Modeling Paradigm for the Environmental Impacts of the Digital Economy

Abstract

Technological advancements of Internet communications and the recent evolution of e-commerce have created a viable, emerging framework to conduct business electronically. Undetermined at this point is the environmental impact of the new digital economy and the economic profile of resulting distribution networks. This study develops and employs an integrated modeling framework to compare the environmental impacts of a traditional business strategy with an e-commerce strategy for the personal computer industry. Ecological factors are evaluated to provide an overall comparison of the 2 business strategies over the product�s life cycle. Of particular importance are factors relating to the distribution of products through their supply chains. This study�s integrated modeling framework includes a simulation component to address the stochastic modeling environment caused by business uncertainty. Also included is an environmental input�output life cycle assessment model to quantify the full direct and indirect impacts of different business strategies. Outputs from this model include measures of electricity, natural gas, fuel and packaging expended, retail and warehouse space used, energy expenditures, vehicle emissions, and 20 different pollutants resulting from different business strategies. Results of the study suggest 40% to 50% reduction in life cycle energy and pollutant expenditures with e-commerce in the personal computer industry.