Valuation, appraisal, discounting, obsolescence and depreciation

Towards a life cycle analysis and impact assessment of their effects on the environment of cities


Previous editions of this Journal have drawn attention to the critical role valuation plays in life cycle analysis and environmental impact assessment (see for exampleVolkwkin andKlöpffer |1|). In particular, the critical role of valuation has heen highlighed in a number of discussions on ‘valuation step’ within life cycle costing, ‘hedonic and contingency’ assessments of environmental impact and both the utility and welfare of ‘pathway’ analysis/assessment (Krkwitt, Mayerhofer, Trukenmüller andFriedrich, 1998;Powell, Pearce andCraighill, 1997;Volkwein, On in andKlöpffer, 1996 |2-4|). Focusing on the utility of market valuation, this paper examines the critique of discounting environmentalists have made in relation to property valuation, investment appraisal and the application of the principle in the income based net annual return model of land use time-horizons and the spatial configuration of building programmes-a criticism implict in ‘valuation step’, ‘hedonic, contingency’ and ‘pathway’ analysis/assessments. It examines the argument put forward regarding the link between the selection of a discount rate, the valuation of property, appraisal of investment and inter-generational downloading of costs associated with the use of land, repair, maintenance and refurbishment of buildings: the downloading of costs, seen by some, to have an adverse impact and work against the introduction of experimental designs aimed at energy saving, clean air environments.

This is a preview of subscription content, access via your institution.


  1. [1]

    Volkwein, S.; Klöpffer, W. (1996): The Valuation Step within LCA, Part1. Int. J. LCA 1(1) 36–39

    Article  CAS  Google Scholar 

  2. [2]

    Krewitt, W.;Mayhofer, P.;Trukenmüller, A.;Friedrich, R. (1998): Application of the Impact Pathway, Analysis in the context of LCA. Int. J. LCA 3 (2) 86–94

    CAS  Article  Google Scholar 

  3. [3]

    Powell, J.;Pearce, D.;Craighill. A. (1997): Approaches to Valuation in LCA Impact Assessment. Int. J. LCA 2(1) 11–15

    Article  Google Scholar 

  4. [4]

    Volkwein, S.;Gihr, R;Klöpffer, W. (1996): The Valuation Step within LCA, Part 2. Int. J. LCA 1 (4) 182–192

    Article  Google Scholar 

  5. [5]

    Rydin, Y. (1992): Environmental Impacts and the Property Market. In: Breheny M. (ed) Sustainable Development and Urban Form, Earthscan Publications Ltd, London

    Google Scholar 

  6. [6]

    Pearce, D.;Turner, R (1990): Economics of Natural Resources and the Environment. Harvester Wheatsheaf, London

    Google Scholar 

  7. [7]

    Deakin, M. (1996): Discounting, obsolescence, depreciation and their effects on the environment of cities. Journal of Financial Management for Property and Construction 1 (2) 39–57

    Google Scholar 

  8. [8]

    Deakin, M. (1997): An Economic Evaluation of the Effects Land use, Building Obsolescence and Depreciation have on the Environment of Cities. In: Brandon, P. et al. (eds.) Evaluation of the Built Environment for Sustainability. Chapman and Hall, London

    Google Scholar 

  9. [9]

    Harvey, J (1989): Urban Land Economics. Macmillan, London, p 97

    Google Scholar 

  10. [10]

    Balchin, P.;Bull, G.;Kieve, L. (1995): Urban Land Economics and Public Policy. Macmillan, London

    Google Scholar 

  11. [11]

    Fisher, I. (1965): The Theory of Interest. Augustus, M. Kelly (eds) New York (Fourth Edition)

  12. [12]

    Baum, A.;Crosby, N. (1988): Property Investment Appraisal, Routledge, London

    Google Scholar 

  13. [13]

    RICS (1995): Appraisal and Valuation Manual. RICS, London

    Google Scholar 

  14. [14]

    Salway, F. (1986):Depreciation of Commercial Property. CALUS, Reading

    Google Scholar 

  15. [15]

    Baum, A. (1991): Property Investment, Depreciation and Obsolescence. Routledge, London

    Google Scholar 

  16. [16]

    Vale, B.;Vale, R. (1993): Building the Sustainable Environment. In: Blowers, A. (ed) Planning for a Sustainable Environment. Earthscan Publications Ltd, London

    Google Scholar 

  17. [17]

    Breheny, M.;Rookwood, R. (1993): Planning the Sustainable City Region. In: Blowers, A. (ed) Planning for a Sustainable Environment. Earthscan Publications Ltd, London

    Google Scholar 

  18. [18]

    Pearce, D.;Turner, R., op. cit. p. 230.

  19. [19]

    Pearce, D.;Turner, R., op. cit. p. 223

  20. [20]

    Baum, A.;Macgregor, B. (1992): The initial yield revealed. Journal of Property, Valuation and Investment 10 (4) 709–726.

    Article  Google Scholar 

  21. [21]

    O’ Brian, M.;Doig, A.;Clift, R. (1996): Social and Environmental Life Cycle Assessment. Int. J. LCA 1 (4) 231–237

    Article  Google Scholar 

  22. [22]

    Deakin, M. (1997): Discounting, obsolescence and depreciation: an assessment of their impact on the environment of cities. In: Proceedings of the Second International Conference on Building and the Environment. CTSE, Paris

    Google Scholar 

Download references

Author information



Corresponding author

Correspondence to Mark Deakin.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Deakin, M. Valuation, appraisal, discounting, obsolescence and depreciation. Int. J. LCA 4, 87 (1999).

Download citation


  • Appraisal
  • discounting
  • Life Cycle Assessment
  • environmental impact assessment
  • valuation