Monetary valuation in Life Cycle Assessment

Monetary valuation of environmental impacts is crucial in environmental economics, as it reveals market externalities by expressing them in economic terms. Its relevance has been recognized since the 1930s (Read, 1963). Monetary valuation involves assigning a monetary value to non-market goods or services, such as environmental impacts (Pizzol et al., 2015). Monetary valuation approaches (and associated methods) are used to derive monetary valuation coefficients, as outlined in the literature (Amadei et al., 2021), and are categorized based on their underlying hypotheses and assumptions.

Monetary valuation of environmental impacts is key for enhancing the relationship between green transitions and competitiveness. By assessing the societal costs of environmental impacts, it enables fairer comparisons between alternatives. Monetary valuation has the potential to interpret environmental impacts derived from Life Cycle Assessment (LCA). Its advantages include: (i) monetary units being more intuitive to audiences than weights derived via other methodologies, and (ii) the ability to quantify impacts economically, contextualizing them within the real economy and supporting decision-making (Alberici et al., 2014).

State of the art and future needs of monetary valuation

Amadei et al. (2021) review available monetary valuation approaches for LCA, mapping them to the impact categories of the Product Environmental Footprint (POF) method (EC, 2021), and identifying challenges and research needs. The literature review compiled and compared monetary valuation coefficients adjusted to Euros and inflation for a reference year. The below box provides downloadable unadjusted monetary valuation coefficients employed in the study of Amadei et al. (2021). These unadjusted data ensure transparency and flexibility, enabling users to apply tailored adjustments (e.g., via Harmonised Indexes of Consumer Prices (HICP), Purchasing Power Parities (PPP), or other price indices) to meet specific analytical needs.

References

  • Alberici, S., Boeve, S., Breevoort, P. Van, Deng, Y., Förster, S., Gardiner, A., van Gastel, V., Grave, K., Groenenberg, H., de Jager, D., Klaassen, E., Pouwels, W., Smith, M., de Visser, E., Winkel, T., Wouters, K., Subsidies and costs of EU energy, Ecofys, by order of: European Commission, 2014. https://cedelft.eu/publications/subsidies-and-costs-of-eu-energy/;
  • Amadei, A. M., De Laurentiis, V., Sala, S., A review of monetary valuation in life cycle assessment: State of the art and future needs, Journal of Cleaner Production, 329, 129668, 2021. https://doi.org/10.1016/j.jclepro.2021.129668;
  • EC (European Commission), Commission Recommendation (EU) 2021/2279 of 15 December 2021 on the use of the Environmental Footprint methods to measure and communicate the life cycle environmental performance of products and organisations, 2021;
  • Pizzol, M., Weidema, B., Brandão, M., Osset, P., Monetary valuation in life cycle assessment: a review, Journals of Cleaner Production. 86, 170-179, 2015. https://www.sciencedirect.com/science/article/pii/S0959652614008294?via%3Dihub;
  • Read, J. E., The Trail Smelter Dispute, Canadian Yearbook of International Law/Annuaire canadien de droit international, 1, pp. 213-229, 1963. https://opil.ouplaw.com/display/10.1093/law:epil/9780199231690/law-9780199231690-e1612?p=emailAyOPLDbiWa.kw&d=/10.1093/law:epil/9780199231690/law-9780199231690-e1612&print.

    • (last update July 2025)