Rebound effects of price differences

Goal, Scope and Background Traditionally, comparative life cycle assessments (LCA) have not considered rebound effects, for instance in case of significant price differences among the compared products. No justifications have been made for this delimitation in scope. This article shows that price differences and the consequent effects of marginal consumer expenditure may influence the conclusions of comparative LCA significantly. We also show that considerations about rebound effects of price differences can be included in LCAs. Methods The direct rebound effect of a price difference is marginal consumption. Based on statistical data on private consumption in different income groups (Statistics Denmark 2005a, 2005b), the present article provides an estimate of how an average Danish household will spend an additional 1 DKK for further consumer goods, when the household has gained money from choosing a cheaper product alternative. The approach is to use marginal income changes and the following changes in consumption patterns as an expression for marginal consumption. Secondly, the environmental impact potentials related to this marginal consumption are estimated by the use of environmental impact intensity data from an IO-LCA database (Weidema et al. 2005). Finally, it is discussed whether, and in which ways the conclusions of comparative LCAs can be affected by including the price difference between product alternatives. This is elucidated in a case study of a comparative LCA screening of two different kinds of Danish cheese products (Fricke et al. 2004). Results Car purchase and driving, use and maintenance of dwelling, clothing purchase and insurance constitutes the largest percentages of the marginal consumption. In a case study of two cheeses, the including the impact potentials related to the price difference results in significant changes in the total impact potentials. Considering the relatively small price difference of the two products, it is likely also to have a significant influence on the results of comparative LCAs more generally. Discussion The influence of marginal consumption in comparative LCAs is relevant to consider in situations with large differences in the price of the product alternatives being compared, and in situations with minor differences in the impact potentials related to the alternatives. However, different uncertainties are linked to determining the pattern for marginal consumption and the environmental impact potential re