even with a 10 percent download of music, the energy savings equate to supplying the annual needs for 1.648 million households or a city with a population of over 4 million or bigger than the city of Los Angeles. The environmental benefits are in direct proportion to the amount of music downloaded and pending royalty and licensing considerations, the practice of downloading music should be encouraged.

Journal Articles:

No journal articles submitted with this report: View all 17 publications for this project

Supplemental Keywords:

e-commerce, life-cycle analysis, public policy environmental impacts., RFA, Scientific Discipline, Ecosystem Protection/Environmental Exposure & Risk, Economics and Business, Ecology and Ecosystems, Exp. Research/future, Social Science, Futures, emerging environmental problems, electronic commerce, socio-economic changes, information ecology, environmental policy, exploratory research, energy consumption, environmental regulations, information technology, digital economy, public policy