Environmental ROI Calculator Formula
Understand the math behind the environmental roi calculator. Each variable explained with a worked example.
Formulas Used
Total ROI
roi_pct = (lifetime_return - net_cost) / net_cost * 100Payback Period
payback = net_cost / annual_returnLifetime Net Profit
net_profit = lifetime_return - net_costAnnual ROI
annual_roi = (lifetime_return - net_cost) / net_cost * 100 / project_lifeVariables
| Variable | Description | Default |
|---|---|---|
project_cost | Project Investment(USD) | 50000 |
annual_savings | Annual Energy Savings(USD) | 8000 |
annual_credits | Annual Carbon Credit Revenue(USD) | 2000 |
incentives | Tax Credits & Rebates(USD) | 15000 |
project_life | Project Lifespan(years) | 20 |
net_cost | Derived value= project_cost - incentives | calculated |
annual_return | Derived value= annual_savings + annual_credits | calculated |
lifetime_return | Derived value= annual_return * project_life | calculated |
How It Works
How to Calculate Environmental ROI
Environmental ROI measures the financial return from green investments.
Formula
Net Cost = Investment - Incentives
Lifetime Return = (Annual Savings + Credits) * Years
ROI = (Lifetime Return - Net Cost) / Net Cost * 100
Many green projects have excellent ROI when including energy savings, carbon credits, tax incentives, and avoided regulatory costs.
Worked Example
A $50,000 project with $8,000/year savings, $2,000 credits, $15,000 incentives over 20 years.
project_cost = 50000annual_savings = 8000annual_credits = 2000incentives = 15000project_life = 20
- 01Net cost: $50,000 - $15,000 = $35,000
- 02Annual return: $8,000 + $2,000 = $10,000
- 03Lifetime return: $10,000 * 20 = $200,000
- 04Net profit: $200,000 - $35,000 = $165,000
- 05ROI: $165,000 / $35,000 * 100 = 471%
- 06Payback: $35,000 / $10,000 = 3.5 years
Ready to run the numbers?
Open Environmental ROI Calculator