The Cost of Sustainability – Less Space

Simple Living

The American dream of owning a house has taken a hit since the Great Recession began in 2007. This recession has caused severe global economic problems. As many countries are recovering, we can see a shift in how people perceive the housing market. As the gap between the cost of housing and the cost of living in large cities increases, more people will look into smaller living spaces. For example, in Japan, where land is scarce, it is necessary to design and build small living spaces. It is difficult to find affordable housing when the cost of living in large cities exceeds the income of most Japanese citizens. Tokyo, Japan, holds the title of World’s Most Expensive City 2011, according to Bloomberg Businessweek.  Cities are also major energy and resource users. Therefore, more consideration of affordability and smaller living spaces should be considered in development in the US.

There are now market incentives for as more architect firms to design sustainable housing and buildings: reduced energy cost and increased intrinsic value of buildings. Cities are major consumers of energy and producers of waste. Landfills are contributing to a global environmental problem as toxic emissions are released from landfills into the ozone layer. Landfills also include toxins that seep out and that spread into the surrounding area. As the US public become more concerned, the government has become an enforcer and incentive producer to reduce impacts of population growth and resources threats.

Grass roots organizations have also sprung up around the world to address public consumption of resources. Many education institutions are encouraging different disciplines – such as business, engineering, social service, and so on – to study sustainability and its benefits. In the construction field, the major focus is on schedule, budget, safety, and quality. Sustainability designs have both an external and intrinsic value. Decade ago, there were few construction safety standards or regulations, but as more regulations has been created to protect workers, more innovation and focus is put on creating safe construction environments.  The same phenomena are now occurring with sustainability. As more critical resources, such as water and land, are being consumed, the focus on sustainability will continue.

Why Not Cap and Trade?

There is a call to limit carbon emissions in certain parts of the world such as China, the US, and Europe. Cap and trade or carbon taxation would both serve as disincentives to producing carbon emissions and should be considered as more people strive for opportunities to live in a more environmentally sustainable world. The cap and trade approach controls pollution by providing economic incentives for achieving a reduction in emissions of CO2. Carbon taxation involves an environmental tax as a disincentive by increasing the cost of CO2 emissions.  Many people advocate for a global carbon tax.

There are two major problems with having carbon taxation: inconsistent measurements and unfair punishment of the public and private sectors. Not everyone produces the same amount of CO2 and punishing only certain people or entities promotes inequity.  Carbon emissions are directly related to climate change, but not every country is willing to accept that it is their responsibility to pay the price of global warming when other countries or entities are not willing to act. It is difficult to point fingers when the cause of the problem crosses many borders in this globalized world. That leads to the following question: can an authority be created to regulate CO2 emissions in the world? Countries have their own laws and standards of living, which make it unfeasible to reach an enforceable global consensus. Also, in many parts of the world there are equality issues to resolve.

Taxation can also cause a negative reaction to the economy and markets, even if it has a positive effect on changing population behaviors. Carbon pricing may be perceived as unfair because it is difficult to target large entities when everyone who breathes is producing CO2. The intrinsic value of reducing CO2 to save the world for future generations does not have immediate payback except in the case of reducing costs by reducing energy usage. An economic shift can cause short term problems and be anti-efficient. For example, fuel efficient cars lead to states and federal government collecting fewer resources in gas taxes. If they tried to recuperate the money by taxing miles driven, they would remove one incentive to buy fuel efficient cars. Whether a mileage tax or a gas tax, it is hard to pass carbon taxation in the US. It is even more difficult on a global scale.

Another option to consider is cap and trade, which shows a better result in persuading people to do the environmentally responsible thing by encouraging people with monetary incentives. For example, C. Boyden, a lawyer, triggered the Clean Air Act of 1990 partly in response to acid rain – related emission trading system. This sulfur emission trading system was considered successful because, by the mid-1990s, sulfur dioxide emissions had been reduced by 3 million tons while the government contemplates cap and trade or carbon taxation, the private sector has come up with the LEED rating system, which is constantly improving and advocating for more sustainable buildings. Other programs such as the Green Built, Energy Star, and so on, also encourage people to be more sustainable. There is a reward in the form of companies and people having to pay less for energy usage. Currently, the Federal government is supporting incentives to lower CO2 emissions by offering FAA grants. In SeaTac, the Pre-Conditioned Air Project received part of its project cost ($18 million) from a government grant to produce an airport infrastructure design that has the potential  to reduce 50,000 tons of CO2 emissions and 5 million gallons of jet fuel per year. This incentive is efficient because it allows large entities to get funding to produce jobs, to encourage sustainability, and to reduce C02 without feeling the burden of taxation. If we had a cap and trade system, the market would create its own incentives.

In conclusion, cap and trade would be more effective than carbon taxation because it would rely on market forces. Carbon taxation causes negative association with punishment by the public and is difficult to enforce when the cause of the problem is difficult to measure and regulations against targeted entities can be avoided.  Also, the public in one country who has to pay the cost while other countries are not forced to pay would rebel against this kind of taxation. Cap and trade promotes sustainability by creating incentives to reduce CO2 emissions.

Saving money and the planet – what are we waiting for?

Listen to this: buildings account for more than a third of total energy consumption which causes CO2 emissions and costs money. If companies improve energy efficiency in buildings, we avoid much of the emissions – and companies save money! There, problem solved. Or maybe it is a little more complicated than that.

A couple of years ago, McKinsey & Co came out with a report stating that energy efficiency in buildings could be improved by 23 percent by 2020 at a positive net present value. Although the report also presented potential barriers to energy efficiency, the study has become popular evidence for how “stupid” real estate companies are not to undertake even the short-term profitable investments in energy efficiency, also referred to as ignoring the “low-hanging fruit”.

Swedish housing companies have shown varying approaches to energy efficiency when renovating the notoriously energy inefficient post war building stock, suggesting that their incentives for energy efficiency differ. The companies can be roughly divided into three levels of ambition. At the lowest level, the short-term profit maximizing companies see energy efficiency as an investment opportunity among others, which usually isn´t profitable enough to outdo other options. The “little extra” companies take some environmental responsibility and allow a longer payback on energy efficiency, hoping to get some goodwill for the effort. The few very ambitious companies are all public, driven either by policy directives or by enthusiasts in the administration, claiming energy efficiency will be profitable in the long run (unless they have other motives for undertaking such an ambitious approach, creating jobs for example).

Hence, some of the companies look almost only to the financials of an energy effiency investment whereas other companies take their responsibility and do “the right thing”. The emphasis they put on barriers vary accordingly. Energy efficiency improvements can be profitable as part of renovation, the Empire State Building being such an example. Adding a little extra to energy efficiency improvements may make sense economically when replacements are necessary anyway, and when there is a demand for the final product (it´s rather unlikely that failure to undertake energy efficiency measures would have left the ESB sitting vacant). However, it is deceiving to believe that the companies who do the major energy efficiency improvements do it because they alone have discovered how to make energy efficiency improvements pay for themselves. Where we are today, idealistic reasons are still a major driver and while some companies have managed to find a market niche, major market change require the financial incentives to be there as well. As a general business strategy, companies will continue to view energy efficiency as part of the overall investment decision, and as such it will not always triumph the competing alternatives. It looks like we will have to wait some more before strategies for saving money and saving the planet are perfectly aligned.

The Melting Pot of Dreams

I wonder what cityscapes in America will look like in thirty or fifty years.  Many cities across the country are seeing a resurgence of economic investment in the urban core and immediate growth rings.  Since the financial crisis of 2008 and the ensuing Great Recession evidence has begun to pop up supporting a more significant loss of home values in remote suburban and exurban communities versus closer-in communities. As obstacles to home-ownership rose following the Great Recession, developers began to invest heavily in mutli-family real estate assets that would meet the growing demand for rental property.  The absence of cheap and available money for home loans has helped recast the value proposition of housing in the United States in favor of denser living.

Card-carrying environmentalists of all stripes often find common ground promoting denser living within cities as a means to reduce the impact of humans on a landscape.  From a seat on a busy Tokyo subway car the shift away from a petroleum-based economy appears far closer than it does waiting in line to get on I-5 at rush-hour in Seattle.  But getting a culture to reconfigure an economy and settlement patterns is a tall order.  Even as politicians espouse the benefits of high-density living, mass-transit, walkable cityscapes and a connected culture, a wave of resistance can be heard from people promoting the value of more secluded and separate living.

People make housing decisions for a variety of reasons – money playing a big role.  Housing is also a significant player in an American’s identity.  People make broad and significant assumptions about who you are by where you live, what kind of home you live in and what you prioritize in the decision process. A lot of these decisions are imbedded in how we grew up, too.  I grew up in a single-family, detached home in a quiet neighborhood in the Midwest.  I have relocated, but think most seriously about spending a large part of my adult life in a similar dwelling in a similar neighborhood.  Many who grew up in a housing development in the suburbs feel good about recreating that for their own adulthood.  It is not until large macroeconomic challenges force a significant portion of the population to revisit these implicit assumptions about our dreams that denser living becomes palatable.  I wonder if there is point at which the scales tip and a critical mass of our society has been exposed to or is forced into a denser living situation.  Will this sudden influx of denser housing influence the next generation of young people to reconsider the car culture of America and dream of that 5th floor flat on the corner over the coffee shop instead of the home in the suburbs with the three-car garage?  Current housing price statistics make me think so.

Yesler Terrace: Retrofit or redevelop?

Seattle Housing Authority

Retrofitting urban infill buildings makes sense when you consider the economics and the amount of carbon produced from a new development. What I found interesting is the Leavitt article where Liz Dunn of Dunn & Hobbes talks about retrofitting low density rather than higher density redevelopment. I was curious how this strategy would apply to Yesler Terrace, a seventy year old low density public housing project that is planning high density redevelopment.

Liz Dunn’s argument for retrofitting low-density urban areas directly contradicts Edward Glaeser. He argues in favor of redevelopment of low density urban areas to high density for the purpose of keeping housing prices affordable in the most desirable cities. She counters by asking why neighborhoods should be torn down in desirable cities that already have established successful lower density neighborhoods? Success in this case is measured from a financial and social perspective. Does this logic include housing developments like Yesler Terrace?

Yesler Terrace is the oldest, public housing in the city of Seattle. It is centrally located on First Hill, which is adjacent to downtown, Harborview Medical Center, the International District, and Seattle University. Currently, Yesler has 561 units located on 30 acres with 18.7 units per acre. Unfortunately, existing conditions of Yesler are less than desirable, including home to vermin. In contrast, the proposed redevelopment would jump to 5,000 units. This increase jumps the units per acre to 166.67, assuming that redevelopment covers the same 30 acres.

There might be significant reasons for pushing for a Yesler Terrace redevelopment as opposed to a retrofit. It’s decrepit conditions may be so severe that, as chapter 5 of Carbon Efficient City suggests, “buildings so dilapidated suffer structurally making them some of the most difficult candidates for reuse or retrofit.” This building is probably at or past the “difficult” stage. Another point is that Yesler was built at the time of WWII as workforce housing. These buildings were typically erected quickly, cheaply, and presumably past it’s intended life span. Additionally, Yesler has received over $10 million in additional funding from HUD, making the cost for redevelopment more economical. Lastly, Yesler’s location probably has a higher land value due to its central location.

In conclusion, I am in favor of a general strategy of retrofitting low density instead of redevelopment of low density into high density. This strategy will work particularly well in lower density neighborhoods in desirable cities that are economically and socially successful. But, when buildings like Yesler Terrace are in such disrepair to be considered difficult candidates for reuse or retrofit, then redevelopment should be considered and have increased density to reflect the higher land value and character of the neighborhood.

Mean what we say


In The Atlantic‘s interview piece “Preservation Green Lab’s Liz Dunn on the Economics of Urban Grain” Liz Dunn remarks that “some of the most economically and socially successful neighborhoods are the ones with a stock of older, three- to six-story buildings.”  This was part of an argument advocating for”granular” retrofitting of neighborhoods in order to induce the amenities that attract new economy workers.

I acknowledge this is an interview and the format is more casual than an essay, but the rhetorical form of pointing out that two events are correlated and then implying causality is hurting advocacy for progressive issues.  We are not taken seriously if a reader can immediately come up with a counter-example.  I can imagine a lot of three and six-story neighborhoods in Chicago I wouldn’t be in after sunset, and a lot of attractive, active one and two-story neighborhoods in Los Angeles.  Of course, the causality may very well be reversed.  Did high-wage labor come to South Lake Union because of the active street scene or did high-wage labor make South Lake Union’s street scene active?  If we treat correlation as causation, both are valid.

In last week’s reading, a WSJ author claimed that “There are no examples of a nation that grew wealthy on expensive energy.”  Japan grew wealthy on expensive energy. West Germany grew wealthy on expensive energy.  Qatar grew wealthy on cheap energy; Libya grew poor.  Energy prices are a poor correlative to wealth (there’s a term for this even, the resource curse, but this too is just correlation) and a reader will dismiss the author’s entire argument based on this error.

Just because “granular” streetscapes worked in the past doesn’t mean they’ll work now.  And just because they work now doesn’t mean it’s because of their granularity.  We need — and our critics deserve — more than correlation.  We need a proposed mechanism that can be falsifiable.  So much rotten social policy of the 20th Century has been based on mistaking correlation for causation and it’s damaged the integrity of the field ever since.  Let’s take our time and get it right.

xkcd #552