Green building is for conservatives: a financial case

Green building is for conservatives: a financial case

Our buildings are central to our lives, and we put a tremendous amount of our wealth and skills into making them. Current standard building practices are not a natural fit for the experimental, odd looking, obscure buildings often associated with green building. However, in reality the modern green building movement is a highly tuned, intensive, and measured approach to building that values efficiency, health and durability.

The success of the United States Green Building Council (USGBC) has not been based on their radical agenda but on the practical results of the types of building they have helped shape. Go on to their website or read a brochure and they will mention the larger environmental benefit of green building, but then the USGBC will also detail the financial values of green building. A Leadership in Efficient and Environmental Design (LEED) building is cheaper to operate, improves health by reducing causes of asthma and other health issues, increases resale value and rents, reduces maintenance, and improves productivity. The improvement in productivity in LEED commercial buildings alone can pay for the entire building. No wonder so many companies and government groups such as the Times Corporation, United Services Automobile Association, Condé Nast, universities, municipalities, schools and so on, are using the LEED standard to build platinum level buildings. Ok, so this sounds like a pitch for LEED. These large projects have demonstrated the value gained by investing in green building principles, but skyscrapers and houses are not the same thing. The budget for building a house is much tighter and less flexible. When I talk about green building, the first thing I often hear is that it is expensive (meaning too expensive to justify).

I can best dissuade this argument by my experience of designing and building my own home. My wife and I live on a very tight budget. The only way for me to build a reasonable house was by rethinking all my assumptions about how a house works. Size matters, so fewer materials means a lower mortgage, easy. Engineer the building for the actual loads and do not over engineer (see the blog posting "An engineer's role in green building" by Mark Benjamin PE on the sustainable line: blog) and build using advanced framing techniques. I spent a lot of time designing the space, rethinking the floor plan, the day lighting, materials, water, electrical, thermal mass, insulation detail, until I knew it was right. There are things I would have changed, and lessons learned, but the house looks good (a pat on my back), works well, and cost $600 a month in mortgage payments. No power or water bill to boot. The building plan for my house will not work for many other houses, but the approach to designing it will. There is no, and will never be, a cookie cutter system. The suburbs of the last couple decades are losing value in part because the cookie cutter approach turns out to be a failed model, a bad investment.

A home that that works well retains value. Energy efficiency is naturally at the top of the list. When you make an investment you want to reduce risk. Green building is a way now to do this because you are fixing your investment dollars up front. Every decision and dollar you make to reduce your energy consumption buffers you from the increasingly unstable energy market. The simple laws of supply and demand will keep energy prices tracking upward. If you borrow $2,000 to upgrade your heating and cooling system, your added cost to a loan will be $20 a month but your energy saving would make up for it, and in the future you will save money each month. Another way of putting this is that your investment pays for itself on day one! If you choose to sell the house the money for the added value will be in your hot little hand. Another example is those noisy little bath fans. They are cheap and loud, but with all that noise they should do something. Well, they use a lot of electricity too, but don't move much air. In a few years you need to repaint your bath because you're little noise maker never got the moisture out (and hopefully not just into the attic). For a hundred bucks more you get a quiet, efficient, and effective fan that keeps the painter out.

Green building investing is not just about energy. One's well being is a large part of the equation. In fact, the tug of war in green design is often between energy efficiency and indoor environmental quality (IEQ). Good IEQ has its own, perhaps less quantifiable, payback. Good natural light helps with our well being as well as lowering lighting bills, but could increase cooling and heating costs. Good air quality protects our health. Thermal comfort keeps us happy. The investment in IEQ may help with resale and rent, but the value to our well being will be substantial.

All this first dollar payback talk is a trap, though. The current model for making investment decisions is to make incremental changes until you can't justify the cost with the money saved. This approach leads to mediocre overall design and only addresses a little of the building's potential. Looking at a more substantially integrated and advanced design can propel a building into a new category of investment, one that is recognized with a robust certification system, and highly sought after. Again supply and demand provide the key to investing in green building. For the next decade demand will push up the value of good green building as consumers and investors can better quantify them, and supply will be forced to keep pace.

Since we are talking about the marketplace, I should promote green building consulting. A good green building consultant (like me) will be able to greatly improve a building project by integrating the design and all the folks who make the building happen, by making the building components work better to save materials and energy, and help guarantee a quality building, which in turn become a quality investment.

Andrew Michler, LEED AP