Evaluating Sustainable Ventures in Developing Countries : A Case Study of Biodiesel Production in Zanzibar

University essay from KTH/Industriell ekonomi och organisation (Inst.); KTH/Industriell ekonomi och organisation (Inst.)

Abstract:

The matter of sustainable thinking today permeates the Western world and is now widely agreed to recognize three aspects; environmental, economic and social sustainability. Due to limitations of resources and knowledge, this concept is considerably less widespread in developing countries. Many sustainable ventures in developing countries aim to unite the three aspects and solve the pressing issue of unsustainable development, but evaluating these projects has proven to be a challenging task and tools for systematic analysis are missing. Furthermore, current frameworks lack in guidance on what tools to use for the assessment of the three sustainability aspects.

This research aims to investigate how established models can be applied and what obstacles that occur when evaluating a sustainable venture in a developing country. To do this, a case study is performed on Zanzibar, Tanzania where the Swedish waste management company Zanrec is considering pursuing a sustainable venture of starting up a biodiesel production from used cooking oil. This research therefore also provides Zanrec with an evaluation of the project’s alignment with the sustainability concept. To reach the purpose of this study, two established models for evaluation are chosen; LCA for the environmental aspect and the payback method as capital budgeting tool for the economic aspect. No established evaluation tool is used for the social aspect; instead the social implications of the project are analyzed in a discussion.

It is found that the applicability of the chosen tools for evaluating the biodiesel production project is highly affected by the contextual setting of a developing country. The major finding is that these tools have varying flexibility in adapting to the main challenge, which is the lack of documentation and available data. LCA is found to be a complicated and rigid tool to use if fully abiding by its associated ISO standards. Without an existing LCA knowledge base and any guidelines on how to manage missing data, the LCA tool is deemed to not reach its full potential in a developing country at this stage. The payback method is proven to be a more flexible tool that to a higher degree can be adapted to fit the setting and the requirements of the commissioner. The project’s impact areas related to the social aspect are found to be few, but to evaluate the extent of these, further research is required.

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