Valuing Environmental Impact Using Conjoint Analysis

Abstract

Objective. The objective of the paper is to review the valuation method of environmental impact using the conjoint analysis. The conjoint analysis is one of the attribute-based econometric methods and estimates the monetary value of environmental attributes. This paper discusses the application of the conjoint analysis to the life cycle impact assessment.

Results and Discussion. In the literature of environmental economics, most papers used the choice experiment format, which asks respondents to choose their most preferred alternative from a set of alternatives. Current research of the choice experiment is focused on the econometric models for heterogeneity of preferences, including the random parameter logit, latent class logit, and hierarchical Bayes.

Conclusions. The validity of the conjoint analysis depends on the survey design and sampling design, because the method uses the stated preference data. Nation-wide, in-person interview is considered to be the best survey method for valuing environmental impacts on the whole country. The international comparison of the conjoint analysis for the life cycle impact assessment is important future research.