Analysis of the Impact of Environmental Management Accounting Costing Techniques on Water Consumption in South African Manufacturing Companies

Abstract

High water consumption contributing to water scarcity remains a challenge in manufacturing companies. Environmental management accounting emerged to contribute to solving environmental challenges, such as water scarcity. This paper covers three popular techniques in environmental management accounting literature: activity-based costing, material flow cost accounting, and life cycle costing. Thus, this paper aims to determine the impact of environmental management accounting costing techniques on water consumption in South African manufacturing companies. Findings show a positive (coefficient 2.947) and significant impact between activity-based costing and water consumption at 1% significance level. In addition, the findings indicate a positive (coefficient 3.875) and insignificant relationship between material flow cost accounting and water consumption. Conversely, the findings depict a negative (coefficient –18.002) and significant effect between life cycle costing and water consumption at 1% significance level. This paper calls for manufacturing companies to increase applying the costing techniques of environmental management accounting to achieve reduced water consumption.