What is Allocation in Life Cycle Assessment?#

Allocation determines how we split environmental impacts when a process produces multiple products.

The simple approach follows mass. A system produces 2 kg of product A and 1 kg of product B, so product A gets two-thirds of the emissions and product B gets one-third. Straightforward.

But wrong, because it ignores the WHY.

The Gold Mine Problem#

Consider a gold mine in Minas Gerais, Brazil. Deep in mountainous terrain, difficult access, significant infrastructure investment. Modern gold mines typically move 100,000 tonnes of rock for every tonne of gold produced – this rock-to-metal ratio reflects low ore grades, often just a few grams of gold per tonne of ore.

Mass allocation says the waste rock carries 99.999% of the mining emissions. Gold gets 0.001%.

This makes no sense. WHY is that mine there? Not for waste rock. Nobody builds mines in remote Brazilian mountains to extract waste material. The mine exists because there’s gold.

Mass allocation has assigned virtually all environmental impact to material that has no market value whilst the actual reason for mining – gold extraction – appears almost impact-free.

Economic Allocation#

Economic allocation addresses the WHY by reflecting market value. That 1 kg of gold is worth approximately £96,000. The 100,000 kg of waste rock, even if it were clean aggregate at market rates of £15 per tonne, would theoretically be worth £1,500. But it isn’t sold. It sits in waste rock dumps because the mine is remote, transport costs exceed any possible value, and the material is often contaminated or unsuitable for construction use.

In reality, that waste rock has zero economic value. Gold represents 100% of the economic output, therefore gold carries 100% of the environmental impact. The allocation now reflects why the activity happens.

This approach works, but economic allocation has limitations. Gold prices fluctuate significantly – they can shift 5% in a day, 30% in a year. Your allocation changes constantly or you freeze it to a specific date, introducing temporal arbitrariness.

Beyond Simple Allocation#

ISO 14044 actually prioritises avoiding allocation entirely where possible. Subdivision of processes or system expansion often provides clearer answers than allocation.

But when allocation is unavoidable, the principle remains: understand WHY the process exists. Mass allocation works for co-products of similar value and purpose. Economic allocation works when one product clearly drives the process. The method should reflect the reality of production decisions.

Allocation isn’t a mathematical exercise. It’s about representing why industrial systems exist and operate the way they do.