This document discusses eco-innovation in the tourism sector and measuring a business's ecological footprint. It introduces key concepts like ecological footprint, which measures how much biological capacity is required to support human activities. It then discusses methods for measuring ecological footprint, including using an online calculator. Finally, it outlines investment decision rules for green investments, including average rate of return, payback period, net present value, and internal rate of return as well as the time value of money concept of future and present value.

1. Module 2 - Eco-innovation in the Tourism sector:Impacts of eco-
innovative Business Implementations
Unit 3
The European Commission support for the production of this publication does not constitute an endorsement of the contents which reflects the views only of the authors, and the Commission cannot be held
responsible for any use which may be made of the information contained therein.

2. Learning outcomes
The learner will able to plan the Eco-innovative actions
considereing its impacts also during the lifecycle.

3. What is the Ecological Footprint?
• The Ecological Footprint is a resource accounting tool used by
governments, businesses, educational institutions and NGOs to answer
to a specific resource question: How much of the biological capacity of
the planet is required by a given human activity or population?
Same as in Unit 1 - Slide 10
Yes, we agreed in Mugla. We need this information again to deal with it in
this presentation.

5. Measure of Ecological Footprint
• http://www.footprintcalculator.org – calculate our businesses
Footprint! (HU)
• Solutions have to check! - choose your target!

6. • What will I do tomorrow?
• Actions for tomorrow:
• 1.
• 2.
• 3.

7. 1. Investment Decision Rules
You can use the following measuring methods to make your decision according to
your
green investment: (You can find more detailed information about them in the External
resources file.)
1. Unsophisticated Capital Budgeting Techniques
1.1 AVERAGE RATE OF RETURN
1.2 PAYBACK PERIOD
2. Sophisticated Capital Budgeting Techniques
2.1 NET PRESENT VALUE
2.2 INTERNAL RATE OF RETURN

8. 1.1 Average rate of return
Average rate of return =
• Average profits after taxes - are found by adding up the after-tax profits
expected for each year of the project’s life and dividing the total by the number
of years.
• Average investment - is found by dividing the initial investment by 2. This
averaging process implies that the cost of the asset is written off at a constant
(straight-line) rate over the life of the project. This means that, on the average,
the firm will have one-half of the asset’s initial purchase price on the books.

9. 1.2. Payback period
The payback period is the number of years required to recover the
initial investment from cash inflows.
• In the case of any annuity:
- the payback period can be found by dividing the initial investment by
the annual cash inflow.
PP =
• In the case of a mixed stream of cash inflows:
- the calculation of the payback period is not quite as clear-cut
PP = (Irn < CFn+1)
I believe that during the C1 course it was agreed that this was to
difficult for the target group -

10. Disadvantages of using the payback period:
1. like the average rate of return, this method is not able to specify the
appropriate payback period in light of the wealth maximization goal.
2. the failure to recognize cash flows that occur after the payback period.
Different fonts
1.2. Payback period

11. 2. Time Value of Money. Future and present value
• Every decision has future consequences –
• More money today, smaller Footprint tomorrow!
• Does the cash value today of the benefits exceed the cash
value today of the costs?
• The difference between the cash value of the benefits and
costs indicates the net amount by which the decision will
increase wealth.

12. Future Value
- evaluates future amounts resulting from current investment in an
interest-earning medium.
Present Value
- is inversely related to future value.
Both future value and present value are needed to calculate the
payments required to accumulate a predetermined future sum and to
amortize loans by calculating loan payment schedules.
2. Time Value of Money. Future and present value

13. • The basic relationship:
Fn = P(1+r)n
- where:
Fn = the future value or amount at the end of period n
P = the initial principal
r = the annual rate of interest paid on the account
n = the number of periods
Again, I believe that during the course it was agreed that these formulas are to
difficult for the target groups. - Again, if we do not give them something for
measuring, thay can not to understand the main part of the eco-innovation. It
isn’t difficult, just have to put some numbers.. It is not a question of putting
2.1. Future Value (Compound Value)

14. • The present value of a dollar that will be received in the future is less than the value
of a dollar in hand today.
“If I can earn r percent on my money, what is the most I would be willing to pay for an
opportunity to receive Fn dollars n periods from today?”
Discounting determines the present value of a future amount, assuming that the
decision maker has an opportunity to earn a certain return, r, on the money.
2.2. Present Value

15. Project web-page: http://eco-mode-project.eu/
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