IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v12y2020i24p10493-d462685.html

Comparison of Different Monetization Methods in LCA: A Review

Author

Listed:
  • Rosalie Arendt

    (Department of Sustainable Engineering, Institute of Environmental Technology, Technische Universität Berlin, 10623 Berlin, Germany)

  • Till M. Bachmann

    (EIFER—European Institute for Energy Research, 76131 Karlsruhe, Germany)

  • Masaharu Motoshita

    (National Institute of Advanced Industrial Science and Technology, Tsukuba 305-8569, Japan)

  • Vanessa Bach

    (Department of Sustainable Engineering, Institute of Environmental Technology, Technische Universität Berlin, 10623 Berlin, Germany)

  • Matthias Finkbeiner

    (Department of Sustainable Engineering, Institute of Environmental Technology, Technische Universität Berlin, 10623 Berlin, Germany)

Abstract

Different LCA methods based on monetization of environmental impacts are available. Therefore, relevant monetization methods, namely Ecovalue12, Stepwise2006, LIME3, Ecotax, EVR, EPS, the Environmental Prices Handbook, Trucost and the MMG-Method were compared quantitatively and qualitatively, yielding results for 18 impact categories. Monetary factors for the same impact category range mostly between two orders of magnitude for the assessed methods, with some exceptions (e.g., mineral resources with five orders of magnitude). Among the qualitative criteria, per capita income, and thus the geographical reference, has the biggest influence on the obtained monetary factors. When the monetization methods were applied to the domestic yearly environmental damages of an average EU citizen, their monetary values ranged between 7941.13 €/capita (Ecotax) and 224.06 €/capita (LIME3). The prioritization of impact categories varies: Stepwise and Ecovalue assign over 50% of the per capita damages to climate change, while EPS and LIME3 assign around 50% to mineral and fossil resource use. Choices regarding the geographical reference, the Areas of Protection included, cost perspectives and the approach to discounting strongly affect the magnitude of the monetary factors. Therefore, practitioners should choose monetization methods with care and potentially apply varying methods to assess the robustness of their results.

Suggested Citation

  • Rosalie Arendt & Till M. Bachmann & Masaharu Motoshita & Vanessa Bach & Matthias Finkbeiner, 2020. "Comparison of Different Monetization Methods in LCA: A Review," Sustainability, MDPI, vol. 12(24), pages 1-39, December.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:24:p:10493-:d:462685
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/12/24/10493/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/12/24/10493/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. de Groot, Rudolf & Brander, Luke & van der Ploeg, Sander & Costanza, Robert & Bernard, Florence & Braat, Leon & Christie, Mike & Crossman, Neville & Ghermandi, Andrea & Hein, Lars & Hussain, Salman & , 2012. "Global estimates of the value of ecosystems and their services in monetary units," Ecosystem Services, Elsevier, vol. 1(1), pages 50-61.
    2. Wouter Botzen, W.J. & van den Bergh, Jeroen C.J.M., 2012. "How sensitive is Nordhaus to Weitzman? Climate policy in DICE with an alternative damage function," Economics Letters, Elsevier, vol. 117(1), pages 372-374.
    3. Nick Hanley & Clive L. Spash, 1993. "Cost–Benefit Analysis and the Environment," Books, Edward Elgar Publishing, number 205, June.
    4. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, Enero-Abr.
    5. Joost Vogtländer & David Peck & Dorota Kurowicka, 2019. "The Eco-Costs of Material Scarcity, a Resource Indicator for LCA, Derived from a Statistical Analysis on Excessive Price Peaks," Sustainability, MDPI, vol. 11(8), pages 1-20, April.
    6. Karen Allacker & Leo De Nocker, 2012. "An Approach for Calculating the Environmental External Costs of the Belgian Building Sector," Journal of Industrial Ecology, Yale University, vol. 16(5), pages 710-721, October.
    7. Andrea Isoni, 2011. "The willingness-to-accept/willingness-to-pay disparity in repeated markets: loss aversion or ‘bad-deal’ aversion?," Theory and Decision, Springer, vol. 71(3), pages 409-430, September.
    8. Sebastian Rauner & Nico Bauer & Alois Dirnaichner & Rita Van Dingenen & Chris Mutel & Gunnar Luderer, 2020. "Coal-exit health and environmental damage reductions outweigh economic impacts," Nature Climate Change, Nature, vol. 10(4), pages 308-312, April.
    9. Leslie Carnoye & Rita Lopes, 2015. "Participatory Environmental Valuation: A Comparative Analysis of Four Case Studies," Sustainability, MDPI, vol. 7(8), pages 1-23, July.
    10. Tol, Richard S. J., 2008. "The Social Cost of Carbon: Trends, Outliers and Catastrophes," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 2, pages 1-22.
    11. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    12. Horowitz, John K. & McConnell, K. E., 2003. "Willingness to accept, willingness to pay and the income effect," Journal of Economic Behavior & Organization, Elsevier, vol. 51(4), pages 537-545, August.
    13. Marc Fleurbaey & Stéphane Zuber, 2012. "Climate policies deserve a negative discount rate," Working Papers halshs-00728193, HAL.
    14. Ackerman, Frank & Stanton, Elizabeth A., 2012. "Climate risks and carbon prices: Revising the social cost of carbon," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 6, pages 1-25.
    15. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    16. Weidema, Bo Pedersen, 2009. "Using the budget constraint to monetarise impact assessment results," Ecological Economics, Elsevier, vol. 68(6), pages 1591-1598, April.
    17. Richard L. Revesz & Peter H. Howard & Kenneth Arrow & Lawrence H. Goulder & Robert E. Kopp & Michael A. Livermore & Michael Oppenheimer & Thomas Sterner, 2014. "Global warming: Improve economic models of climate change," Nature, Nature, vol. 508(7495), pages 173-175, April.
    18. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
    19. Anthoff, David & Hepburn, Cameron & Tol, Richard S.J., 2009. "Equity weighting and the marginal damage costs of climate change," Ecological Economics, Elsevier, vol. 68(3), pages 836-849, January.
    20. Adam P. Hejnowicz & Murray A. Rudd, 2017. "The Value Landscape in Ecosystem Services: Value, Value Wherefore Art Thou Value?," Sustainability, MDPI, vol. 9(5), pages 1-34, May.
    21. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
    22. Brown, Thomas C. & Gregory, Robin, 1999. "Why the WTA-WTP disparity matters," Ecological Economics, Elsevier, vol. 28(3), pages 323-335, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ayşe Bayazıt Subaşı & Elçin Filiz Taş, 2023. "Single Score Environmental Performances of Roof Coverings," Sustainability, MDPI, vol. 15(5), pages 1-15, March.
    2. Walter J. V. Vermeulen & Pim R. Croes & Larissa van der Feen, 2023. "Piloting Oiconomy Pricing: First experiences of producers applying full cost sustainability assessment of products," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4924-4937, November.
    3. Ewelina Olba-Zięty & Jakub Jan Zięty & Mariusz Jerzy Stolarski, 2023. "External Environmental Costs of Solid Biomass Production against the Legal and Political Background in Europe," Energies, MDPI, vol. 16(10), pages 1-27, May.
    4. Alberto Bezama & Nora Mittelstädt & Daniela Thrän & Fritz Balkau, 2021. "Trends and Challenges in Regional Life Cycle Management: A Bibliometric Analysis," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    5. San Miguel, Guillermo, 2024. "External environmental costs of electricity generation using a life cycle approach: A case study of Spain," Renewable Energy, Elsevier, vol. 237(PD).
    6. Gemina Quest & Rosalie Arendt & Christian Klemm & Vanessa Bach & Janik Budde & Peter Vennemann & Matthias Finkbeiner, 2022. "Integrated Life Cycle Assessment (LCA) of Power and Heat Supply for a Neighborhood: A Case Study of Herne, Germany," Energies, MDPI, vol. 15(16), pages 1-21, August.
    7. Niccolò Caramanico & Giuseppe Di Florio & Maria Camilla Baratto & Viviana Cigolotti & Riccardo Basosi & Elena Busi, 2021. "Economic Analysis of Hydrogen Household Energy Systems Including Incentives on Energy Communities and Externalities: A Case Study in Italy," Energies, MDPI, vol. 14(18), pages 1-24, September.
    8. Kledja Canaj & Andi Mehmeti & Julio Berbel, 2021. "The Economics of Fruit and Vegetable Production Irrigated with Reclaimed Water Incorporating the Hidden Costs of Life Cycle Environmental Impacts," Resources, MDPI, vol. 10(9), pages 1-13, September.
    9. Magrini Chiara & Rodriguez Manotas Judit & Gonzalez Torres Maria & Senatore Vincenzo & Gama Caldas Miguel & Kouloumpis Viktor & Maury Thibaut & Amadei Andrea & Venturelli Sara, 2025. "Method for the ranking of potential requirements, based on expected impacts and costs," JRC Research Reports JRC143331, Joint Research Centre.
    10. Vahakn Kabakian & Marcelle McManus, 2024. "From private to social cost-benefit analysis: life cycle environmental impact cost internalization in cement production fuel switching," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(10), pages 25527-25548, October.
    11. Clara Celauro & Andrea Cardella & Marco Guerrieri, 2023. "LCA of Different Construction Choices for a Double-Track Railway Line for Sustainability Evaluations," Sustainability, MDPI, vol. 15(6), pages 1-20, March.
    12. Svetlana Zenchenko & Wadim Strielkowski & Luboš Smutka & Tomáš Vacek & Yana Radyukova & Vladislav Sutyagin, 2022. "Monetization of the Economies as a Priority of the New Monetary Policy in the Face of Economic Sanctions," JRFM, MDPI, vol. 15(3), pages 1-18, March.
    13. Sonja Arnold-Keifer & Simon Hirzel & Clemens Rohde, 2025. "Integrating the Assessment of Environmental Costs and the Non-Energy Benefits of Energy Efficiency into an Energy Demand Analysis of the Tertiary Sector," Energies, MDPI, vol. 18(9), pages 1-23, May.
    14. Patricia Schneider-Marin & Anne Winkelkotte & Werner Lang, 2022. "Integrating Environmental and Economic Perspectives in Building Design," Sustainability, MDPI, vol. 14(8), pages 1-27, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard S.J. Tol, 2021. "Estimates of the social cost of carbon have not changed over time," Working Paper Series 0821, Department of Economics, University of Sussex Business School.
    2. Richard S. J. Tol, 2021. "Estimates of the social cost of carbon have increased over time," Papers 2105.03656, arXiv.org, revised Aug 2022.
    3. van den Bergh, J.C.J.M. & Botzen, W.J.W., 2015. "Monetary valuation of the social cost of CO2 emissions: A critical survey," Ecological Economics, Elsevier, vol. 114(C), pages 33-46.
    4. Pycroft, Jonathan & Vergano, Lucia & Hope, Chris & Paci, Daniele & Ciscar, Juan Carlos, 2011. "A tale of tails: Uncertainty and the social cost of carbon dioxide," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 5, pages 1-29.
    5. Nordhaus, William, 2013. "Integrated Economic and Climate Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1069-1131, Elsevier.
    6. Bosello, Francesco & Orecchia, Carlo & Raitzer, David A., "undated". "Decarbonization Pathways in Southeast Asia: New Results for Indonesia, Malaysia, Philippines, Thailand and Viet Nam," MITP: Mitigation, Innovation and Transformation Pathways 250260, Fondazione Eni Enrico Mattei (FEEM).
    7. David Anthoff & Johannes Emmerling, 2019. "Inequality and the Social Cost of Carbon," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(2), pages 243-273.
    8. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.t., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," LSE Research Online Documents on Economics 114941, London School of Economics and Political Science, LSE Library.
    9. W. Botzen & Jeroen Bergh, 2014. "Specifications of Social Welfare in Economic Studies of Climate Policy: Overview of Criteria and Related Policy Insights," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(1), pages 1-33, May.
    10. Fleurbaey, Marc & Zuber, Stéphane, 2015. "Discounting, risk and inequality: A general approach," Journal of Public Economics, Elsevier, vol. 128(C), pages 34-49.
    11. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).
    12. Parry, Ian W.H. & Timilsina, Govinda R., 2009. "Pricing externalities from passenger transportation in Mexico city," Policy Research Working Paper Series 5071, The World Bank.
    13. Weyant John, 2014. "Integrated assessment of climate change: state of the literature," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 377-409, December.
    14. Auke Hoekstra & Maarten Steinbuch & Geert Verbong, 2017. "Creating Agent-Based Energy Transition Management Models That Can Uncover Profitable Pathways to Climate Change Mitigation," Complexity, Hindawi, vol. 2017, pages 1-23, December.
    15. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    16. Chris Hope, 2013. "Critical issues for the calculation of the social cost of CO 2 : why the estimates from PAGE09 are higher than those from PAGE2002," Climatic Change, Springer, vol. 117(3), pages 531-543, April.
    17. Tol, Richard S. J., 2011. "Modified Ramsey Discounting for Climate Change," Papers WP368, Economic and Social Research Institute (ESRI).
    18. Benjamin Jones & Michael Keen & Jon Strand, 2013. "Fiscal implications of climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 29-70, February.
    19. Dietz, Simon, 2012. "The treatment of risk and uncertainty in the US social cost of carbon for regulatory impact analysis," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 6, pages 1-12.
    20. Kverndokk, Snorre & Rose, Adam, 2008. "Equity and Justice in Global Warming Policy," International Review of Environmental and Resource Economics, now publishers, vol. 2(2), pages 135-176, October.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:12:y:2020:i:24:p:10493-:d:462685. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.