Monetary valuation is the practice of converting measures of social and biophysical impacts into monetary units and is used to determine the economic value of non-market goods, i.e. goods for which no market exists. It is applied in cost benefit analysis to enable the cross-comparison between different impacts and/or with other economic costs and benefits. For this reason, monetary valuation has a great potential to be applied also in Life Cycle Assessment (LCA), especially in the weighting phase. However, several challenges limit its diffusion in the field, which resulted in only a few applications so far. The authors have performed a review of different monetary valuation methods for use in LCA. Firstly, monetary valuation approaches, methods, and LCA applications were identified. Secondly, key features and the strengths and weaknesses of each monetary valuation method were determined. Finally, monetary valuation methods and LCA applications were evaluated according to a comprehensive set of criteria, ranging from scientific foundation to uncertainty and complexity. It was found that observed- and revealed-preference methods and the abatement cost method have limited applicability in LCA, whereas the choice experiment method and the budget constraint method are the best options for monetary valuation in LCA.
Journal review article
Journal of Cleaner Production, 2015, Vol 86
Monetary valuation; Externality; Life Cycle Assessment; Weighting