Sustainable housing has wider environmental, social and wellbeing benefits which do not neatly fit into traditional economic considerations. Policy makers must adapt the way they develop minimum performance regulations if we are to move beyond the argument about capital costs and deliver a transition to low carbon housing.
Since the 1970s oil crises, energy efficiency has been on the agenda. Housing accounts for a sizeable chunk (10-25%) of greenhouse gas emissions in developed countries. Report after report suggests there is ample scope for cost-effective improvement through energy efficiency and renewable energy generation.
Yet, a commonly touted barrier to achieving these changes is the high cost of sustainable housing.1 Various vested interests claim that build and retrofit costs are high and savings are indeterminate. While the argument rages over cost-effectiveness, almost all sides seem to be missing the main game: There are a raft of other non-economic environmental, social and wellbeing benefits that make sustainable housing a more compelling and affordable policy response.
In this article we discuss the arguments for and against increasing sustainability standards in housing performance, and point out the often unacknowledged benefits of sustainable housing through a mixed methods evaluation of a low-carbon housing development in Victoria, Australia.2 Our analysis makes the case for combining traditional Cost Benefit Analysis (CBA) with other social science methods to reveal the true costs and benefits of sustainable housing.
Beyond Minimum Standards
Minimum standards based regulations specify building elements such as insulation levels, energy labelling of appliances, and the general specifications of building design and materials. Generally, building energy performance regulations focus on improving the building “skin” or thermal envelope, to reduce the energy required for heating and cooling. These regulations have seen increasing sustainability requirements over the past decade or two, but current minimum requirements are still significantly below the performance required to deliver low/zero energy housing.3 They have also been heavily criticised for the assumptions they make about how occupants use energy in the house and for not including technologies such as energy generation.
There are increasing examples of low/zero energy housing developments around the world such as Park Dale (Wakefield, UK)4 and Lochiel Park (Adelaide, Australia).5 These developments are demonstrating what is possible for new builds or retrofitting of existing dwellings. Moving from one off examples to mass production of low energy housing continues to be a significant challenge. In countries like Australia, the majority of new housing (and retrofits) is delivered to minimum regulatory requirements. Therefore, improving these regulations is critical to delivering improved sustainability across the residential sector.
Arguments for improving building regulations, and in turn sustainable housing outcomes, often come down to the claim of additional capital costs related to any additional “sustainability” requirements. Even in the face of increasing evidence that low energy housing does not necessarily cost more upfront, the perception that it does is holding back regulatory development in the face of housing affordability challenges around the world.
However, the argument that sustainable housing adds an unreasonable capital cost to housing fails to consider the through-life benefits that such housing provides. Research is increasingly demonstrating a range economic, social and environmental benefits associated with low energy housing. For example, households living in sustainable housing have lower (or eliminated) energy bills which help control living costs and reduce the risk of energy poverty – an increasingly important outcome in the context of rapid utility price increases occurring around the world.6 There is also increasing research highlighting improved health and wellbeing outcomes from low energy housing such as reduced stress from paying energy bills, reduced temperature related health issues, and improved mental wellbeing.7 These benefits have been found to be even greater for low-income or vulnerable households.8
The problem is that policy makers increasingly require hard monetised benefits in, say, health care savings, if sustainable housing beyond minimum standards are to be justified. Without a defined economic cost, and with contingent, long-term or flow-on effects, such benefits are not easily captured in traditional policy making evaluative tools such as CBA. As a result, policy analysis often wrongly concludes that zero carbon housing is unaffordable.
If these wider benefits can be properly considered the justification for zero carbon housing becomes clearer. Our three-year, mixed-method evaluation of a small sustainable housing development in regional Victoria, Australia demonstrates these benefits.[ms-protect-content id=”5662″]
Low-Carbon Housing Case Study
Commissioned by Victorian Department of Health and Human Services (a state government department in the southern part of Australia), our study of low-carbon housing used both quantitative and qualitative methods to evaluate housing policy, environmental performance and occupant wellbeing.
The Department received funding to build four two-bedroom, nine-star-rated (under the Australian National House Energy Rating Scheme – predicted heating and cooling energy load of 25 MJ/m2/year for climate zone 27), houses were built to maximise passive solar principles; achieving a performance level similar to the German Passivhaus standard. The design elements and technologies used included (partial) reverse brick-veneer construction, double-glazed windows, solar hot water, a 1.5-kilowatt solar photovoltaic system and a shared 5,000-litre rainwater tank. The houses were built without air conditioning but did have ceiling fans and gas heating in the living area.
We evaluated these low-energy houses against seven control houses built to Department standards, with a six-star NatHERS rating (predicted heating and cooling energy load of 108 MJ/m2/year). We also compared the results to a technical model of standard industry practice. We conducted a traditional cost-benefit analysis, technical performance analysis (utility consumption, internal temperature), three rounds of interviews with the householders during different seasons, and a personalised household sustainability assessment.
Through a traditional CBA lens, the low-energy housing was not financially viable. Even if the Department could capture the savings to the householders, payback was only achieved within 40 years for one of the four dwellings in a high-energy-price future. This was due to higher-than-expected capital costs for the sustainability initiatives.
However, this analysis did not include broader benefits. For example, resale value could be up to A$40,000 higher per unit. The technical performance analysis also identified significant benefits for the low-energy households illustrated through the qualitative research. Interviews with residents highlighted positive social outcomes supporting the technical data. The benefits they described included improved health and personal finances. For example, these householders said they had extra spending money due to low (or no) utility bills. One occupant told us:
Look, I haven’t paid any off my power bill in six months and I’m still in credit.
This meant they could buy children Christmas presents, avoid personal debt and lay-by, or go on a holiday. Householders described how this led to reduced stress and better mental health.
I do go clothes shopping on occasion now instead of thinking,“Oh God, I have to go and lay-by that.”
We found that these low-energy households:
• were A$1,000 a year better off because of reduced utility consumption (including solar feed-in tariff);
• purchased 45% less electricity than the control households (and 73% less than the standard industry practice);
• consumed 22% less water (30% less than the industry standard);
• had 40% less CO₂ environmental impact from power use (63% less than the industry standard); and
• were comfortable with the indoor temperature of their house for 10% more of the time (even without air conditioning) using adaptive thermal comfort criteria.
Extreme weather events magnified the comfort and health benefits. On a second consecutive day above 41 degrees Celsius, the nine-star houses were up to 16.6 degrees Celsius cooler (without air conditioning) compared to the Department’s standard six-star house (which had air conditioning). This meant householders could stay at home during heatwaves rather than needing to seek alternative accommodation, which happened sometimes for the control households. One low-energy occupant said:
…in summer I would sit down at the supermarket, you know, because it was cool … [Now] I can stay home and veg out.
The research demonstrated that the housing sector’s over-reliance on cost-benefit analysis may be overlooking important benefits (and detriments) of different housing arrangements. Combining qualitative and quantitative evaluation methods can help uncover a more detailed and complete picture of how housing affects people’s lives.
Our research also highlights how sustainable housing benefits extend beyond the environment. These flow-on effects can improve the living conditions of some of the most vulnerable members of society. This, in turn, potentially reduces pressure on health and other support systems and sectors.
Combining Sustainable and Affordable Housing
Our study is part of an emerging body of research that challenges the idea that sustainable housing is unaffordable. The evidence increasingly shows that sustainability and good design can improve affordability when non-monetised social, health and well-being benefits are considered, and when understandings of “affordability” move beyond capital costs.
Policy makers should be “valuing” sustainable housing in more innovative and pioneering ways. This does not necessarily mean we need to find a way to put an exact economic value on non-economic benefits within existing cost-benefit frameworks. Rather, as our case study demonstrates, other methods can be combined with traditional CBA approaches to improve evaluations of sustainable housing developments.
There is still a role for CBA to help inform policy development. However it is clear that relying solely on this method is failing to capture the extent of the benefits of low-energy housing. Policy makers must adapt the way they develop minimum performance regulations if we are to move beyond the argument about capital costs and deliver a transition to low carbon housing.
This article is based upon an article published by the authors in The Conversation on the 25th August 2016 which is available via http://bit.ly/2qUNHar[/ms-protect-content]
About the Authors
Trivess Moore is a Research Fellow at RMIT University’s Sustainable Building Innovation Lab (SBiLab) in the School of Property, Construction and Project Management. He has a strong research interest in socio-technical transitions to a low carbon urban future, with a focus on sustainable and liveable housing.
Ralph Horne is Professor of Geography and is Deputy Pro-Vice Chancellor, Research and Innovation for the College of Design and Social Context at RMIT University, and Director of the Cities Programme, the urban arm of the United Nations Global Compact.
Yolande Strengers is a Senior Research Fellow at the Centre for Urban Research, RMIT University, where she co-leads the Beyond Behaviour Change research program. Her research is grounded in sociology and geography; it seeks to understand socio-technical change, and possibilities for intervening in everyday life to achieve sustainability outcomes.
Cecily Maller is Vice-Chancellor’s Senior Research Fellow at RMIT University’s Centre for Urban Research. She is co-leader of the Beyond Behaviour Change Research Program and a lead researcher for the Clean Air and Urban Landscapes Hub funded by the Australian Government.