Thursday, July 3, 2014

The Built Environment’s Social Costs, Part 1: Quantifying Productivity, Health and Larger Societal Costs

As designers, we have a responsibility to investigate and present the social costs and benefits of our designs to all key stakeholders. Whether its building safe routes to schools , taking a project to Net Zero, or evaluating the number of separate HVAC zones in an individual project, our clients, building occupants and the general public should be aware of the associated productivity and health implications at the individual/local level, as well as what the larger social/cultural and economic ramifications are.

Business operating costs (the “people” costs) range anywhere from 10 to 100+ times building operations costs, depending on the number and salary level of the employees and type of facility.[i] [ii] Because of this, even small percentage improvements in productivity and health can dwarf the associated decreases in operational costs obtained from sustainable built environment solutions, and this can drastically change the results of any life cycle cost analysis.

For example, M.E. GROUP’s rectrocommissioning efforts at the Conrad Duberstein U.S. Courthouse and Post Office in Brooklyn, NY, resulted in 37 energy conservation measures (ECMs) that were estimated to cost $9,167,000 to implement and save $872,000/year in building operational costs.[iii] Using contextually gathered data from surveys, interviews/observations, and space condition measurements to strategically apply previous research on productivity relative to specific building conditions, such as lighting, acoustics, IAQ, etc., these same ECMs were conservatively estimated to result in $3,570,000/year in productivity improvements. This was 4.1 times the estimated operational savings while only considered some of the productivity benefits and excluding all of the potential savings related to health improvements. Simple payback using the operational savings only was 10.5 years. If we include productivity the length of time drops to 2.1 years. Yet we rarely consider quantified productivity and health impacts as part of the master planning, design, retrocommissioning or post occupancy evaluation process. For additional examples, see the following blog posts: How a Lack of Space/Flexibility Can Impact Teacher Productivity/Performance, Culture and Thermal Comfort and Study: Safe Routes to School Investments Save Millions and Improve Quality of Life.

Moving to a larger scale, data from the U.S. Energy Information Administration indicates that approximately 40.6% of U.S. CO2 emissions generated annually is produced by buildings compared to transportation and industry.[iv] Using Johnson and Hope’s social cost of carbon (SCC) estimate[v] (also discussed in two of Laurie Johnson’s blog posts  here and here, as well as David Robert’s blog here), a reduction in annual CO2 emissions of only 5% from the building sector would translate into $11.66 billion in avoided future U.S. economic damages, based on 2012 emissions data[vi] and Johnson and Hope’s 2010 SCC estimate using the 1.5% discount rate. Limiting this to the commercial sector only, that number would be $5.48 billion. That’s billions of dollars of avoided agricultural productivity decreases, health care cost increases, increased flood damages, etc. But as with productivity and health, we rarely take greenhouse gas (GHG) impacts into account as part of the master planning, design, retrocommissioning or post occupancy evaluation process.

If we did, the decision making process relative to short and long range planning, value engineering exercises, policy formulation, etc. would often have different outcomes. Part 2 of this 3 part series will discuss some of the evolutionary reasons for our species’ short sightedness and how we can increase our collective ability to take the long view during the decision making process. Part 3 will discuss how this correlates with successfully managing common pool resources (such as energy and water), providing specific examples, such as Kansas City’s recently begun implementation of the City Energy Project.

[i] CABE/BCO. 2005. The Impact of Office Design on Business Performance. Commission for Architecture and the Built Environment and the British Council for Offices, London, UK. 

[ii] Fisk, W. J. 2002. How IEQ Affects Health, Productivity. ASHRAE Journal 44(5):56-58.

[iii] Harmon, M. 2011. “The Commissioning Agent as Anthropologist – Part 1.” The Checklist: The Quarterly Newsletter of the Building Commissioning Association. (second quarter): 8-10. 

[iv] ©2013 2030, Inc. / Architecture 2030. All Rights Reserved. Data Source: U.S. Energy Information Administration (2012).

[v] Johnson, L. T. and C. Hope. 2012. The social cost of carbon in U.S. regulatory impact analyses: an introduction and critique. Journal of Environmental Studies and Sciences. September, 2012.

[vi] EPA 430-R-14-003: Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2012:

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