Tuesday, April 08, 2008

The Green Mark-Up: Who pays for environmentally friendly design?

As I seem to be inundated with new information, advertisements or appeals to make buildings green-friendly, I find it more and more difficult to ignore the aspect of money in evaluating it all. Somehow I fail to suppress my sneaking suspicion that there's more than just simply wanting to use resources more efficiently or to limit a building's carbon footprint-- that in reality, the green movement in the industry of architecture is eyeing for potential new sources of fees and income. I admit it's a cynical posture, but in so many places one looks, money is an important consideration when practicing the green way of life, especially when it comes to who is expected to pay for the extra expenditure.

Recently the leaders of the large multi-national firm I work for decided to make a concerted effort to practice what they preach when it comes to promoting eco-friendly design. The first baby-step towards that end was to recycle more and dump less, which is no small matter given the massive amounts of paper architecture firms use to deliver services. In addition to buying new recycling waste bins for each desk, it was decided that we needed to abandon styrofoam cups in the breakroom and use recyclable paper cups instead. The first major delivery of paper cups, while smaller and more costly than the styrofoam cups, proved to be inadequately rigid only a few minutes after pouring coffee into them. Sturdier cups are now on their way, but it is already contemplated that reusable ceramic cups will be made available to everyone who never got one on the first day on the job. Who will pay for all of these mugs? Will my pay-raise be affected somehow?

During a sector-wide meeting, the vice president in charge responded to a question posed that inquired on what the potential for green design would be in future projects. Prospects for LEED-certified projects were very good, but not necessarily because developers had change of heart regarding the environment, nor were they completely converted to the mantra of reduced life-cycle costs. Rather, a LEED-certified building could be marketed to tenants or buyers for a higher price, thus enhancing a project's profitability. That means they are hoping to attract high-paying tenants, who in turn will need to lure in high-paying customers who live in high-rent districts and neighborhoods with high property values. Someone will have to pay for this more conscientious quality of construction and design, and initially, it won't be those who live in the lower- to middle-class sections of the city. Walmart's recent efforts notwithstanding, environmentally friendly retail design thrives mostly in an upscale market, where the producers will gladly mark up the price of their goods and consumers will gladly pony up additional dollars for it for reasons too intangible for economists to make sense out of. It's the "Whole-Foodization" of retail landscape, which is the result of, and is sustained by, the rising affluence of consumers and the emergence of a broader upperclass demographic that has been taking place in the last couple of decades.

Although many people involved won't proclaim it openly, there is more professional income to be made by all design-related consultants practicing green architecture, particularly when the client desires that their project is certified by an official body like the U.S. Green Building Council. As a LEED accredited professional myself, I'm required to become quite familiar with most of the materials and methods that will earn a building project points towards certification, with a substantial portion favoring the use of additional professional consultants. To best comply it is often advisable to retain landscape consultants for water irrigation and site drainage, commissioning consultants who analyze mechanical systems throughout the design and construction phases, environmental consultants for proper disposal of waste, and other specialists that promote proprietary technologies. Since a a large part of green design involves the proper selection of buiding systems, MEP consultants (mechanical, electrical and plumbing) will require more time to research products and methods to maximize building efficiency, which in turn drives up the fee charged to the architect, who must in turn demand a higher fee from the client in order to ensure green certification and cover additional costs born from green compliance.

With such numerous consultants usually needed to implement a complex green design, architects must be in charge of an ever more complicated web of coordination between all the specialists. This added level of coordination can be listed as an additional service to the client, and can be a new source of billable fees. Some architects find it more profitable to branch off as independent LEED consultants, who along with code consultants and accessibility consultants, seem to owe their existence from the exponential growth of regulation affecting all facets of building design. One can only imagine that as municipalities throughout the country implement a vast body of eco-friendly design, zoning, and building code guidelines, so will the number of specialists that thrive from these new rules. I wouldn't be all that surprised to see some architecture firms morphing into environmental guideline consultants, while other firms may see their fees shrink after having ceded more design responsibilies to independent environmental compliance consultants.

Architectural designers love green design not necessarily because they love nature, but rather because they don't have to defend the products they specifiy on purely economic terms. Instead they get to qualify them as part of the desired green solution. Since they don't bear the cost of their design, and since the client will only be willing to make a project green as long as they can defray the extra cost on someone else (either through a higher sell/rent price or a tax cut/subsidy), all can tap themselves on the back for having done the right thing for the planet.

Governing authorities naturally play a crucial role in adding a premium to the cost of living green. Watching the local news one evening, I happened to catch a report about how the city of Frisco (northern exurb of Dallas) has been enhancing their local building and zoning codes in order to require home builders to specify more green-friendly products and mechanical systems. The city officials claimed that the new regulations added an average of about 10 to 20 percent to the selling price of the finished home. What went unstated was that Frisco prides itself as a slightly more upscale exurb than the rest of the region, and is fully aware that the slightest green-friendly codes encourage the 'right' kind of people to move there by virtue of the fact that they are glad to pay extra. With Dallas itself having just adopted a more green-friendly code, I can only imagine that as the city makes gradual strides towards greater liveability, it will result in making it more exclusive as well. The link between good green design and higher property values seems always to have been evident, and it presents challenges to households who are in no position to pay the added property tax or rent price. To partake into a sophisticated green lifestyle requires some extra green in one's wallet, which real-estate developers are only too happy exploit. It is no coincidence that the first couple of environmentally sensitive residential subdivisions in Dallas consist of homes that start from a million dollars and up.

In our times it is obvious that environmental friendliness adds value to any commodity that embodies it, for as long as this quality is desireable. There is an added cost in producing such commodities (eg. organic produce), but it is matched and often surpassed by demand that is only possible in an affluent population. In a purely market context, buying green can be seen as a luxury. So long as there is the kind of high-end demand for green products and services persists, those who are outside of the potential consumer base are not negatively affected. Indeed, they benefit from an even greater variety of choices and eventually benefit from the economies of scale that make green products affordable to all. In this context, there an ironic conclusion arises: the kind of sustainable standard of living most people desire depends on sustaining wealth creation. It is no coincidence that the cleanest countries tend to be the wealthiest ones, even if they use the most energy and resources. They have minimized the negative externalities of resource consumption (eg. pollution) and have innovated dramatic ways in making the most efficient use of all natural resources. These wealthy countries also enforce environmental regulations the most, which can only follow economic prosperity and not the other way around.

As the practice of an environmentally friendly lifestyle depends on continued economic growth, it is important not to put the cart in front of the horse. Environmental regulations will only be as effective and popular as long as there are lots of people who are more than happy to pick up the tab. I fear the temptation is too great for governments and particular lobbies to enact legislation that rations resources and restricts free choice before there is the necessary cushion of prosperity to absorb radical changes. Europe is a good example of how too much environmental regulation compromises the economic potential of its people. Instead having a large upper class to adapt and popularise the choice of green-friendly lifestyle while leaving the middle to lower classes to enjoy cheap consumer prices, minor taxation and unencumbering regulation, all Europeans pay for their relatively green lifestyle. They pay in the form of higher fuel and utility prices, less disposable income and a increasingly tempered economic growth that relatively high levels of structural unemployment. It is not a matter of whether Europeans are more enlightened when it comes to enviromental consciousness, but whether they have known any other way of life outside one of static prosperity and ubiquitous state intervention and regulation.

I get the sense that Americans have been so used to being relatively free that any add0 regulation over their lives will be seen as unnecessary and oppressive. Their willingness to submit themselves to more pervasive regulation will depend on the credibility of arguments that portray a state of crisis so significant that economic growth and freedom are trivial. Global warming, which has become in recent years the rationale for crisis in order to expand controls on economic activity paradoxically suffers from the fact that its negative effects will be so far off in the future that there seems relatively little popular momentum to promptly engage it in the present. Especially because there are so many unknowns when trying to calculate what the climate will be like in 100 years (or what the weather will be in 24 hours), there is a reactionary tendency to construct as presumably certain an argument for impending crisis.

As in any call for reform and broad changes in the way things are done, there are those who stand to benefit and those who stand to lose even more. The group that belongs to former tends to be the already powerful and wealthy, since they possess the valuable resources to weather any change coming their way, and are often those who craft reforms that favor their interests and ideals over others. The losers tend to be the poor, those who wield no considerable political nor economic power and who are expected to conform to new rules and restrictions crafted by their generally wealthier counterparts. Whether it be the people who dwell in the neighborhoods who are highly vulnerable to high energy prices resulting from reforms designed to increase "efficiency", or the destitute masses who work in the heavily polluting industries in throughout the Third World whose meager upward mobility risks being harmed by a more equitable Kyoto treaty, the deep sense of crisis that captivates the wealthy classes or countries neglects the potentially adverse social effects of their thinking. Replacing fossil fuels by the dubious practice of turning food into fuel is music to the ears to some committed environmentalists and agriculture lobbies, but it makes them completely deaf to the overall rapid rise of food prices that harm the starving.

As a privileged consumer who sometimes gladly pays the premium for high quality goods, I cherish the freedom choice in either indulging myself or making efficiencies. I choose to be stingy on quite a few things, and in certain cases I wonder if I should be earning some brownie points for not using too high a carbon footprint relative to others. My stinginess should never be coerced on anyone else since it restricts the freedom of choice to my standards, which is only as unique as there are individuals on this planet. It is imperative to maintain limitless choices especially for those who rely on them to raise their own standard of living and discover self-fulfilling purpose.

Living the green lifestyle in my view is more virtuous when
it is an exercise of free choice. A market-driven shift to more environmentally friendly practices will result in better quality goods and services and ever greater efficiencies. By contrast, a state-driven program in enacting controls and restrictions on economic activity for the sake of sustainability will result in goods of compromised performance (e.g. mandating electric cars with heavy lead batteries, or bite-sized micro-cars in Europe) and lower output (e.g. organic farmings's lower yield per-acre vs. convential farming's much higher yield). Although I personally find much of the pro-ecological banter spouted by the privileged inhabitants that grace the magazine pages of Dwell as pretty smug, I have no problem in permitting them to practice what they preach--so long as it's their money and not mine (or yours).

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