Abstract—In this paper we study the problem of evaluating the reconstruction distortion in the wavelet domain when adaptive lifting schemes (ALS) are used for the direct and inverse transform. The distortion evaluation is necessary in order to perform efficient resource allocation over the transform coefficients. ALS is a non-linear transformation, which prevents using common techniques for distortion evaluation. However we show the equivalence of this non-linear scheme with a timevarying linear filter, and we generalize the distortion computation technique to it. Experiments show that the proposed method allows a reliable estimation of the distortion in the transform domain. This results in improved coding performance.