A method of determining the actual luminous efficacy of one or more light sources in a luminaire housing for a given set of operating conditions, characterized by the following steps: a. characterizing the luminaire housing for effectiveness as a heat sink by determining: i. the physical dimensions of the luminaire housing; ii. properties of the material from which the housing is formed; iii. number and type of light sources typically accommodated by the luminaire housing; iv. thermal resistance of the light sources; and based on the above, calculating the luminaire housing temperature at the given set of operating conditions; b. determining one or more light source output degradation factors for the one or more light sources at the given set of operating conditions based, at least in part, on the characterization of the luminaire housing by: i. calculating a droop factor for the type of light source; ii. calculating the actual junction temperature of the light sources based on the luminaire housing temperature from step a; and iii. calculating a temperature factor for the light sources from the actual junction temperature; and c. determining the actual luminous efficacy of the one or more light sources based on the characterization of the luminaire housing and the one or more degradation factors by: i. modifying a rated efficacy of the light sources by the droop factor and temperature factor of step b to yield actual luminous efficacy for a given set of operating conditions. a. characterizing the luminaire housing for effectiveness as a heat sink by determining: i. the physical dimensions of the luminaire housing; ii. properties of the material from which the housing is formed; iii. number and type of light sources typically accommodated by the luminaire housing; iv. thermal resistance of the light sources; and based on the above, calculating the luminaire housing temperature at the given set of operating conditions; i. the physical dimensions of the luminaire housing; ii. properties of the material from which the housing is formed; iii. number and type of light sources typically accommodated by the luminaire housing; iv. thermal resistance of the light sources; and b. determining one or more light source output degradation factors for the one or more light sources at the given set of operating conditions based, at least in part, on the characterization of the luminaire housing by: i. calculating a droop factor for the type of light source; ii. calculating the actual junction temperature of the light sources based on the luminaire housing temperature from step a; and iii. calculating a temperature factor for the light sources from the actual junction temperature; and i. calculating a droop factor for the type of light source; ii. calculating the actual junction temperature of the light sources based on the luminaire housing temperature from step a; and iii. calculating a temperature factor for the light sources from the actual junction temperature; and c. determining the actual luminous efficacy of the one or more light sources based on the characterization of the luminaire housing and the one or more degradation factors by: i. modifying a rated efficacy of the light sources by the droop factor and temperature factor of step b to yield actual luminous efficacy for a given set of operating conditions. i. modifying a rated efficacy of the light sources by the droop factor and temperature factor of step b to yield actual luminous efficacy for a given set of operating conditions.