formance in all aspects. For the rational decision maker facing this class of problem, LCA will have unquestionably made the choice easier.
The second class of problems, however, will be much more difficult to resolve. In this situation, the two possible alternatives both lie on the lower edge of the gray area; that is, the choice will be between two nondominated alternatives. The analyst therefore cannot resolve the problem without the application of some value function, which itself must represent the strategic interests of the community that the analyst is attempting to serve.
In these cases, establishing the relevant value functions will be a crucial element of the improvement analysis. Individuals and probably many firms can develop these functions using a variety of techniques and appropriately structuring the decision problem (Dyer and Forman, 1992; Keeney and Raiffa, 1976). However, substantial complexities are associated with a wider application.
The Swedish EPS system illustrates both the potential and the limitations of valuation methods when applied in such complex situations. This system, developed specifically with LCA in mind, employs monetization to establish the value of alternatives. Its application is currently being evaluated and endorsed by the Volvo Car Corp., among other companies. (For a complete treatment of this method, consult the references at the end of this paper.)
The EPS system is under development by the Swedish Environmental Research Institute, Chalmers Institute of Technology, and the Federation of Swedish Industries (Steen and Ryding, 1992). The system is designed as a tool for evaluating the ecological consequences of alternative activities or processes and ultimately for generating a value for the various changes to the environment induced by these activities.
The EPS system is specifically constructed to associate an environmental load with individual activities or processes, based on materials consumed or processed per unit. For example, EPS might associate X number of environmental load units (ELUs) per kilogram of steel produced and Y ELU per kilogram of steel components stamped. Thus, the environmental load of stamping a 5-kg automobile component, requiring 5.3 kg of steel, would be 5.3 X + 5 Y. This result could then be compared with the load associated with a different process or the use of a different material. The interesting questions are: How are these environmental loads established? and What do they mean?
Based on the environmental objectives of the Swedish Parliament, the EPS system relates all of the physical consequences of the processes under consideration to their impact on five environmental safeguard subjects: biodiversity, production (growth and reproduction of nonhuman organisms), human health, resources, and aesthetic values. Because a process may affect any one safeguard