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A procedure for analyzing the full costs of development at the community level Moffatt, Sebastian 1996

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A PROCEDURE FOR A N A L Y Z I N G THE FULL COSTS OF DEVELOPMENT AT THE COMMUNITY LEVEL by SEBASTIAN MOFFATT B.E.S. The University of Waterloo, 1976 A THESIS SUBMITTED IN PARTIAL F U L F I L L M E N T OF T H E REQUIREMENTS FOR T H E D E G R E E O F MASTERS OF SCIENCE in THE FACULTY OF GRADUATE STUDIES Resource Management Science We accept this thesis as corLforming to the required standard T H E UNIVERSITY OF BRITISH C O L U M B I A August 1996 (c) Sebastian Moffatt, 1996 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of (j&5W/j(& /hA^M^AST ^CJ6/^C&. The University of British Columbia Vancouver, Canada Date OCT T . . / / 6 " / DE-6 (2/88) Abstract This thesis begins by outlining reasons why communities need to become much more involved with integrated resource planning (IRP) and full cost accounting. A review is conducted of the existing tools and methods available for use by those communities undertaking IRP. The implications of the review are that new tools are needed, that the tools should be designed to work together, that the models should be designed to provide varying levels of analytical detail, and that the models should allow the user to select a range of resource types, scales, and time periods. The thesis then provides a detailed look at full cost accounting methods. This includes an analysis of all the costs that need to be addressed, and the reasons why residential and commercial building developments are likely to include high external costs. A combination of approaches is suggested for expressing the full, life cycle cost values, including physical and monetary units. Multiple attribute analysis is described, and an argument is made that this approach is necessary to facilitate informed, creative decision making. A conceptual framework is presented for a new method of community IRP, referred to as the Building Block Method. This new method involves the use of archetyping, to cope with the complexity and quantity of data for the built environment. It also incorporates an end use model of the community components, and uses existing software to generate accurate modelling data on the performance of buildings, vehicles, and infrastructure archetypes. A partial application of the Building Block Method is presented, using a case study house in Surrey British Columbia. This example includes the use of software modelling tools to generate accurate and detailed data on all aspects of resource consumption over the life cycle of the house, at various physical scales. This detailed data is then used for full cost accounting. The total internal capital costs for the Base Case house are $106,348, excluding taxes of $35,000 and land costs of $200,000. Life cycle costs total $567,353, at a 4% discount rate over 50 years. The eight monetized external cost categories total $7,693 the first year, and $88,800 over the life time of the house. Life cycle resource flows for the Base Case house include 16,290 GJ of energy, 368,637 kg of materials, 570 tonnes of C02, and 658,000 litres fresh water. This attempt to conduct full cost accounting of housing services shows that it is a complicated process, that needs a clearly defined method, and an ability to cope with different resource flows and impacts, to alter spatial boundaries, to manage complex data, to incorporate transportation energy and to account for community health impacts. The framework and methods presented in this thesis appears to represent a worthwhile approach. ii Table of Contents ABSTRACT . . 7 . . . . . . . . , , - I T A B L E OF CONTENTS m LIST OF TABLES V LIST OF FIGURES VI ACKNOWLEDGEMENTS V H 1. INTRODUCTION 1 1.1 THE CONTEXT FOR PROMOTING COMMUNITY BASED RESOURCE PLANNING 2 1.2 ECONOMIC AND SOCIAL FORCES 3 1.2.1 Fast growing communities 3 1.2.2 Inadequately Maintained Infrastructure 4 1.2.3 Downloading of responsibilities to municipal and regional governments 4 1.2.4 Increased awareness of ecological and constraints 4 1.2.5 Physical resource scarcities 5 1.3 NEW EVIDENCE FOR INCREASED EFFICIENCY 5 1.4 COMBINING INCREASED EFFICIENCY WITH CONSTRAINT SATISFACTION 7 2. CHAPTER TWO EXISTING METHODS AND TOOLS 10 2.1 METHODS FOR ANALYZING IMPACTS OF DEVELOPMENT 10 2.1.1 Computer Applications Developed for Community Analysis 11 2.2 THE POTENTIAL FOR COMMUNITY IRP TOOLS 17 3. CHAPTER THREE FULL COST ACCOUNTING AND MULTI-ATTRIBUTE ANALYSIS19 3.1 COST AND VALUE 21 3.2 VALUATION 21 3.3 INTERNAL AND EXTERNAL COSTS 22 3.4 FINANCIAL SUBSIDIES AND SOCIAL COSTS 24 3.5 DISCOUNT RATES 25 3.6 ACCOUNTING FOR SUSTAIN ABILITY AS PART OF FULL COST ACCOUNTING 27 3.7 EXPRESSING AND SUMMARIZING COSTS 30 3.7.1 Establishing a credible price for 'benefits forgone' 30 3.7.2 Hedonic Pricing 31 3.7.3 Using Control or Prevention Costs as Substitutes 31 3.7.4 Contingent Valuation 33 3.8 EXPRESSING COSTS IN EFFECTIVE WAYS 33 3.9 EXPRESSING SUSTAIN ABILITY IN MEANINGFUL WAYS 35 3.9.1 Risk Assessment. 35 3.9.2 Sustainability Targets and Pass/Fail Tests 35 3.9.3 Shadow prices based on the costs of sustainability 36 3.9.4 Average Impacts and Average Allocations 37 4. CHAPTER FOUR A CONCEPTUAL FRAMEWORK FOR MODELLING THE RESOURCE IMPACTS OF HOUSING DEVELOPMENTS 39 4.1 WHAT GOODS AND SERVICES ARE INCLUDED IN THE DEFINITION OF HOUSING739 4.1.1 Including Access as part of the Housing Services 44 4.1.2 Expanding Spatial Limits to Include Housing Infrastructure 46 iii 4.1.3 Accounting for embodied inputs and outputs 4.2 IDENTIFYING IMPACTS OF C O N C E R N 4.2.1 Cause and Effect Chains 4.2.2 Natural Environment Stressors and Impacts 4.2.3 Sustainability Indicators 4.3 SUSTAINABILITY INDICATORS FOR SOCIAL AND CULTURAL IMPACTS... 4.3. J Adaptability 4.3.2 Self Reliance and Fair Trade.... 4.4 COMMUNITY H E A L T H 4.5 LIMITATIONS OF MODELLING RESOURCE IMPACTS OF DEVELOPMENTS 5. CHAPTER FIVE APPLICATION OF THE BUILDING B L O C K METHOD 5.1 THE PROCESS OF COMMUNITY-BASED RESOURCE PLANNING 5.1.1 Step I Inventory: J. 1.2 Step 2 Archetype: 5.7.5 Step 3 Model Resource Transformations 5.1.4 Step 4 Aggregate Results 5.1.5 Step 5 Forecast " 'what-if?" Scenarios 6. CHAPTER SIX CASE STUDY OF A SINGLE HOUSING ARCHETYPE 6.1 INTRODUCTION TO THE COST DATA SHEETS 6.2 DESCRIPTION OF BASE CASE HOUSE DESIGN FEATURES 6.3 OCCUPANT TRANSPORTATION AND ACCESS TO COMMUNITY SERVICES 6.4 COMPUTER MODEL AND RESOURCE DATA BASE 6.5 RESOURCE TRANSFORMATIONS FOR BASE CASE HOUSE 6.6 MATERIAL FLOWS 6.7 AIR EMISSIONS 6.8 WATER CONSUMPTION 6.9 LAND USE '. 6.10 INTERNAL COSTS OF BASE CASE HOUSE 7. CHAPTER SEVEN OVERVIEW OF EXTERNAL COSTS 7.1 DESCRIPTION OF EXTERNAL COSTS BY CATEGORY 8. CHAPTER EIGHT SUMMARY AND CONCLUSIONS 8.1 SUMMARY 8.2 INSIGHTS AND LESSONS 8.3 LIMITATIONS AND SECOND THOUGHTS 9. BIBLIOGRAPHY 10. APPENDIX I DATA BASE OF RESOURCE TRANSFORMATIONS FOR CASE STUDY 11. APPENDIX H COST DATA SHEETS FOR SELECTED EXTERNAL COSTS iv List of Tables Table 1 Examples of Resource Flow Problems, Policy Options and Two Kinds of Benefits 9 Table 2 Summary of Available Software Applications 12 Table 3 Potential Value of Full Cost Accounting of Developments at Different Levels 20 Table 4 Options for How to Express the Full Costs of Development 32 Table 5 A Definition of Housing Based Upon Services Provided 41 Table 6 Categories of Impact and Possible Groups of Concern 50 Table 7. Rating the Impact of Housing on Community Health 55 Table 8 Sample List of Building Energy Archetypes 60 Table 9 Examples of Specific Costs that Were Addressed in a Case Study 65 Table 10 Summary of Base Case House Construction 67 Table 11 Transportation of Case House Occupants Between the House and Essential Community Services 68 Table 12 Materials Use (kg) for Base Case House (Building & Site Only) 74 Table 13 Annual Contaminant Loading from Base Case House Site (grams/yr.) 76 Table 14 Fresh Water Use for Base Case House 77 Table 15 Summary of Costs for Base Case House 80 List of Figures Figure 1 SETAC's Life Cycle Assessment Technical Framework 11 Figure 2: Boundary Choices 43 Figure 3 Typical Breakdown of Energy Use at the Community Level 46 Figure 4 The Context of Community Integrated Resource Planning 58 Figure 5 Functional Components of a Community Model 62 Figure 6 Possible Architecture for a Software Tool Kit for Community Integrated Resource Planning 63 Figure 7 The Full Cost Accounting and Planning Process for the Base Case Housing Archetype 71 Figure 8 Energy Use for House and Infrastructure (GJ) 72 Figure 9 Energy Resources for Building and Site by Time Period (GJ) 73 Figure 10 Energy Resources Used by the Subdivision Irifrastructure (GJ) 73 Figure 11 Energy Resources Used by the Municipal Irifrastructure (GJ) 73 Figure 12 Energy-related C02 Generation for Building and Municipal and Subdivision Infrastructure by Time Period (tonnes) 75 Figure 13 Total Gas Emissions for Building and Irifrastructure, including Transportation (kg) 75 Figure 14 Annual Fresh Water Consumption by End Use for Base Case House (m3) 76 Figure 15 Land Usage on Site (m2) 77 Figure 16 Land Usage by House for Subdivision (m2) 77 Figure 17 Internal Capital Costs by Category (excl. transportation facilities) 78 Figure 18 Lot Servicing Costs Paid by Developer to Construction Sector ($) 78 Figure 19 Development Cost Charges Paid by Developer to Municipality ($)79 Figure 20 Allocation of Property Taxes Paid by Homeowner for First Year ($)79 vi Acknowledgements I am grateful for the financial assistance received from the CMHC University Scholarship for Graduate Studies. Thanks to my graduate committee for any and all help with preparation of this thesis, and especially my graduate advisor, Dr. Ray Cole. Valuable input was received from Dr. John Robinson, at the UBC Centre for Sustainable Development. Dr. Robinson reviewed course assignments and participated in workshops that contributed to the thesis preparation. Staff at my company, Sheltair Scientific Ltd., were helpful in commenting on the ideas as they evolved, and in assisting with some of the Excel formatting for easier access into worksheets used for costing. A number of projects undertaken by myself at Sheltair were especially helpful in creating the tools and data required for analysing resource flows and costs for this thesis. In particular I have benefited from research conducted on behalf of CMHC Research Division, and on behalf of the BC. Energy Council. Reference to specific projects can be found within the main body of the thesis. vii 1. Introduction This thesis is intended to contribute to the development of improved analytical tools for integrated resource planning (IRP) and full cost accounting at the community level. The objective has been to create a more robust and versatile method for analyzing the impacts of development proposals, based upon a model of end use technologies. The thesis argument has four parts: 1. communities need to become much more involved with integrated resource planning and full cost accounting; 2. new tools are needed for this task, since the existing tools are deficient; 3. the most promising approach is a new method, developed as part of this thesis, referred to as the Building Block Method; and, 4. it is feasible to develop and operationalize the Building Block Method using existing data bases, and computer applications. Although the above arguments are intended to apply to all kinds of community development - residential, commercial, institutional - many of the examples will be limited to the residential sector for reasons of convenience and clarity. The organization of the thesis paper roughly parallels the series of arguments listed above. The remainder of this introductory Chapter addresses reasons why communities are likely to benefit from becoming more involved with IRP and full cost accounting. Chapter 2 provides a summary overview of the existing tools and methods for use at the community level, and identifies their deficiencies in a general way. Chapter 3 provides some background on how IRP might be adapted to community development and decision-making, including a look at the basics of full cost accounting and multiple attribute analysis. Chapter 4 presents the conceptual framework for the Building Block Method. 1 Chapter 5 proposes how to apply the Building Block Method, using existing data sources and computer applications. Chapter 6 presents a partially-worked-out example of the Building Block Method, including full cost accounting of a typical new single family residence in Surrey, BC. Chapter 7 provides a summary of what has been achieved in this thesis, and looks at what parts of the work have proved less than satisfactory. 1.1 THE CONTEXT FOR PROMOTING COMMUNITY BASED RESOURCE PLANNING A growing body pf knowledge on ecological economics is creating strong and urgent arguments for changes to human consumption and living patterns (Daly, Costanza, Rees). Two key tenets of ecological economics provide an importance context for promoting community based resource planning procedures, such as those developed in this thesis. The first is that humankind is presently directing its economy and communities on an unsustainable course. The second is that humanity must soon learn to live within the carrying capacity of the self-reproducing ecosystems on the planet. The conclusion that current economic development is fundamentally impossible to maintain arises from a series of arguments, briefly listed below: • Resource transformations by the human economy will continue to increase. The key contributing factors are exponential population growth, and an increase in average levels of consumption globally, (especially as per capita incomes increase in some of the heavily populated third world countries). • Increased throughput for the human economy produces, according to the laws of thermodynamics, an increase in waste and pollution on the planet. • Because of the massive scale of the waste production now occurring, human activity is causing the deterioration of aquatic and terrestrial ecosystems, and interrupting the chemical balances and regulatory functions of the atmosphere (de Groot 1992). • The situation is unpredictable and ultimately calamitous. Unknown thresholds are exceeded on local and global scales, and the environmental surprises threaten to disrupt the basic life-support functions of the biosphere. • Ecological problems cannot be eliminated through economic growth or technological innovation, because it is impossible for humanity to use technology or capital to replace the "stock" of renewable systems which 2 the economy requires for its basic inputs. As these basic stocks are depleted, each year there will be less truly sustainable wealth to be shared. Without major changes, the renewable systems and the dependant human populations, will suffer from a death spiral. This gloomy conclusion is based on scientific principles, as opposed to economics. Ecological economists "see the economy not in isolation, but rather as an inextricably integrated, completely contained, and wholly dependent subsystem of the ecosphere" (Rees 1995). The basics of classical economics are therefore turned up side down, since economic growth and trade cannot, in themselves, generate wealth over the long term or in any absolute sense. This perspective has important implications for community development. To survive the next few decades, what will be needed is a major paradigm shift away from the prevailing doctrines of economic growth and globalization of markets. Instead, communities will need to become intimately familiar with their local carry capacities, and learn to trade in true surpluses, rather than irreplaceable stocks. The challenge will be to achieve improved standards of living, and economic vitality, within these prescribed limits. Community development proposals will need to be "sieved" through a go/no go evaluation based on the constraints of the natural environment, before consideration is given to optimising other social or economic goals (Jacobs 1991). Communities will need to become increasingly restructured to incorporate bio-regional planning and democratic decision-making (Hancock 1996). A key role for urban governments will be the identification and monitoring of sustainability indicators (Maclaren 1996). This new kind of planning places much greater requirements on the physical accounting systems, and on the forecasting ability of planners and developers. A more rigorous, and more adaptable method is needed to guide community development in a sustainable direction. 1.2 ECONOMIC AND SOCIAL FORCES A number of economic and social forces appear to be creating additional demands for more sophisticated resource planning tools at the community and neighbourhood level. 1.2.1 Fast growing communities Urban population explosions in developing nations threaten and exacerbate pollution and poverty. In the next ten years more people will live in urban areas than in rural areas, three-quarters of them in developing nations. A 3 United Nations report that profiled 100 cities concluded that urban governments have neither the money nor the management and technical skills to keep pace, and that unexpected increases in population have overwhelmed their master plans (Moffet 1996). The failure of traditional urban planning to cope with the impacts of growth emphasizes the need for new, robust, easy to use accounting tools. 1.2.2 Inadequately Maintained Infrastructure Many municipalities have not budgeted for infrastructure maintenance and upgrading, choosing instead to spend their capital budgets on higher profile projects or on meeting basic demands for other services (Tate 1992). In Canada, the federal government recently initiated a 5 billion dollar infrastructure program to assist municipalities with the high costs of road maintenance and water and sewer upgrades. As budgets become tighter in the future, municipalities will be looking for creative ways to manage these costs. 1.2.3 Downloading of responsibilities to municipal and regional governments As federal and provincial governments take measures to reduce budgets and pay down debt, they are increasingly transferring planning and management responsibilities to local government. Recently this has included transfer of responsibilities for some types of environmental protection, analysis of development cost charges, solid waste management, and long range growth planning. Few municipalities have the skills and capability to deal with the new reporting and accounting functions. 1.2.4 Increased awareness of ecological and constraints Awareness is increasing amongst planners that communities are reaching or exceeding the assimilative capacity of the renewable environment. The evidence is sometimes obvious - poor air quality, contaminated soils, surface waters polluted by sewage, run-off and industrial effluents, and so on. This has lead to Official Community Plans (OCPs) which commonly cite "Sustainable Development" as a key goal for future plans in the community, and which include actions to protect habitat, improve air quality, and reduce energy consumption. As yet there has been almost no attempt to operationalize such goals and policies through hard analysis of development impacts. Planners, are becoming acutely aware of the need to translate the 'fluffy' language of the OCPs into clear target and guidelines, and to incorporate such information into the new area plans and regulations. Yet how do planners identify priorities among the many potential impacts? And 4 if the changes are proposed to minimize impacts, at costs which appear high to the community leaders, where do planners obtain hard numbers for a benefit cost analysis? 1.2.5 Physical resource scarcities As the standard of living increases around the world, so does per capita resource consumption. In urban areas the problems associated with increased consumption are magnified, as seen in the loss of valuable agricultural and natural lands as they are converted to urban uses, shortages of potable water, and brown-outs during peak energy demand periods. Currently, decision makers lack the tools to evaluate which forms of urban development can actually reduce resource consumption. Nor is there a way to forecast resource consumption over time so as to determine, for particular development scenarios and building technologies, just when capacities are likely to be exceeded. When will the reservoirs run dry? When will the land fill be filled? When will the gas pipes reach capacity? 1.3 NEW EVIDENCE FOR INCREASED EFFICIENCY The arguments briefly listed above help to explain the growing need for more community-based planning and resource analysis. To fully appreciate the value of such an approach, however, it is also necessary to look at whether such a development might lead to significant benefits in resource conservation^ that could not otherwise be achieved. In Europe, which is highly urbanized, countries such as Germany and Denmark have found that if energy planning includes the community, in addition to the more conventional groups such as utilities and government departments, the potential for integration of supply and demand side measures, and for integration between sectors, is greatly increased.(Jank, 1995). This argument has been extensively examined as part of an earlier research paper (Moffatt 1993). Only the kernel of the argument will be repeated here. The basic argument is that the process of developing resource management strategies at the community level opens up new and significant opportunities for increased resource/energy efficiency, at lower social costs. The community of Surrey BC was analysed from both a 'business-as-usual' perspective, and from a perspective in which integrated resource management occurs at the community level. By including investments at the community level, it became possible to reduce total energy consumption within the building sector by more than 50% over a 20 year period. An even 5 greater reduction was predicted in social costs of air emissions, by converting to energy sources with lower rates of greenhouse gas and NOx generation. While Surrey serves to highlight the potential for community IRP, it also highlights the barriers. The community of Surrey was chosen as a case study for a number of reasons: • it is Canada's fastest growing community, which helps to emphasize the effects of public policy and the potential for alternatives, • it is a community that exemplifies suburban sprawl, which helps to underline problems of waste and inefficiency, and, • it has a new Official Community Plan, which commits the community to a sustainable development path. Basically Surrey represents a community facing extremely difficult choices about how to manage growth and development. In this context it is noteworthy that current council and planning staff are not particularly sympathetic to a more comprehensive, long-term planning agenda. Discussion with staff at Surrey1 suggest that, similar to many such communities, they presently lack the skills, knowledge, mandate and motivation to undertake effective resource planning. (Moffatt 1993, Wichern 1991). They are also feeling under attack by the development community who equate such planning with higher costs and further delays. Integrated resource planning is a process that may assist communities in coping with resource planning for alternative development scenarios. Over the last five years IRP has become well accepted as a method for use by utilities involved in resource acquisition. It is now official policy for BC Hydro and BC Gas, for example, to satisfy new energy demands by means of an IRP process. IRP has three operating principles (BC Gas 1992). The value of community-based resource planning is best understood by examining how each of these three principles benefits from a community-based perspective. 1. Consider all known resources for providing services, including both the supply and demand sides. By viewing resource options at the community level, new possibilities emerge for resource efficiency. Consider the possibility of district heat and power, a community-based energy supply system that is common in many European cities and that delivers resources that cannot easily be exploited by a building developer in isolation, or by a provincial utility (Bond 1993, MacRae 1992). In the case of Surrey a 20 MW cogeneration facility, located in the high density Surrey Town Centre, would offer tremendous economic and social benefits for developers, 1 Discussions occurred as part of in person interviews with the director of planning and the director of permits and engineering 6 building owners, and community residents alike. Employing appropriate building technologies at the community level can create still other unique opportunities for resource efficiency and integration within the building sector. For Surrey, this could mean such measures as airtightness standards and ground source heat pumps for single family dwellings, and minimum ratings for multiple unit residential and office buildings, using such programs as C2000 and BEPAC (Cole, et al 1993). 2. Incorporate where possible the external costs and benefits, including environmental impacts, social equity, economic development, and risk. The external costs are also likely to vary at the community level, since every community has a unique blend of resource constraints and opportunities. For example Surrey is one of two 'air sheds' in Canada that exceed the standards for ground level ozone (smog). (GVRD 1994) This existing air quality problem imposes a much higher social cost on the use of fossil fuels by buildings and vehicles,in Surrey during summertime, than would be the case for other communities in BC. Another example is the constraint on Surrey's power availability. Very little additional capacity exists on the power transmission lines into the lower Fraser Valley. (BC Hydro 1995) Further growth in demand for electricity and power may incur significant additional costs in comparison to other communities, since the impacts include either new transmission corridors, or additional thermal generating plants in the lower mainland. 3. Involve the public and other stakeholders before the key decisions are made. Public involvement is an integral part of the IRP process. It is at the community level where the most political activism takes place, and where businesses and residents are most likely to play a significant and positive role in forging and managing change. "Sustainability planning must be community-led and consensus-based because the central issue is will, not expertise... We can't protect ecosystems, let alone restore them, unless ways and means can be found to integrate the work of all communities with the region". (Doering 1994) 1.4 COMBINING INCREASED EFFICIENCY WITH CONSTRAINT SATISFACTION Part of the value of full cost accounting and IRP is the extra benefits that can occur as a community faces resource constraints. In the past, much of the value given to more detailed planning exercises has focused on the Benefit 7 Cost equations, in which the intent is to achieve the greatest utility at the lowest cost, (van Pelt 1993) This is an "optimization" approach that looks for maximum efficiency. As resource constraints and lifestyle are becoming an increasing issue for community planning, the potential arises for using the analytical work to ensure that community development does not exceed thresholds that are intended to function as fixed targets or caps. Table 1 illustrates how planning and analysis of resource flow within a community can produce both kinds of benefits: efficiency and constraint satisfaction. The conclusion to be drawn from this inquiry is that community level planning offers some unique advantages, and is a necessary complement to resource planning at the building, region or provincial levels. 8 Table 1 Examples of Resource Flow Problems, Policy Options and Two Kinds of Benefits Resource Problems Policy Option Example Increased Efficiency from IRP Benefits Constraint to be Addressed wood waste accumulation • Cogeneration System • district heat provides lower cost services to nearby buildings and saw mill reduces tipping fees • peak demand for energy stays within capacity of electricity or gas utility household organic waste collection • compost • market gardens become more productive • time to landfill capacity is lengthened grey water disposal • household collection system • landscape irrigation is possible at lower cost • community lives with existing water reservoir capacity land use constraints • increased density • reduced transportation needs, reduced material needs, and reduced infrastructure costs • growth is accommodated within areas appropriate for building sites community air quality • demand management of transportation and building energy use so as to reduce products of combustion • lower social and environmental costs • community air shed conforms to local air quality standards community water quality/quantity • demand management of residential and commercial water use to reduce consumption, and improve quality issues • Less money spent on expanding infrastructure • aquifer is used at sustainable rates electricity/gas supply limitation • demand management of transportation, residential and commercial energy use • lowered social and environmental costs • greenhouse gas emissions are stabilized at 1990.1evels transportation congestion • demand management of transportation • reduced health care costs • no tax increases 9 2. Chapter Two Existing Methods and Tools 2.1 METHODS FOR ANALYZING IMPACTS OF DEVELOPMENT Probably the most sophisticated life cycle impact assessment methods are those developed by the Society of Environmental Toxicology and Chemistry (SETAC). These methods have been documented in a series of manuals, and have become an informal standard used for life cycle assessments (LCA) world wide. LCA methods have been used most extensively by the packaging and pharmaceutical industries to compare the overall environmental costs of different industrial processes and consumer products. Although buildings and developments are many orders of magnitude more complex than packaging or drug store products, in principle the same , methods can be applied. SET AC has developed a three step technical framework for life cycle assessment that is illustrated11 in Figure 1. The inventory stage refers to data collection and categorization. Improvement assessment refers to the process of analyzing the physical inputs and outputs of the options or alternatives under study. Impact assessment is a three step process, including: 1. classification - aggregating data from the inventory into stressor categories 2. characterization - using tools to estimate the magnitude of the impact on ecological health, human health or resource depletion, and 3. valuation - assigning relative values to different impacts and integrating across impact categories. Within the three steps of the method they have added a goal definition and scoping process. The goal definition serves to clarify the purpose and expected products. The scoping helps to select appropriate time and spatial boundaries, and clarify the model's boundary conditions and assumptions. The scoping exercise is especially important when conducting LCA on buildings and community development. The extremely long life time of buildings, the large number of materials, components and assemblies, and the high rates of replacement within the life cycle all create difficulties with direct application of the SETAC LCA method. u Figure adapted from A Conceptual Framework for Life-Cycle Impact Assessment, SETAC, Pensacola, Florida 32501,1993 10 Inventory Figure 1 SETAC's Life Cycle Assessment Technical Framework 2.1.1 Computer Applications Developed for Community Analysis A number of detailed computer model have been developed for use by SET AC members in conducting LCA on simple consumer products like shampoo or diapers. However there has been very little application of LCA to projects dealing with buildings or developments. Data inventories, and impact assessments, have generally been restricted to unusual building developments, like eco-communities, or to development proposals for ecologically sensitive areas. Consequently, community planners and engineers have few tools to assist with general forecasting of resource consumption or standardized evaluations of the costs of development. Table 2 provides a summary of the computer applications relevant to buildings, reviewed during the preparation of this thesis. Virtually all tools are specific to one resource category only; most look either at the buildings or the infrastructure, not both. Although several projects are now underway to integrate a number of different building modelling programs so they can share files and operate sequentially on the same building design, none of these tools is yet available. Even when available, the tools do not offer the option of aggregating the results of such micro-level models to forecast the resource needs of the entire building stock within a development project, neighbourhood or community. It appears that the least understood benefit of computer simulations is the opportunity to aggregate results at the level of the neighbourhood and 11 community. The same assumptions that guide design at the site level, can provide a consistent, accurate and detailed basis for projecting resource consumption for a utility, local government, or region. Policy decisions at these larger scales can influence greatly the design decisions, and thus the forecasting of design changes becomes a useful basis for informed decision making. The greatest number of computer applications have been focused on energy consumption, and this overview will only mention the highlights in this resource category. Most energy modelling tools deal exclusively with operating energy. If they aggregate results from individual buildings or technologies, there is no accounting trail that allows for changes in the end uses to reflect changes in the totals. This makes them essentially black boxes that deliver answers in mysterious ways, and become a convenient if misleading reference for economists or utility planners. A number of very sophisticated computer applications are available for demand side management (DSM) of energy use by utility managers1". Although these tools permit forecasting energy use for different scenarios, they are very specific to DSM program design. No mechanism exists to facilitate use by community planners, developers or others in the buildings sector. Solid waste is the other extreme to energy, with apparently no computer aided planning applications available for use by communities or regionsiv. Table 2 Summary of Available Software Applications Resource Category Building Level Applications Infrastructure Level Applications Energy • HOT 2000 • INDEX or Placed • DOE 2.1 • REEP • Building Design • Greenhouse Gas Model Advisor for Ottawa (Torrie-• Athena Smith) • OPTIMIZE Water • Watersave • WaterPlan m Examples of powerful software tools for energy utilities include DEMAND SIDE STRATEGIST, and COMPASS. i v Software is currently under development in Ontario for waste management system implementation, management and reporting. However it is being designed for use at the business level only. 12 Resource Category Building Level Applications Infrastructure Level Applications • LICWATER Materials and Solid Waste (no product identified) nothing available Land Use (no product identified) • GIS and Computer Assisted Mapping (MAP INFO) Some of the most relevant of the computer tools now under development, or in use at the building or community level, are briefly described below. M A R K A L is an energy modelling program developed mainly in Switzerland, and funded by the International Energy Agency. Initially, MARKAL modelled national energy trends. Recently, however, the model has been modified to permit energy modelling at the regional and community levels. It is currently undergoing changes to permit life cycle costings The model uses a hybrid approach, including econometric routines to predict consumption and technology change as a function of price, combined with end use modelling capabilities. The strength of MARKAL is it has been used for approximately 15 years, and has been verified over years of application. As a result, MARKAL is well known and has become the standard energy modelling tool among IEA countries. However, MARKAL is an extremely complex tool (expert system) that has been used only by a few academics in Canada. It does not model resource flows other than operating energy. I S T U M is an computer based economic model which predicts energy demand in the residential, commercial and industrial sectors at a regional or national level. It is a publicly supported program developed at Simon Fraser University (SFU). It is not currently being used by anyone other than academics, although it has been used by the Federal government to estimate greenhouse gas emissions from industry. ISTUM is available to interested users at no charge. ISTUM simulates how much energy is consumed by each end use application, and aggregates to obtain total energy needs. The strength of ISTUM is its ability to model industrial energy consumption accurately, including the impacts of demand and cost factors, producing v Personal discussions with Sweden's energy department staff indicate a contract is being let results that have been well verified. However, ISTUM does not model resource flows other than operating energy, and it lacks a user friendly interface. REEP is one of a number of programs developed by the US Army Corps of Engineers, who employ a team of engineers to revamp the approach used to renovate and redesign army bases. The software and method will be used to rationalize the design for over 2 billion dollars of rebuilding and renovation over the next 3 yearsvi. BETA versions of REEP are now available, and include a detailed process for evaluating benefits and costs of a long pick list of building retrofits. Ultimately REEP is intended to become a component within a software toolkit that can address a number of resource at the end use level. The army is intending to knit together the results of models on their different building types, to create an aggregate resource assessment for each base. They will then change the layout, orientation and density of the housing, and the building technology and design, in an effort to minimize life cycle cost, and to preserve environmental amenities and ecological resources. City of Ottawa, with assistance from Environment Canada, has employed Torrie Smith and Associates to conduct a thorough inventory of greenhouse gas emissions, and to explore different development scenarios. The first phase of this work is now completed as a report (Torrie Smith 1995), and includes the creation of a data base for all energy uses in the city. This has produced a comprehensive end use assessment of GHG emissions at the community level. Although the program has reportedly been requested by other groups, including an international agency, it is not currently available for third party applications™. LEP is a term used by Reinhard Jank, of KEA, Germany, to describe a major European demonstration of Advanced Local Energy Planning (LEP), now underway within the International Energy Agency (IEA) Annex 33. The LEP demonstration will include at least three large European cities, and involves the application of MARKAL. A tool kit of other software will be integrated with MARKAL into an expert system with compatible databases, and used to develop, analyze and evaluate local energy plans. So far the cities are located in Germany, Sweden and Italy.vUi. The purpose of the demonstration is to promote the use of complex planning tools at the local level, and thereby enhance the potential for integrated resource planning, town planning, and V 1 Some of this information is based upon personal discussion with US Army project manager Donald Fournier. v u This information is based upon personal discussions with Ralph Torrie of Torrie Smith. V U 1 Canada is communicating with the Annex through Mike Wiggins at CANMET, NRCan. 14 environmental protection. Reinhard's research team will be tutoring the town planners, and applying MARKAL over a period of three years. INDEX, is a proprietary software package designed to assist in community planning for energy environmental and economic sustainability. It was developed by a planning firm, Criterion, with support from the U.S. Department of Energy (DOE). The target audience includes governments, utilities, developers and businesses. INDEX applications include integrated resource planning, metropolitan growth planning, national land-use and transportation planning, and neighbourhood and site development and design. Program output includes CAD/GIS based maps of results for study area, energy demands and costs for building, transportation and infrastructure under baseline conditions and resource efficient scenarios, and the air pollution emissions from buildings, transportation and infrastructure energy use. INDEX is probably the most sophisticated computer tool in North America for community based energy planning. However it deals only with energy in any detail, and is not available for use by anyone other than Criterion's consulting staff. A T H E N A is the result of a three-year research program funded primarily by Natural Resources Canada and undertaken by a team of architects, environmentalists, economists, and engineers. Athena focuses on life cycle assessment, and is attempting to become a leading edge environmental assessment tool for the building design and construction community. The tool is currently under development, and is only capable of handling the structural elements of a building. Ultimately the developers of A T H E N A hope that a building designer will be able to use the software to evaluate the life cycle environmental effects of a whole building or component parts, and experiment with alternative designs that produce the best environmental performance while still meeting a clienf s cost, space and other requirements. Product manufacturers could also become potential users, assessing the environmental implications of alternative technologies or production processes. A prototype version of ATHENA is planned for release in 1996. B D A (Building Design Advisor) is a prototype building technologies program that supports the integration of multiple building models and databases. BDA is being developed at Lawrence Berkeley Labs, University of California. Designers should be able to use the BDA software to manage data and compare multiple design solutions, as well as building case studies. In terms of data management, BDA will contain default values that can be reviewed and changed by the user. BDA also is planned to have a graphical interface to allow designers to easily specify building geometry. The initial release of this program will be linked to PowerDOE, a new version of DOE-2. 15 The current development of BDA is supported by Pacific Gas and Electric and Southern California Edison through the California Institute for Energy Efficiency and the U.S. DOE. Watersave is a residential water demand and water quality model developed for CMHC by the Technical University of Nova Scotia. The model is not yet publicly available1". If s primary purpose is to permit designers to evaluate the possibilities for grey water recycling, and for major system options that reduce potable water consumption. It includes a rain water cistern model. The model has been designed to be used to analyze a system at 4 levels: • average daily water balance, including hot and cold, recycled, treated, discharged. Water is categorized as untreated, and treated light grey, dark grey, and black. • weekly water balance, in hourly increments, accounting for peaks in demand by fixture and effects of storage; • daily water quality balance; and • daily energy balance related to water consumption and treatment (this model is not yet completed). LICWATER is a CAD based software application designed in Denmark to assist engineers in building a model of a community or subdivision water system. According to product documentation, LICWATER's models can be simulated and presented in tables and graphs. Data required to construct a model includes the pipe connections and dimensions, the distributions and magnitudes of system demands, and details of network elements such as reservoirs, pumping station and control valves. The model is intended to be used for capacity analysis, operational analysis, and cost analysis. It is being marketed internationally. WaterPlan is a software product developed by the State of California Water Resources that is designed to assist communities in the identification and implementation of cost effective water management programs. Version 1.0 has been available since 1989. A new version was released in the spring of 1996. Essentially this is a benefit cost method for municipal water utilities and regional governments. The program design is similar to DSM software for electrical utilities in that it allows the program manager to adopt specific measures and estimate penetration rates and impacts on the total water supply and cost. The software has been used by a number of California communities. •* This summary is based on project reports supplied by the C M H C project manager, Peter Russell. 16 2.2 THE POTENTIAL FOR COMMUNITY IRP TOOLS A review of existing tools and methods has demonstrated that current applications are not capable of dealing with issues that span resource categories, and that impact both building and community design. None of the tools now available have adopted robust LCA methods and scoping procedures, such as those promoted by SET AC. Most are not end use models. Those that focus on end use technologies do not take advantage of the many excellent, well validated micro-level tools for modelling building performance. Ideally a tool kit for IRP at the community level would accommodate all of the above mentioned concerns, by including multiple resources, end use models, and lifecycle analysis. The end product would be a "toolkit", powerful enough to provide accurate modelling at the end use level, and yet flexible enough to permit easy aggregation of results by scenario planners. Based on this analysis, and the current pace of development, it is likely that the emergence of such resource management tool-kits will occur over the next decade or two. Two issues in particular are likely to be critical in determining the success of the tool-kits in the near future. The first is the strength of the conceptual framework that underlies the model. Is it possible to create a resource inventory and scenario building model that can accommodate the differences between buildings and communities, and the changing concerns of planners? What are the limitations? These questions will be addressed in later chapters. The second issue is how to create a simple, easy-to-use modelling program that is also comprehensive and flexible. Is it reasonable to assume that any planner is capable of entering or assessing data on so many different levels, and in a number of disciplines? How can the vast amounts of useful information that already exist within the national census database, GIS surveys, property assessment and utility records, and municipal offices be integrated with buildings and infrastructure modelling and scenario planning? These questions will not be addressed within this thesis, but point to a need for substantial new research and creative thought. Once a toolkit is developed that functions well, and satisfies all these concerns, it is possible to imagine an evolving ability for scenario development, as users benefit from past experience by others. For example, the development of a database on a new type of energy generator could be stored in the model, as a library file, and used by other planners to build new community scenarios. Each application of the tool-kit provides additional 17 information that can be shared with future users. Over time the toolkit may evolve into a learning tool, that formulates scenarios automatically to educate the user. The real strengths and limitations of such software are so difficult to predict that the ultimate value of the toolkit is largely an unknown at present. 18 3. Chapter Three Fu l l Cost Accounting and Mul t i -Attribute Analysis Full cost accounting is a technical analysis of all the costs associated with a particular economic activity. Full costs are different than market prices because they include costs which, for one reason or another, have not been captured by the "marketplace". For example, a particular housing development may - by virtue of its design - increase traffic congestion, pollute nearby waterways, spoil views and reduce the amount of affordable housing available to young families. Although all of these impacts represent real costs to various groups in society, the home buyer or tenant may not be required to provide any compensation in the price paid for the housing service. A method for calculating the full costs of housing should help to improve the accuracy of accounting systems and guide policy formation and decision-making. (Hull, 1993) This is true at various levels; from the design of individual houses, to housing developments and communities, and to the entire building sector, nationally or globally. Some examples of how full cost accounting can be of value at each of these levels are presented in Table 3. The structure of the table is based on a presentation by Brian Hull (Hull, 1993) while the examples are drawn from this thesis research. Increased concern over the impacts of housing on the health of communities and the sustainability of the natural resource base has lately focused more attention on the full costs of development The building sector in Canada represents about 20% of economic activity and an even greater share of natural resource consumption. Sustainable development is probably impossible if decisions about building technologies are based primarily on market prices that ignore significant costs to society and to the environment. At present, the full costs of buildings are not well-documented. At least three factors have contributed to this situation: 1. full cost accounting is a technique that is not well-defined or understood, (it is difficult to apply full cost accounting in the residential sector when the same accounting method has not been accepted in other sectors); 2. much of the data needed to assess costs has not been collected; and, 3. houses and commercial buildings, combined with municipal infrastructure, are especially complicated and diverse products -probably the most complex consumer durable in the marketplace. 19 Any analysis of impacts associated with housing is further complicated by the relatively long product life times, and by the tendency of housing services to overlap onto many other areas of economic activity. It is hoped that this thesis research will help to clarify and simplify the techniques required for full cost accounting of housing and other buildings, while providing some useful case study data on some of the costs that have been overlooked to date. Table 3 Potential Value of Full Cost Accounting of Developments at Different Levels Level Decision Making Accounting Global National & Regional Municipal Development & Sub-division Building Full costs enable global macroeconomics pokcy-making to address world environmental policies like CFC emission quotas and permits; full costs also allow decision makers to compare options through simulating the impact of alternative types and levels of intervention. Full costs can be used to estimate what level of fees and charges might be needed to provide housing services that satisfy ecological constraints. Development of locally sensitive codes and regulations for buildings and municipal services; development of rating systems and financing programs that reflect full costs of housing. Improved benefit/cost estimates & better trade-offs & negotiations with community representatives and municipal planners. Comparing different technologies and designs; Choosing appropriate economic instruments for regulating the housing marketplace. Full costs can enhance global income accounts, including satellite accounts for the environment. Such accounts are still in the development phase. Developing global accounts for the residential and commercial building sector would help to guide research and international activities. Full costs could help to maintain national accounts through Statistics Canada and monitoring the impacts of housing at the community level. Stats Can is already tracking air emissions by product, for example. Evaluating the degree to which municipal 'green' community goals have been achieved. Evaluating the firm's commitment towards providing value to the entire community. Assessing the most benign approach to delivering housing services, e.g., high density vs. medium density housing. 20 3.1 COST A N D VALUE Although in common parlance, the terms "price" and "cost" are often used interchangeably, in formal economics cost is defined as "benefits foregone". Whereas price is always expressed in monetary terms, costs can involve the loss of money, time, health and other resources. Costs can also indicate the loss of an opportunity to enjoy a benefit. The value ascribed to such losses is assumed to be equal to their value in their best alternative use. For example: • if the amount of land used by housing was somehow reduced, what would be the maximum benefits received from using this land in another fashion - as farm land or park land? • if less energy was needed to heat a house, how valuable would this energy be to other sectors of our economy or to other communities or to other generations? • if a house was constructed from materials purchased from clean, low polluting industries, how much would society benefit from the cleaner air, or from using this unpolluted air to help disperse pollutants from alternative economic activity? The concept of costs depends then, on benefits forgone; there is no separate measure of cost that is distinct from valuation of benefits. For this reason, the measurement of costs that are not fully reflected in the market price will typically require a definition of all the benefits or goods that are lost as a result of providing housing services. The concept of sustainable development extends the analysis of benefits to include the perspective of future generations. The difficulty, of course, in measuring future benefits is trying to imagine just how many benefits might be lost when so much about the context of resource use is dependant on changing technology and values. 3.2 V A L U A T I O N Valuation refers to the process of translating costs into terms that can be more easily understood. Usually this means providing a clearer or more detailed description of how the cost represents a lost benefit to a specific group. Most valuation techniques are ways to combine a number of related costs into a single term. For example, the air pollution caused by housing may include a range of different emissions (NOx, C02, CH4) from a range of different technologies (home heating, transportation, sewage treatment). This pollution can be valued in terms of: 21 • the total quantity of air consumed by diluting these emissions to acceptable concentrations, (e.g., cubic metres of fresh air), or • the natural resources that must be allocated to assimilate the emissions, (e.g., Ha of arable land), or • the economic losses experienced by people who suffer from associated respiratory problems, (1996 $ C A N ) , and so on. In each case the different air emissions have been combined and differently valued. The choice of valuation method depends on the interests and influence of the decision-makers. Sometimes, the best approach is to value the same cost in different ways, so important information is not lost to the decision-makers. 3.3 INTERNAL A N D EXTERNAL COSTS Internal costs are the costs borne by the user of the service. In the case of housing these include the usual household payments for the land and building (principle, interest, taxes, insurance, energy, and so on), the cost of furnishings and maintenance, and the value of any lost benefits not already included in the accounting, such as lost personal time and occupant health and safety risks. External costs of housing are costs borne by third parties - individuals, groups or businesses that experience a loss when housing services are provided and do not receive satisfactory compensation. For example, if a housing development creates run-off that pollutes a nearby stream, costs may be borne by a range of third parties: • fishing companies may suffer lost revenue because the pollution has damaged fish nursery habitat; • downstream municipalities may need to increase their investments in monitoring water quality and in treating water to make it safe for drinking; or • neighbouring developments may experience a reduction in recreational opportunities and a loss in property values because the waterway is unsafe for swimming and is less attractive. Externalities such as these are an integral part of housing costs, yet they are seldom captured in the price of housing. Externalities are generally recognised as a marketplace failure. In an ideal marketplace, scarce resources (like clean water and affordable homes) are allocated efficiently between competing uses because those who stand to benefit most will pay the most If resources are undervalued because of 22 externalities, we end up with too much of one resource and too little of another, as well as an unfair distribution of costs and benefits. For example, instead of polluting the stream, the housing development could have been designed with a storm water management system - dry ponds, managed wet lands, and so on. The added cost of storm water management may be much less than the benefits foregone by water pollution. However, as long as the price of housing does not include such costs, the result will be polluted water and a less efficient, less equitable society. Only when the price signal reflects true costs, is there a possibility that the self-interested actions of consumers will result in an optimal sharing of scarce resources. The most common explanation for the continuation of housing externalities is the presence of transaction costs. A transaction cost is any obstacle to market exchange. This might include the cost of writing up a contract, the cost of finding people who have been affected, the uncertainty about the distribution of benefits and costs, or the presence of regulations that prevent individuals from claiming compensation. The biggest obstacle to internalising environmental impacts is the lack of ownership rights over "open-access" resources like the air and the water. Because nobody can claim ownership, transaction costs are high, and typically the polluters are not required to pay. Imposing regulatory standards and fining the polluters does not make necessarily make it possible to compensate the many individuals who may suffer divers injuries from polluted air and water. Even when transaction costs are not present, other types of market failures can lead to significant externalities. For example, a common problem with the housing market is the tendency for "consumers" to focus on reducing first costs, - ignoring many investments that are cost-effective over the life-cycle of the home. Most of the market research in this area has revealed that the average homeowner or small business will refuse to invest in energy conservation unless rates of return are greater than 50% - as opposed to a more traditional investment rate of return of 6 or 8%. (Stern, 1984, and Lovins,1993) In essence the consumer is demanding a pay back period of less than 2 years for resource conservation. Such high expectations on the part of potential investors means that conservation options are not generally pursued, which has the effect of forcing society to invest in new energy supply such as new generating plants and new pipelines. The net result is much greater cost for providing household energy services, fewer jobs, and more environmental damage, than if the houses were designed to be more efficient in the first place. In this example, both the homeowner and the other affected groups ultimately end up paying more than is necessary. 23 Why do homeowners appear to ignore life-cycle economies? The answer includes a host of obstacles (or market imperfections): • lack of access to capital; • more profitable uses for limited capital; • concern about cost recovery, especially since homes are commonly sold within five years and the next purchaser may not recognise the value of the investment; • uncertainty about technology and a lack of information and expertise; and • excessive time and effort required for assessing the investment. These are reasons why the marketplace commonly fails to direct resources where they belong and why the sale of housing services can lead to high externality costs. 3.4 FINANCIAL SUBSIDIES A N D SOCIAL COSTS Externality costs can be separated into two different types of costs: financial subsidies and social costs. Typically a financial subsidy is some kind of agreed transfer payment, charged as a tax, fee, levy or other mechanism and used to partially finance services for which the payee receives little or no direct benefit. In the context of housing costs, a financial subsidy is a direct monetary cost borne by one group on behalf of the group that receives the specific housing service. Subsidies are accounted for by economists who compare the costs of products and services within the economy as a whole. However subsidies may be, and frequently are, ignored or undervalued by consumers and businesses. The result can be a distorted impression of relative costs for housing services. Homeowners, for example, are both payees and recipients of financial subsidies. Payments made by homeowners, such as school taxes and transit subsidies, are not relevant to the full cost of housing. Instead, they reflect external costs of the community services, transit systems and the other subsidized goods and services that receive the payments. Conversely, subsidies received by homeowners need to be recognized as part of the full costs of housing. Often these subsidies are policy instruments used to implement social and economic objectives, improving, for example, the affordability of houses, or increasing the availability of housing services in a changing marketplace. CMHC mortgages are a subsidy for housing that help lower income home buyers overcome a shortage of capital. New housing developments sometimes require expensive new infrastructure investments (for sewer, water, roads) that are financed by the existing property owners or other rate payers, as a subsidy to new home buyers. 24 Social costs are all the other external costs of housing. The term 'Social cost1 is a term that tends to confuse discussions about full cost accounting, since it has been differently used in economics literature. Historically social costs have been defined to include only environmental costs (Davis (1969). Other times they refer to costs borne primarily by society as a whole as opposed to specific groups (e.g. Ullman, 1978). More recently the term is used to include any external costs that involve unpriced goods (e.g. Hoymeyer, 1994). In this thesis, the term social costs will include all the unintended or unaccounted for economic losses resulting from externalities, borne by any or all groups within society. These include costs related to individual health, community health, physical property, and the natural environment. Social costs include both direct use values, and non-use values. Direct use values are the clear economic benefits from a resource. For example the salmon that breed in the waterways of a residential area represent a fish resource of direct use value to the fishers who participate in the salmon harvest. A non-use value would be the benefit somebody might receive just from the satisfaction of knowing wild salmon are continuing to survive in a nearby stream, or from the satisfaction of bequesting wild salmon streams for the enjoyment of future generations. Social "costing" is the exercise of placing monetary values on specific social costs. Social costing is usually undertaken as part of resource management techniques that require monetary inputs. For example, cost benefit analysis is a technique that typically requires monetary inputs for all social costs. 3.5 DISCOUNT RATES Discount rates can make a significant difference to the life cycle cost of housing services, especially over the 50 to 60 year lifetime of a typical house. Discount rates reflect the time value of money, which assumes that future resources have lower value than current resources, even after adjusting for inflation. Discount rates are a kind of 'anti-future' bias that is a part of how economic systems work. Discounting the future is also a fundamental part of human nature. The higher the discount rate, the more weight is given to present benefits over future benefits. Most capital investment discount rates are around 8%, with higher rates for increased risks. These rates reflect the return capital could earn in typical alternative investments such as buying mutual funds or treasury bills. At an 8% discount rate, $100 in 30 years is worth only $10 in the present. Real discount rates for homeowner investments are usually estimated at less than 8 percent. When code writing committees were 25 deciding on the best levels of insulation for houses in Canada, future savings were typically discounted at a rate of 6%, - a rate considered reasonable and prudent for the typical Canadian investor/homeowner. Surveys of public opinion indicate that most people are not prepared to discount social benefits like health and environment at the same rate as capital investments. Economists typically use a rate of 4% for social assets like the environment, (although in Canada the social discount rate over the last 20 years has averaged about 3%.) At a rate of 4%, $100 of forest products 30 years from now is judged to be worth only $30 in present day terms. Many older people, when queried about the value of natural resources and individual health in the longer term future, tend to use a flat rate (zero discount), even though the same persons expect high discount rates for private capital (McDaniels, 1993). This would suggest that the 6 and 8% rates commonly used for environmental regulations are far too high. Some economists have even suggested negative discount rates are appropriate for natural resources, since trends indicate that natural resources are likely to be worth more to future generations than they are worth.at present. (Daly, 1989) This raises the important ethical issue of who should be valuing irreplaceable resources - those who plan to use them or those who are - or will be - at risk of doing without. So it is clear that the choice of discount rates for use in full cost accounting of houses is a crucial yet controversial issue. Even small discount rates have the effect of converting longer term benefits to insignificant values in present day terms. And apparently slight changes in discount rates can suddenly make uneconomic investments look cost effective. Some cost categories are purely. short term issues and may warrant 6 or 8% discount rates. Others are not. Ideally a full cost accounting procedure for housing would use different discount rates, depending upon what exactly is being discounted and who is likely to lose the future benefits. This approach is followed in the case study analysis in Chapter 6. 26 3.6 ACCOUNTING FOR SUSTAINABILITY AS PART OF FULL COST ACCOUNTING Sustainability is becoming an overused term that serves as a catch-all for almost all social cost considerations. A more precise application is needed for a full cost accounting method. This should include both a better definition of sustainability and a better process for determining when to include such concerns as part of full "costs". Sustainability is a term that expresses concern about: • the effects of present day activities on the future; • the importance of maintaining constructive ecological processes; and, • the benefits of improving the quality of life now, without denying future generations a similar opportunity. The concept is intended to guide decision making by defining obligations to future generations. Although many different definitions exist of what these obligations should be, a consensus is emerging in at least two areas (Young, 1992): 1. Beneficiary pays: the external costs of present day activities should not be passed to future generations who will have no opportunity to make the original polluters pay for their actions; and 2. Intergenerational equity: each generation needs to be provided with similar options to solve its own problems. To preserve these options we are obliged to maintain the value of stocks of renewable resources on a per person basis and to avoid ecologically irreversible actions. Including "sustainability" as another cost category within full cost accounting is problematic. Once sustainability is considered as another cost, the implicit assumption is made that issues of sustainability can be optimised with other cost categories, to obtain a more efficient use of resources today. In fact, this is not possible as long as sustainability is understood to be primarily a moral issue that addresses obligations to future generations, (or to other species). Nevertheless, many social costing exercises are treating sustainability as a cost category similar to other costs (e.g. BPA 1991). Part of the confusion arises because sustainability is assumed to represent one of society's goals - like full employment or peaceful international relations. A better approach might be classify sustainability as one of society's fundamental rights - applied to future generations (or species and ecosystems)- like the sanctity of human life or the incontrovertibility of civil liberties. If assumed to be a goal, it may be possible to trade-off 27 sustainability as long as other goals receive significant benefits. If assumed to be a right, sustainability becomes a kind of constraint that must be satisfied prior to optimising and trading-off all the other costs and benefits. Another source of confusion is the tendency of economists, planners and others to lump all major environmental risks into the sustainability category. Many environmental costs involve two kinds of risk: a) lost benefits to the economy within the near future; and, b) lost opportunities for achieving a sustainable lifestyle and preserving ecosystem integrity in the longer term. These two impacts are best addressed separately, since the first is a question of economic efficiency, while the second raises concerns about equity. A single cost value would only obscure such a distinction, and undermine the decision-making process. Further confusion arises because of different definitions of what constitutes a resource. A "strong" definition of sustainability would require a quantity of each renewable resource to be preserved for future generations, equal or greater to the resources inherited from the previous generations. A "weak" definition of sustainability would recognize that some substitution is possible between resources, and between resources and technology. A reduction in forests might be compensated by more farmland, or by more productive silviculture. Because housing services consume substantial quantities of resources, it is difficult to conceive of policies in the near term that would succeed in conserving an equal share of renewable resources for future generations - i.e. the strong sustainability approach. However, housing offers tremendous potential for creating a new mix of renewable resources (community gardens, solar oriented building sites, infrastructure for sharing of resources, and so on), which are passed down to future generations. With consideration for the long-term value of the community systems, it may still be possible for the housing sector to achieve a weak version of sustainability. In theory most people engaged in this type of discussion are likely to consider resource substitutions to be necessary and acceptable for housing services - at least on a case-by-case basis. However, the question leads quickly to the hard job of evaluating whether a new mix of resources is commensurate with what has been lost. For example, imagine a housing development that appears on first glance to be unsustainable because it uses large amounts of scarce resources such as clean atmosphere, ground water from a depleted aquifer, hardwood panelling, wildlife habitat, and so on. It is nevertheless possible that other 28 features of the development may compensate for these obvious negative resource impacts. In fact the development could be specially designed to address major problems in other areas of the economy and ecology. To the extent that the net sustainability potential is increased for the community as a whole, the housing services could be viewed as sustainable. The compensating features of the development might include a wide range of impacts. Perhaps the development: • is located on a rocky hillside that had few alternative uses and had been damaged by past logging and road-building, • is built on a site that has good solar exposure and is walking/cycling distance from many work and school locations, • has been designed with terraced food gardens that recycle organic human, kitchen and yard waste, with water catchment and storage facilities, with landscaping features that preserve many of the remaining trees and introduce fruit, nut and seed trees, • has used buildings that incorporate waste from many local industrial processes (crushed waste glass uses as drainage material, and old newsprint for insulation, fly ash for concrete, and so on), • delivers surplus power and hot water to nearby apartments and commercial buildings by means of extensive rooftop solar panels, and • uses materials for construction that have been chosen and installed so that removal and reuse is easy to accomplish during the renovation or demolition stages. Such a housing development could benefit the overall community by reducing fossil fuel use (less transportation and space heating), increasing bio-productivity and health (from the intensive gardening and the food forest), improving water quality and increasing water resources (from the catchment systems and erosion control measures), and reducing energy and land committed to waste disposal (due to recycling within houses and between sectors). How is it possible to determine if such a combination of housing technologies represent the most appropriate design choice for the community? Only an extremely detailed analysis of resource quantities and qualities (similar to a thermodynamic analysis) throughout the entire ecological and economic system could indicate whether the net impact of such a development is likely to increase or decrease sustainability. Such comprehensive cost accounting is well beyond the capability of anybody at present. In the absence of such an analysis planners will be forced to make judgements by selecting and examining just a few indicators of sustainability, in isolation. The serious limitations of such an approach should be kept in mind, especially as 29 community infrastructure and design becomes more integrated between sectors. 3.7 EXPRESSING A N D SUMMARIZING COSTS Once full costs have been identified and measured, the challenge is deciding how best to express the costs. Table 4 presents choices for expressing the costs of housing services, and some of their pros and cons (Moffatt 1992). One of the most challenging and controversial approaches is to try and express the full costs in monetary terms (costing). Two major problems are likely to be encountered: pricing non market goods, and keeping monetary values discrete in cases where discrete values can assist negotiations, or creative thinking, or effective decision-making. Each of these problems is critical to determining the best method for expressing the full cost. 3.7.1 Establishing a credible price for 'benefits forgone' The difficulty in pricing non-market externalities has meant that these costs are often ignored or given little thought in decision-making. It is argued that if monetary values can be assigned to such costs, it is more likely that planners and politicians will make the right decision and be able to hold to that decision. A well known example of the benefits of costing is the California decision to require car companies to provide a quota of zero emission vehicles in the next two decades. This policy was a direct result of research into monetizing social costs associated with automobile emissions. Public health care costs were found to exceed the costs of using alternate transportation technology. (Dagang, 1995) The California example does not necessarily indicate any inherent value for costing of social costs. Clearly there were problems with auto exhaust emissions regardless of the work by economists. However costing can be expedient. As long as society's decision-making processes emphasize the use of cost-benefit analysis and similar economic balance sheets, probably the worst possible dollar value to give external costs is zero. Some standard approaches to establishing prices for social costs include hedonic pricing, the use of control or prevention costs as a substitute, and a procedure referred to as contingent valuation. Each of approaches is briefly evaluated below. 30 3.7.2 Hedonic Pricing Valuing non-market goods is a process that occurs constantly in decision-making. Home buyers, for example, must decide how much they will pay to move to a better view, a quieter street, or a safer neighbourhood. An analysis of purchase prices for homes on the west coast of Canada, for example, indicates that the typical home buyer is prepared to pay an extra $35,000 for a good view of the mountains or ocean. (GVRB, 1994) This monetary value represents the average discrepancy in selling price between view lots and non-view lots - other factors being equal. The value of a view is thus empirically determined by comparing numerous transactions that trade-off market and non-market goods. This technique is referred to as 'hedonic' pricing and is especially useful for monetizing the effects of environmental impacts on property values and wages. Hedonic pricing can be used, for example, to put a value on the benefits that come from living on a well-treed lot. One difficulty with using hedonic pricing in this way is that many indirect and residual impacts cannot easily be isolated from market prices. For example, a home developer who cuts down all the trees may lower the value of the houses to purchasers, but the price differences will not reflect the value of the trees to neighbouring property owners who could otherwise enjoy the environment created by trees. Generally these indirect impacts are ignored, and as a result, hedonic pricing underestimates the full cost. 3.7.3 Using Control or Prevention Costs as Substitutes Calculating the cost of preventing or mitigating an impact is another technique that can be used to determine the minimal value of an external cost. For example, the cost incurred by the developer who protects trees during house construction can be used as a minimum value for the tree. Unfortunately, control or prevention costs do not always produce a value that is accurate. An assumption is made that society has acted rationally when establishing control measures. But very often, there is a strong bias towards setting regulatory limits at the lowest level of acceptable practice. Limits may simply legitmize existing norms. Also, the control method that is selected for establishing costs may not represent the investment actually needed to eliminate the impacts of development. For example, - the trees may die anyway the following year because no attempt was made to compensate for drainage disturbances. Or the process of controlling the impacts may create new types of impacts, such as less opportunity for gardening because of excess shading. 31 METHOD [& units[ SUMMARY DESCRIPTION STRENGTHS, AND APPROPRIATE APPLICATIONS WEAKNESSES MASS, VOLUME & ENERGY BALANCES [kg] m3] [J] [L] Emissions from all processes at each stage of production are quantified and aggregated without any weighting: • Atmospheric emissions (kg) • Waterborne wastes (kg) • Solid wastes (m^ ) • Raw materials (kg) • Energy (J) • Water (L) • Simple to understand & execute • Transparent to users • Suitable for quick rough cut assessments • May also be suitable as general indicators of impact if validated by other, more sophisticated methods • Difficult to interpret significance • Multiplicity of factors • Easily misleads due to order of magnitude differences LIMITS • critical air volume [m ] • critical water volume [m ] • solid waste [kg] Data is aggregated by vector: • Air, • Water, • Soil. Substances are weighted with their respective emission limits, prior to summing. • Transparent to users and applied without difficulty • Powerful image for public mind • No confusion of air emissions with the high mass - low impact water and land emissions • Limits not always available • Legal limits may vary by jurisdiction • Limits may not reflect actual impact on environment or health but only what is practical or affordable • Many substances move through the vectors as they are transported, (air particulates -> soil contaminant -> water pollutant) MATERIAL FLOWS Eco-factors [ l / F k F / F k C ] or Ecological Footprints [m2] Emissions and resource flows (Fj,) are related to the capacities limited by nature (F). Nature's capacity is the total available resource (in the case of non-renewable resources), or the carrying capacity of the ecosystem (for renewable resource use or activities depending on ecological processes). A variant of this approach calculates the area of given ecosystems required to sustain a given life support functions. • Can be used to derive single values • Is a fundamental approach since it relates the building to the theoretically absolute limitations • Is especially valuable for making broad comparisons, and for encouraging more responsible attitudes • Can be easily corrected to reflect improvements in how we understand environmental impacts • Requires lots of data collection, since all the flows need to be added in order to derive F. • Carrying capacity, available resources, and other Fj^  values are contentious issues, that depend on value judgements, and are still largely guesswork • Some kinds of emissions are undesirable at any level, and cannot be related to sustainability COSTS OF CONTROL OR SUBSTITUTION [$] Emissions and resource flows are converted to monetary values based on the cost that would have to be borne to control the emission, or to substitute alternate technology • Dollar values are easy to integrate with other types of evaluation, • Facilitates cost optimization • Especially useful in cases where damage costs are difficult to estimate (e.g. global warming) • Requires difficult assumptions about the effectiveness and cost of specialized technology • Reasonable limits do not always exist for establishing the extent of controls required • Control costs may bear little relation to actual cost of damage to society POTENTIAL CONTRIBUTION Effects of concern are chosen, (global warming, acidification, urban smog, human health, etc.) and each is carefully defined with regards to how different substances contribute to the effect. A conversion factor is established for each substance, such that quantities can be weighted scientifically. The potential contribution from each substance is then added to obtain a total contribution the building for the effects of concern. • Useful for describing multiple effects from a product or building without reference to their transport mechanisms (air, liquid, solid). • Organizes information in ways suitable for many user groups; • Can easily incorporate site specific impacts by defining effects at the local level • No consensus exists for what conversion factors to use for each substance and effect; • No clear delineation of effects has been proposed, and some effects can be differently defined depending on the individual; • Expresses the building's potential contribution to an effect, not the real impact of the building. • Assumes a linear relationship between cause and effect. WILLINGNESS TO PAY, WILLINGNESS TO BE COMPENSATED [$] An economic value is determined proportional to the environmental risk associated with the balance of emissions for each substance. The value of the risk is equal to society's willingness to pay to avoid the risk (or to be compensated for the possible damages). Market prices are used where possible (e.g. timber losses), along with a range of valuation techniques used by economists. • All costs can be aggregated to a single value • Addresses the issue of greatest concern - the damage to are social and life support systems; • Combats the tendency of economists and policy makers to ignore environmental impacts because they have no market value. • Non-priceable effects are still left out of analysis • Aggregation and rounding errors can lead to false estimates of zero cost when large numbers of persons experience small amounts of damage • Not transparent to users, hides many types of trade-offs • Use of a monetary value leads to debate over appropriate discount rates for human health, life, & scarce resources. Table 4 Options for How to Express the Full Costs of Development 32 3.7.4 Contingent Valuation Contingent valuation involves polling a representative group of people to determine how much they value a particular non-market good. Typically, people are presented with a hypothetical choice of investments, and asked either: • how much they would be willing to pay to receive this benefit? or • what is the minimal compensation they would accept to give up enjoyment of this particular benefit? Although contingent valuation is a convenient method to obtain dollar values and has been widely used by economists in social costing, it has recently come under strong attack. Critics argue that people are often unwilling or unable to put any price on social goods. Typically people have no idea how much a good or service is worth. Without guidance on how to value intangibles and non-market goods, the average person has no idea of how much a service might be worth. Even the best questionnaire will not produce useful information. This problem has been illustrated by the lack of resolution in response by most participants in contingent valuation. The dollar values typically remain the same, even when the size of the impact is doubled or tripled. (McDaniels, 1994) It can be argued that many non-market goods related to the environment and to health have no real value outside the context in which decisions must be made. People can judge the utility of one option over another, from their own value set and perspective, but this decision-making process does not confer any absolute value to the choices. Placing a dollar value on the choice implies that the values are absolute and transferable, - an assumption that is often incorrect. 3.8 EXPRESSING COSTS IN EFFECTIVE WAYS The second major problem with costing is that too much emphasis may be given to the importance of defining costs and benefits, and too little to the process required to make creative and effective decisions. Particularly when a number of groups are involved with decision making, bringing conflicting interests, good decisions are not likely to be simply based on an economical analysis that calculates the least cost option. Participants need to understand and trust the valuations, and reach compromises by trading-off specific costs against benefits. New and innovative combinations of costs and benefits may emerge, for a solution that gives greater satisfaction to everyone involved. From this perspective, how can costs be expressed so they contribute to better negotiations and creative, more effective decisions? Clinton Andrews has argued that "sustainable development depends upon finding innovative solutions to difficult planning problems. [...] Three major impediments to creativity can be identified - controversy, uncertainty, and technical complexity. A more 33 open process, perhaps with assisted negotiation, is an important first step in resolving contentious planning debates. Hoivever, when uncertainty and technical complexity are also present, then special analytic tools must be provided to support the process." (Andrews, 1990) Andrews points out that traditional decision-making tools, like cost-benefit analysis and environmental impact analysis, are designed to support a single dictatorial decision-maker, rather than a collaborative process. Thus these tools fail to provide timely information, packaged in a useful way. The result is typically a report that is unread by most stakeholders, expensive, criticised as biased, completed too late to allow for consideration of other options and used to delay or halt projects rather than improve them. The alternative is to describe a number of different future scenarios and to evaluate the planning options by observing the probable impacts of each option for each scenario. For example, we could analyse different housing development designs and technologies in terms of their full costs, firstly in the context of a future that is an extension of present trends, and secondly in the context of a future in which a substantial carbon tax is imposed on energy commodities used for transportation and operating homes. In each scenario, the impact of the design would be described in categories like health, environment, and so on, with emphasis on who benefits and who pays. By keeping the impacts discrete, each stakeholder can recognize trade-offs of importance. Controversy is avoided, because all the impacts are identified, and uncertainty is addressed by looking at a number of completely different scenarios whenever these are warranted. The process handles technical complexity by providing an expert analysis team to ensure adequate technical detail, while minimising the "black box" nature of modelling by exposing assumptions to public scrutiny. A matrix of impacts permits the listing of monetary values, where these are known or have been estimated. It also allows for important physical units to be used as terms, where these might better inform decision-makers. And for sustainability indicators, where monetary compensation may is not the most appropriate measure of impact, other terms can easily be accommodated, (van Pelt, 1993) The approach advocated by Andrews has since been adopted by a number of groups struggling with difficult resource planning issues, including electrical utilities primarily (e.g. BC Hydro, 1994), but also water utilities (AWWA1996). In this thesis it is adapted to the task of analysing the full costs of housing. The technique typically involves creating a matrix listing the impacts (or costs) for different categories and for a series of different design options. Instead of trying 34 to reduce all the costs (or potential trade-offs) into a single question about how much a person is willing to pay, the object is to allow the affected individuals to analyze these costs and rate their relative importance. Opportunities are thus created for decision-makers to negotiate trade-offs that result in greater utility for all concerned. (McDaniels, 1993) 3.9 EXPRESSING SUSTAINABILITY IN MEANINGFUL WAYS If the impact of housing on sustainability is not something to be combined with other social costs, there is no need for conversion into similar physical units or to dollars. A variety of other options exist for expressing sustainability concerns. 3.9.1 Risk Assessment Sustainability addresses future performance, and can be summarized in terms of the assumed risk. A less sustainable development, for example, is one that increases the risk of flooding, climate change, famine, and so on. Risk is a concept that is frequently used to influence the choice of housing technology. However in order to calculate risk, it is necessary to judge both: • the nature of the potential hazard, and • the probability of creating the hazard when choosing specific development scenarios. Making these judgements is frequently an impossible task. One problem is that the hazards to ecological and social systems are so poorly understood. For example, a fishery disappears suddenly and permanently, despite attempts at regulation. Or an impoverished country collapses into anarchy despite attempts at aid. Only by exceeding the tolerances of these systems do we discover the precise limits to which they can be exploited or stressed and the kind of damage that will result. And then it is often too late to use this knowledge to guide decisions. Instead of calculating the amount of risk, all that is usually possible is to indicate whether a housing development increases or decreases the risk. In other words, the object is to determine whether the proposed development moves the community towards - or away from - each of the sustainability indicators. 3.9.2 Sustainability Targets and Pass/Fail Tests In cases where consensus exists about the probability of creating a hazard, targets can be specified that are consistent with a sustainable development strategy. Once targets are set, it then becomes possible to evaluate particular aspects housing developments as "sustainable" or "unsustainable". For example, both the climate change convention on green house gas emissions and the Montreal Protocol for ozone depleting substances have stipulated targets for 35 emissions in an attempt to mitigate the risk of environmental hazards. At the regional level, targets have been established for other types of emissions: NOx and VOCs for specific air sheds, and BOD and suspended solids for specific water sheds(e.g. GVRD 1994). In some jurisdictions, targets exist for waste production and for quantities of hazardous and toxic materials (e.g. City of Santa Monica, 1995). Now that these targets exist, a residential development can be evaluated in terms of whether or not it achieves the target and by what percentage it succeeds or falls short. At present, the difficulty in applying such targets to a residential development is the lack of guidance on how to measure emissions, and how to establish a baseline for specific activities. For example, the Government of Canada and most provinces have stated they are committed to stabilizing greenhouse gas emissions at 1990 levels by the year 2000. (Canada 1994, COGGER 1993) How does this translate into targets for housing developments? Is the residential sector to assume the same responsibility as other sectors? This seems unreasonable because housing has a relatively long product lifetime (replacement rates for housing are <2% per year) and because the complex and fragmented production system for housing is relatively difficult to change (housing is manufactured by over 100,000 builders in Canada). Who defines what portion of the target is to be achieved by the housing sector? One option is to apportion the targets at the community level, but this leads to further difficulties. Is a fast growing community like Surrey, British Columbia, expected to meet the target for its entire stock of new and old houses in the year 2000? Or can it simply meet the target on a per house or per person basis? What if the new houses have a greater emission load as a result of energy used in manufacturing and transporting the construction materials. Are these emissions to be attributed to housing? And what if the housing is designed to reduce emissions in other parts of the community - by reducing transportation, for example, or connecting the housing to a district-heat-and-power system. Can related reductions of emissions in other sectors to be credited to the housing? Without well-defined targets specific to housing at the community level, it becomes difficult to determine if a development passes or fails and by how much, even in situations where agreement exists on what degree of resource consumption is acceptable or sustainable. 3.9.3 Shadow prices based on the costs of sustainability One interesting costing technique is to first calculate the costs of satisfying sustainability targets, and then use these costs as "shadow prices" when evaluating the effectiveness of policy tools. Thus the cost of generating NOx from housing services, for example, would reflect the avoided cost of reducing NOx levels to specified targets for the local air shed. This approach offers an 36 opportunity to express sustainability in monetary terms, if desired. However it requires a detailed look at housing technologies in order to properly estimate the least cost strategy for achieving targets with the same level of service. More research is required before such an approach can be used in full cost accounting exercises. 3.9.4 Average Impacts and Average Allocations Another interesting technique for expressing sustainability of residential developments is to compare the physical impacts of housing with the historical averages, or with the available resource allotment. For example, the loss of soil and biological productivity that occurs as a result of residential development can be calculated and compared with average soil productivity, world-wide. This "benchmarking" information is useful for identifying trends, and for providing individuals with a means to judge the relative impacts of lifestyle. A more sophisticated version of this approach has been developed by B. Rees and M. Wackernagel at the University of British Columbia, and involves calculating an "ecological footprint", or an appropriated carrying capacity. (Wackernagel, 1993) An ecological footprint refers to the land (or water) area needed to biologically produce all the resources consumed by a community and to assimilate all the wastes, indefinitely. When fossil fuels are used in housing, the ecological footprint would have to include, for example, an area of productive land dedicated in perpetuity for the purpose of either: • generating the equivalent energy as ethanol; or, • absorbing the C 0 2 emissions from the continued fossil fuel consumption. Also included would be the productive land needed to grow the wood required for the house construction, to catch the water used by the household, and so on. Some of the land area could serve multiple functions, although the total area would have to reflect the amount of ecological resources that have been dedicated to the housing services. An ecological footprint is a way of aggregating resource usage into terms that can be easily visualised and compared. An estimate of the ecological footprint of energy used to heat and operate housing in Surrey, BC, indicated about 5 ha of productive land is required per person. (Moffatt 1993) If all the arable land on the planet was equally divided, the allotment would be about 1.7 ha of arable land per person. On this basis, it is clear that Surrey residents are 'appropriating' land and resources from other countries, and from future generations, to provide its local housing services. 37 The simplicity and educational values of the ecological footprint must be traded-off against a couple of difficulties. One is the lack of resolution when trying to assess how well a new housing system or technology performs in a particular region. Many regions are facing very specific hazards to sustainability, and the aggregation techniques obscure the issues of greatest importance. Another difficulty is the current lack of agreement on how to share the carrying capacity that exists at the global and regional levels. In the short term it is impractical, and, many would argue, inappropriate to expect an equal sharing of resources amongst people world-wide. Over time it is possible to imagine a movement, in principle, towards equitable sharing of common resources, as long as people can be held accountable. But without agreements on the time frames, and the basic principles of fair allocation, the ecological footprints do not provide a basis for establishing whether a particular housing development is, or is not, sustainable. 38 4. Chapter Four A Conceptual Framework for Model l ing the Resource Impacts of Housing Developments Created as part of this thesis research, the Building Block Method is a procedure for integrated resource planning at the local level. Essentially, the Building Block Method is a "bottom-up" approach that first defines a community in terms of supply and management systems and archetypal buildings (including the occupancy characteristics and linear infrastructure associated with the buildings). The resource impacts of each building archetype are then modelled, and multiplied by the numbers of each archetype within the community. In this way the resource flows for the community can be analysed and aggregated for the existing infrastructure and building stock. It also becomes possible to forecast the impacts of one or more development scenarios, simply by altering the mix of building archetypes, their design features, and the types of linear infrastructure and systems to which they are connected. Forecasts can be designed to reflect particular growth trends or public policy initiatives. The step by step application of the Building Block Method is examined in Chapter 4. First, however, it is necessary to create a conceptual framework that establishes the boundary options for the method. In this context, boundary options refers to what goods and services are included and excluded from the definition of housing, and to how are these goods and services separated into resource types, time periods, and spatial limits. This chapter addresses these four key issues in order to create such a conceptual framework. It then expands the framework to consider all the possible impacts that may be of concern. 4.1 WHAT GOODS A N D SERVICES ARE INCLUDED IN THE DEFINITION OF HOUSING? Traditionally the term "housing" has carried various meanings, depending on the context in which it is used and the expertise of the individuals involved in the decisions. Architects might see form and material; planners might see density and land use; civil engineers might focus on the municipal services required to make the housing function. Each of these definitions is valid in context. It is therefore difficult to avoid some confusion when analysing housing costs from a broader context than normal. To minimize confusion the first task is to precisely define what is meant by housing, and then use this definition as a means of explicitly limiting the scope of the analysis. In this way it becomes possible to reduce the information requirements to manageable proportions while clearly communicating exactly what has been left out. 39 When defining housing, consideration needs to be given to a number of issues, including: • the intended audience for the research results and their scope of control and influence, (why bother considering issues that are irrelevant?); • the benefits of using similar definitions to other researchers, so that results from research and demonstration work are comparable and easy to interpret; • the potential for inaccuracy when important and significant impacts are omitted; and • the capability of researchers and readers to cope with large quantities of data and the complex number of assumptions that are needed to measure resource use. Probably the least confusing and constraining definition of housing is one that focuses on the collection of services that housing provides. ( M A R B E K , Sheltair, 1993) This avoids being restricted to only one type of technology, when frequently there exist many alternative approaches for providing housing services. Everything that might be changeable at the planning and design levels can be altered, including the physical layout, density, building design and building technology - even the choice of a building per se - without changing the definition of the housing service. A list of housing services can be created from the options listed in Table 5. The levels of quality for each service may vary greatly, which adds a degree of complexity to any definition. It is necessary to clarify assumptions about the minimum level of service before comparing one housing design with another. These assumptions can have a major impact on the full costs of housing, particularly in the case of "access" to community services. These services can also be viewed as end uses for specific resource categories. For example, energy is a resource that is likely to be required to satisfy every one of the services. The amount of energy will depend upon the service quality, and the technological systems, and the integration with other energy-using services. Ultimately a comprehensive definition of housing services becomes the best way to ensure that all end uses are considered for every resource category, and thus it becomes possible to compare the full costs and impacts of one type of housing with another. In order to account for all the impacts associated with the provision of any housing service, the physical transformations must be analyzed. It is physical transformations which ultimately lead to events that impact on people and society. Consequently the framework must translate each housing service into events that occur in the physical world. 40 Table 5 A Definition of Housing Based Upon Services Provided A Selection of Housing Services 1. A comfortable, safe, quiet and healthy living space 2. Privacy 3. Lighting the living space and lighting tasks 4. Facilities for: • socializing, dining, sleeping; • personal cleaning; • clothes cleaning; • food preservation; • food preparation and cooking; • repair and maintenance of home • procreation and child care 5. Access to community services such as work, school, health care and shopping opportunities 6. Security for personal belongings 7. Waste management and waste disposal An event occurs when matter is transformed in time and space. To account for all the potential impacts of an event, each transformation must be examined. For example, the service of providing a comfortable, safe and healthy living space can include a long series of events, from transporting the home buyer driving to the architects office, to mining the metals used for nails, to generating the power needed to operate the finished home. Each event involves the transformation of matter. Energy is a characteristic of certain forms of matter, for example, that is lost (or more precisely becomes less available, or less concentrated) as the matter is transformed. Water is transformed as it enters a house and then leaves carrying sewage. Air is transformed as it is mixed with gases and particles by the vehicle that transports the occupants to and from their house. The model must follow each form of matter, including energy resources, water, air, land, and materials as they are transformed by the event called housing. In each case the objective is to account for the quantity and quality of all the inputs and outputs. The key to developing an effective model is to use well defined limits or boundaries (the scoping phase of LCA). By carefully limiting our definition of 41 what is meant by matter, time and space, a model is created that simplifies reality without - hopefully - loosing the ability to make useful and reliable predictions and guide decision-making. Figure 2 presents some typical options for limiting a model for housing services. Matter can be limited to: • energy resources, • air (the atmosphere), • water (in all parts of the hydrological cycle), • land use, and • materials (usually focusing on scarce or toxic materials). Time periods can be chosen to reflect stages in the life cycle of the products (or materials) that have been transformed into a housing service. New conventions and standards for life cycle costing have identified five key periods: raw materials procurement, distribution, construction, operation and repair, and demolition and disposal. (Husseini 1993) Space is commonly limited by the shell of the house and the contents used for providing services. But it can be expanded to include the lot (or portion of the lot allocated to the living unit) or to the shared portions of the residential development, or to the portions of surrounding community infrastructure (roads, sewage treatment plants, power corridors, etc.) needed to support the technology used within the house to provide housing services. The extent of surrounding infrastructure that may be included with the dwelling will depend upon the dwelling design. Municipal water supply systems are part of the residential development, for example, to the extent the dwellings are designed to use these system to cope with water requirements. Roadways and other transportation systems are part of the residential development, to the extent the occupants of the dwellings are forced to use the systems to access essential services such as employment, shopping and schools. Part of the value that can be obtained from even very crude research into the full cost of housing is simply to learn what is lost or gained by altering the definition of housing services, and by changing the limits set for space, matter and time. Much of the modelling of houses that has already occurred as part of social costing exercises has examined only a fraction of the housing services, and modelled only a subset of purchased energy resource. The spatial scale has been limited to the building footprint, and time periods have been limited to only the first year of occupancy. The traditionally narrow limits imposed on housing assessments have mislead home buyers and planners about the true resource costs for housing services. A number of the most significant omissions are discussed below. 42 Boundary Setting Tree i S c a l e (or S p a c e ) T i m e P e r i o d (Time) N e i g h b o u r h o o d 1 M u n i c i p a l Infrastructure S u b d i v i s i o n Infrastructure Bu i ld ing a n d Si te R e s i d e n t i a l C o m m e r c i a l N e i g h b o u r h o o d 2 R e s o u r c e (or Matter) Mater ia l Aqu is i t ion Fabr ica t ion a n d Distr ibution C o n s t r u c t i o n O p e r a t i o n a n d R e p a i r Demol i t ion a n d D i s p o s a l N e i g h b o u r h o o d 3 W a t e r F r e s h San i ta ry Runof f L a n d Product iv i ty L a n d U s e R o a d w a y Bui ld ing S u r f a c e C o v e r Mater ia ls (Incl. S o l i d W a s t e ) E n e r g y I I O n - s i t e U p s t r e a m E m b o d i e d Hydro Natura l G a s D isea l G a s o l i n e I P r o p a n e B i o m a s s C o a l Figure 2: Boundary Choices 43 4.1.1 Including Access as part of the Housing Services "Access to work, school, health care, shopping and recreational opportunities" is typically provided by means of a transportation and communications system. Although housing assessments normally exclude all the transportation resources, to some extent transportation systems can be viewed as an essential feature of the housing service. Attributing even a small portion of these systems to housing services can greatly increase the full costs of housing. Thus selecting an appropriate definition for this housing service is critical decision during full cost accounting. Some minimum level of access to work, school and so on is probably an essential part of any housing development. (Litman 1992, KPMG 1991) In fact, increasing the level of access has become a major issue for many new housing developments, to the point that some modern subdivisions give the appearance of a community designed for the use of automobiles instead of people. Is it fair to conclude that the vehicles, the two car garages, driveways and street parking in such a housing development are all part of the housing service? Or should these technologies more properly be viewed as components of a transportation system that services all parts of the community? These type of questions lead to a functional definition of access. For example: • transportation technologies that are a reflection of housing design decisions should be attributed to the costs of housing; • transportation technologies required irrespectively, should be ignored. However such a functional approach does not always lead to clear distinctions. For example, what portion of commuter highways should be categorized as a cost of suburban housing? From one perspective, the design of large single-family dwellings with space consuming front yards causes urban sprawl. From another perspective, the availability of convenient automobile transportation at low cost causes urban sprawl. The cause and effect relationship seems to vary with the viewers politics. Of course both perspectives may be correct to varying degrees. Housing designs that encourage automobile transportation both reflect the community's past investments in transportation systems, and force the community to undertake new investments in roads and highways. The cause and effect relationship is ultimately less important than the influence of the decision makers for whom the accounting is undertaken. To the extent that housing design and housing policy can directly influence the transportation system, then portions of that system should be included in a definition of the housing service. In another context, the same portions of the 44 transportation system may be defined as part of an overall transportation service, without any direct reference to housing policy or design. As a general rule it is probably best to assume that all aspects of a housing development are optional - including the location of the development and the on-site transportation facilities. From this perspective, housing design influences much of the transportation infrastructure requirements. What is needed is a protocol for cost accounting of transportation - or, in other words, a standard way to identify those transportation services that should normally be included in housing costs because they offer access to other community services. In this application of the Building Block Method in Chapter 4 and 5 of this thesis, "access" will be interpreted as including a portion of the entire transportation system for the community, prorated by the housing population, and proportioned in accordance with the demands placed on the transportation system by the design features of the housing development. This would likely include, for example: • sidewalks, to permit pedestrians on feet, cycles, roller blades, wheel chairs, baby carriages, and other conveyances to travel as far as a public transit pick-up, and a corner store. Also included would be the dedicated infrastructure such as snow removal equipment, (private and public), and storm drains required to keep the sidewalks functional year round. • roadways, to permit movement of people and goods between housing and other key services required by either the occupants or by the house. Occupants require roadways to commute to complementary employment centres (not everyone can work at home, even if the houses are equipped with home offices); to ensure that ambulances have access to the home; to allow for transit of children to schools and cultural centres; and to permit shopping trips for groceries and other consumables. Houses need access to allow for servicing of equipment, for construction and renovation work, and for delivery of major goods like appliances and furniture. In total it is common for a minimum of 30% of the roadways to be dedicated for these purposes in a conventionally designed housing development. If so, 30% of all the associated impacts and costs of transportation can be attributed to housing. A greater percentage may be allocated for housing developments that are not well connected with public transportation systems and corner stores, and that are designed with facilities that encourage automobile use and/or discourage walking and cycling opportunities. In worst case conditions, 80% of the transportation system may be dedicated to housing access, including single occupancy vehicle commuting, shopping and other activities because of decisions made about housing location and design. 45 • vehicles, and all the fixed and variable costs of vehicles operation, to the extent that the vehicles are needed to provide the access required by housing occupants. • other transportation costs, in proportions similar to those identified above, including such costs as parking space, traffic regulation and enforcement, time lost due to congestion, and uncompensated for accident costs. 4.1.2 Expanding Spatial Limits to Include Housing Infrastructure For community level planning purposes it may be significantly more effective to defined housing with much broader spatial limits than normal, so as to include the municipal and utility infrastructure that is required to support the choice of building design and technology, and the choice of site location. For example: a building with a flush toilet and no on-site water supply system would be allocated a portion of the community's fresh water reservoir and sewage treatment plant; a building located far from workplaces and public transit would be allocated a portion of the roads, fuel and materials that are dedicated to commuting by car between home and work. In this way almost the entire community infrastructure becomes tied to the building archetypes; and changes to the archetypes are seen to affect the impacts and costs experienced by the community. Municipal Buildings _ . _ _ & Fleet Freight Transport „ 11% 1 / 0 Residential 36% Commercial 17% Figure 3 Typical Breakdown of Energy Use at the Community Level (excluding industry use) 46 By expanding the definition of buildings to include the municipal infrastructure, it becomes possible to capture about 90% of resource flows in a community, without moving beyond the power and simplicity of models based on discrete building types. For example, Figure 3 presents a breakdown of energy use in a typical BC community, using provincial energy data (BC EMPR, 1994), excluding any industrial energy use. The buildings loads, and their associated infrastructure, represent the large majority of total community energy profile. Only freight transport and direct energy use by the municipality are not a function of building design and location. The same proportions can be expected to apply to land use, materials and water. In essence, the community resource impacts reflect the resource flows required to create and operate the community building stock. By representing the community in terms of specific building archetypes, the resource flows can be modelled with validated building models, for relatively low effort and cost. 4.1.3 Accounting for embodied inputs and outputs Although upstream or embodied resources are seldom included by analysts when evaluating housing costs, their importance is likely to be increasing. A protocol is needed to address the extent to which embodied inputs are considered in each time period. For example, the energy used to produce the insulation in a house may be considered as part of the total life cycle energy that has been transformed when providing housing services. This would be accounted for if the "fabrication" time period is included within the model limits. A more difficult decision is required to limit the levels of analysis within each time period. Is it worthwhile to account for the water required to generate the energy used in fabricating the insulation? A n d how about the energy used to provide the water? To avoid getting lost in an spiral of analysis for each material it is necessary to adopt a protocol. For example, it is generally assumed that 90% of the resource inputs, or more, will be accounted for by a method that considers only two steps upstream from the end use (Baird and Aun, 1983). Thus is may be sufficient to look at the direct inputs of resources at each time period, and then at the indirect or embodied inputs for each of these quantities. Further analysis can be avoided at little loss in accuracy. This protocol would account for energy used directly at each stage in the lifecycle, and as a secondary input into any direct use of energy, land, materials, air and water directly used during the same time period. Other resources could be dealt with similarly. As housing is designed to minimize life cycle costs, rather than only the capital costs, resource use can be expected to rise for the fabrication, transportation and disposal of equipment and materials. In this way small investments in technology lead to large life cycle savings. While at present, the embodied energy in a Canadian single family dwelling may represent only 10 to 20 percent of the lifetime energy use (Sheltair, 1995), 47 the embodied energy could easily represent a majority of energy in housing designed for sustainability. An autonomous house, for example, will have extremely low costs for purchased energy, water and waste management. Only by including the off-site resource impacts is it possible to compare the full costs on the autonomous house with any other house. 4.2 IDENTIFYING IMPACTS OF CONCERN Once all the significant resource transformations have been modelled and used to create an inventory of all the inputs and outputs, a method is needed to identify the impacts of concern. The number of impacts is potentially very large and this process becomes tedious if all the options are reviewed. Often the best method is simply to arbitrarily limit impacts of concern to specific categories of impact, on the basis of who is likely to be involved in the decisions. Why bother considering impacts that can't be altered by the decision-makers? However, to avoid misleading others, a method is needed to identify and make explicit what is included and excluded from the analysis. Impacts of concern are defined in terms of the type of impact and the group impacted. Limits can be established in both of these areas. In the past, social costing exercises tend to have adopted a variety of categories for costs. Although in some cases the formats have been well researched and presented (e.g. BP A 1992), the categories are rarely comprehensive and well balanced. For this thesis research, types of impacts will be organized into six categories: 1. financial, 2. individual health, 3. community health, 4. physical property, 5. natural environment and 6. sustainability. This division has several advantages. It is more comprehensive - and thus less likely to mislead - than other frameworks examined as part of this thesis research. The categories generally reflect current divisions among academic disciplines, and divisions of power within and between governing bodies -which facilitates decision-making. Sustainability can be dealt with discretely, and differently than other costs. The inclusion of a Financial category allows for easy identification of subsidies and internal costs, both of which are important for full cost accounting. In each of the impact categories listed above, one or more groups may be impacted. Typically the groups of interest will be drawn from the following: • neighbours, 48 • businesses, • ratepayers, • taxpayers and • society as a whole. Table 6 presents a more specific list of impacts and groups for each category of impact. In this list the internal costs have been omitted. External costs have been listed in general terms only - the specific impacts can vary with different types of housing technology. The number of groups and specific costs is open ended. Consequently there is no end to the number of externalities associated with housing, just increasingly less significant amounts of damage. 4.2.1 Cause and Effect Chains In order to quantify or otherwise evaluate the impacts listed above, an analysis must be undertaken to characterize how the physical transformations required for housing services cause impacts of concern. This involves documenting cause and effect chains. A single resource transformation can generate a whole series of stressors, each of which can produce a series of cause and effect chains, each leading to a different impact of concern. Moreover the impacts themselves can lead to secondary impacts. This phenomenon of multiple stressors and multiple impacts has been well described by SET AC in their manual on A Conceptual Framework for Life Cycle Impact Assessment (SETAC, 1992). The cause and effect (or stressor-impact) chains are sometimes quite short, if the transformations have an immediate and direct impact on a specific group. The noise of construction work, for example, is a direct and short-lived externality for Neighbours, when new housing is provided. In other cases cause and effect chains can become long, convoluted and persistent. The cement used in concrete foundations, for example, is typically produced using coal, which contains trace elements of mercury, which are emitted into the air, deposited on the ground downwind of the plant, carried by surface run-off into local streams, deposited in the mud, methylated by micro-organisms, absorbed by fish through gills and intestines, concentrated in the food chain, eaten by women, and implicated in incidence of foetal brain damage. The length of such chains is frequently limited only by the data available (or by the enthusiasm of the researchers involved). 49 Table 6 Categories of Impact and Possible Groups of Concern Impact Groups Affected and Social Costs Financial Taxpayers (municipal, provincial federal): • Subsidies for infrastructure investments like roads, sewer, water Utility rate payers (gas & electric): • Subsidies for investments in generation & distribution infrastructure Businesses: • Subsidies to residential sector thru increased share of municipal taxes Individual health Individuals: • Respiratory disease and irritation • Accidents and loss of productive time or life • Noise irritation • Water borne disease • Life expectancy and environmental toxicity Society: • Health care costs • Productivity of individuals Community health Neighbours: • Street safety and security of property Community Residents & Disadvantage Groups • Participation in design and production • Adaptability of design to changing needs Physical Property Adjacent property owners: • Solar access, Water run-off, View corridors Regional property owners: • Bunding facades • Agricultural soil productivity Society: • Physical lifetime of existing infrastructure • Economic returns from infrastructure Natural Environment Business sectors (fishing, farming, tourism etc.): • Income from harvesting natural resources • Employment opportunities • Business investments (capital, training, etc.) Neighbours: • Ability of the natural environment to regulate surface water run-off, flood protection soil erosion, sediment control, water catchment and ground water recharge Society: • Ability of the natural environment to function as a source of aesthetic, spiritual, historic, cultural, scientific and educational information 50 Impact Groups Affected and Social Costs Sustainability Future generations (global concerns) & Future inhabitants (local concerns): • The ability of the natural environment to provide essential services • Adaptability of economic and social systems to major unexpected change • Disparities in wealth and opportunity between regions Society: • Peace of mind • Quality of international relations Business: • Security of investment climate, and opportunity for long term planning Because of the limitless nature of such cause and effect relationships it is effectively impossible to fully account for all the costs of housing services. Thus to some extent the term "full cost" is a misnomer. However the real lesson is that any costing exercise is a limited activity. The challenge is not to be comprehensive, but to scope the analysis to cover the significant impacts of concern. 4.2.2 Natural Environment Stressors and Impacts The most complicated cause and effect chains typically involve functions of the natural environment. When reviewing these kind of impacts it helps to use a comprehensive model of how the natural environment serves human needs. Such a model has been developed by de Groot, in Functions of Nature, Evaluation of nature in environmental planning, management and decision making, (de Groot, 1992) According to de Groot, all the functions of nature can be understood as 35 separate services, divided into four categories: 1. Regulation Functions 2. Carrier Functions (providing space and suitable substrate) 3. Production Functions, and 4. Information Functions. For each function that is affected by human activity, de Groot has identified groups that may be impacted, and he provides examples of the economic costs. His functions of nature are useful in two ways. Firstly, they provide an exhaustive framework for identifying and accounting for potential economic losses suffered by society - or by specific groups such as the resource sector industries - as a result of housing services. Secondly, they permit identification of particular functions where the impacts of residential development might represent a risk to ecological sustainability. 4.2.3 Sustainability Indicators 51 Sustainability is a concern in two areas: the natural environment and the social (or socio-economic) environment. Because the number of impacts in these areas are so many, it is useful to develop "indicators" of sustainability . As long as the indicators are fairly representative of the entire range of impacts, the quality of decision-making should not be seriously affected. The use of indicators has been applied to an evaluation of an alternative housing development in Sweden. (Bergstrom, 1991) A reduced set of natural functions suitable for use as indicators of sustainability, can be drawn from de Groot's framework. They include the functional ability of the natural environment to: 1. regulate the local and global climate, (including the hydrological cycle); 2. protect life against harmful cosmic influences (like UV radiation); 3. prevent soil erosion, maintain soil fertility, and continue the formation of top soil; 4. regulate biological control mechanisms and protect ecosystem integrity (particularly the food chains); and 5. maintain biological diversity, (including genetic diversity). These are all natural functions that are critical to sustainability, that are threatened by the scale of present economic activity, and that can be influenced in significant ways by housing developments. 4.3 SUSTAINABILITY INDICATORS FOR SOCIAL AND CULTURAL IMPACTS Sustainability indicators can also include social and cultural factors that might influence our ability to survive or prosper in the longer term. Three such factors are proposed: 4.3.1 Adaptability The principles of ecological management are based on providing the flexibility for adaptation to surprises. (Holling, 1992) From this perspective, surprises are inevitable and must be considered in our management strategy. In fact surprises may be the only thing that is certain about humanity's future relationship with the natural environment. Sustainability requires our economic and social systems be flexible enough to adapt to major unexpected changes in the bio-physical environment and in our international political and economic relationships. An adaptive approach is defined by: • diverse and redundant regulation (achieving the same results in a multiplicity of ways); 52 • monitoring, so we can make corrective responses; and • experimental probing and research so we can know more about how the world is changing. In the housing sector at present, very little thought is given to adaptability. Building standards and by-laws actually discourage diversity in housing styles and technologies. Almost no monitoring is conducted of the existing housing stock. And no thought has been given to how adaptability might be evaluated. In this context it is difficult to imagine how the cost of non-adaptable housing is to be defined and quantified. At a minimum, however, it is possible to identify whether the housing service is provided in a manner that contributes to a balance of diverse technologies, or simply exaggerates an existing imbalance. 4.3.2 Self Reliance and Fair Trade According to some social scientists, it is disparities in wealth and opportunity that typically create tension between peoples. Crime is lowest and life expectancy highest, not in the richest countries, or the countries that spend the most on policing and health care, but in those countries with the least disparity in income levels. On the global level the increasing disparities in wealth and opportunity may represent a threat to peace and to ecological sustainability. At present, the housing sector appropriates large amounts of resources from poor countries. On this basis, greater self-reliance in housing services, and application of fair-trade in housing products, may need to be considered as part of a definition of housing sustainability. The lack of standards and data in this area currently prevents such issues from being included in this analysis. 4.4 COMMUNITY HEALTH Community health costs are impacts of housing design on the functioning of the community as a human system. Other terms for these kind of impacts include social well-being and quality of life at the community level. (Mathur 1989) Typically community health costs would embrace such concerns as: • levels of street safety, • security of household belongings, • enjoyment of beautiful living environments, • opportunity for choosing a diversity of lifestyles, • accommodation and tolerance for minority and disadvantaged groups, including housing choices for persons with disabilities, seniors, low income groups and families • levels of co-operation and mutual support amongst residents, • levels of violent crime, 53 • perceived excitement of street life • preservation of heritage values, and so on. These kinds of impacts can be many and diverse. (Ullmann 1983, Shullman and Bond 1978) Most people recognize that housing developments are likely to affect community health and that the nature of the effects will be influenced by the design features and by the design process. Thus to some extent, a full cost accounting of housing and urban development must consider these kind of non-market externalities. For example, does a particular housing development tend to reduce levels of street crime? foster co-operation amongst community residents? enhance the residents perceptions of beauty and belonging? In theory an accounting method would answer these kind of questions by: 1. defining clearly what is meant by community health; 2. determining cause and effect relationships between housing designs and community health; and 3. qualifying and, wherever possible, quantifying these effects for specific housing projects. In an effort to include community health concerns in a full costing framework, a careful examination of these issues is warranted. However none of these questions is straightforward. Health itself is a largely subjective concept, that cannot be arbitrarily or absolutely measured. The cause and effect relationships between the built environment and health are also open to interpretation. Do well secured houses reflect healthier communities because crime is controlled, or are they a symptom of ill health? The nature of the relationship may depend upon a person's political views. An extensive review of community health issues completed in preparation for this thesis has lead to the conclusion that housing contributes to community health to the extent that it improves the ability of community organisations to work together. In other words, if the process of creating housing helps community groups, developers, future occupants and other concerned people to communicate in effective ways, the result is likely to be better housing designs and a stronger, healthier community. On this basis a number of 'process-oriented' questions are presented in Table 7 as a way of identifying the community health costs of specific housing developments. The answers can be provided in descriptive terms, or ranked relative to average projects, or rated using a simple scale if necessary. Although this is a somewhat round about approach to evaluating sustainability, it does 54 produce an indication of community health based upon the types of housing developments. Table 7. Rating the Impact of Housing on Community Health 1. Does a system or process exist to explicitly permit and encourage involvement in the design by concerned community groups and neighbours? For example, has the developer provided an easily read description of the project? are review panels present? Have community concerns been polled? 2. Is it easy for concerns expressed by community groups and future occupants to be considered during the process of construction? Usually the best system for responding to on-going concerns is to have a single individual in charge - as opposed to a collection of professionals - with the ability to respond personally to concerns by the community and make changes to the production process or specifications accordingly. 3. Can decisions about construction processes be made with consideration for the community benefits? Are the construction firms plants and key decision makers located in - or close to - the community? 4. Is there a process for allowing participation by residents and neighbours and future occupants in decisions about the layout of lots and use of common land? 5. Is there involvement by families and other potential occupants in customizing the interior designs of the dwellings? 6. Are the developer and architect committed to adaptable house designs, so that the house can respond to changing community priorities and allow occupants to adapt the space to their specific requirements? The answer to these questions provides a basis for evaluating impacts on community health. Developing a sophisticated scoring system for this purpose is beyond the scope of this thesis. Only a very simplified and subjective scoring system is applied to the Case Study house in Chapter 6. Even a brief look at the questions is sufficient to reveal that typical tract housing in Canada would score very poorly in this area. Essentially the developer and city use the marketplace as a surrogate for community involvement, and the potential for improving "community health" is ignored. Co-op housing, and some social and native housing developments, may be examples of healthier 55 development processes. Sometimes densification in well established neighbourhoods can also involve lots of participation and communications between all the involved parties. Most developers are likely to prefer an "unhealthy" process for reasons of expediency and profit. Such attitudes may reflect the lack of a long term stake in the community, and may also be a result of antagonistic and ineffective communications styles used by some community groups. 4.5 LIMITATIONS OF MODELLING RESOURCE IMPACTS OF DEVELOPMENTS As housing technology attempts to become more sustainable, it is certain to become more integrated with other economic sectors and less amenable to full cost accounting. In other words, the integration of housing services with other economic activity is a trend that may frustrate attempts at full cost accounting. Before moving on to application of full cost accounting, it is worth taking time to briefly review the trends that drive communities towards integration, and then consider the implications for any modelling framework. Integration is a key principle of ecological municipal management - a technique that improves the sustainability of economic and social systems by adopting patterns and principles developed by natural ecosystems. (Bruggman 1993, Tibs 1992) From this perspective, our present-day residential communities exhibit the characteristics of immature ecosystems - lots of material and energy throughput and a small number of species. If our communities are to become stable over the long term, it follows that they must adopt the design features of mature natural ecosystems. Over the course of four billion years, nature has perfected the art of ecological sustainability, and in doing so provides us with time worn principles for minimizing the full costs of residential design. Mature ecosystems are characterized by designs that employ: • functional integration, • elegance, • recycling, and • feedback systems. In essence we need to replicate in our cities and towns the complex food webs of an old growth forest or tropical wetland. Using nature as a model, energy and materials need to be cycled from one process to another, so that a web is created between an activity such as housing, and all other activities. The waste product of one economic process becomes the resource input for the next. There is no waste in the system, only "food" for subsequent users. The application of ecosystem design to cities and towns results in housing that is functionally integrated with other economic sectors, cycling resources in optimal 56 paths, and giving a whole new meaning to the term "mixed residential development". In general terms, the more sustainable our communities, the more the services become integrated, and the less appropriate it will be to conduct full cost accounting of only one sector of the community - such as the residential sector. The type of models presented in this thesis are ultimately too simplistic to capture many of the important resource flows that relate to housing technology in a complex, integrated community. The value of an exclusive costing model for the residential sector is limited to the short term period when housing is in transition from tract, market driven housing designs to community-based housing systems. During the transition the lack of sophistication may not entail significant loss in accuracy, especially if accommodation is made for the most critical exchange of resources between sectors. Transportation, for example, is a sector that overlaps extensively with conventional housing models. The model can then help to highlight the areas where external costs are most significant, and in this way provide guidance in making trade-offs. 57 5. Chapter Five Application of the Building Block Method 5.1 THE PROCESS OF COMMUNITY-BASED RESOURCE PLANNING The Building Block Method is intended to function as a planning tool, within, the larger context of policy formation and development planning. This larger context is illustrated in Figure 4 . The figure presents a "design wheel", which most appropriately begins with analysis of the regional resource base, and an examination of the local resource constraints and opportunities. This first step may include identification of limits or targets for various resource categories, or on specific types of emissions. The next step involves formulating policies for influencing community development and resource use. This may include a full range of policy instruments, including regulations, market reform, incentives, education and communications. The effect of such measures is then projected as a development scenario; the scenario is used to revise the analysis of resource flows, impacts, and costs. The result is compared with the community goals, and with the limits or targets, and decisions revised accordingly. Within this overall context of Community Integrated Resource Planning, the Building Block Method accomplishes the modelling of resource flows, impacts and costs. At present, this stage of planning appears to be the weak link in the chain. A method is needed for analyzing both the existing resource flows, and the changes that result from alternative development scenarios. The Building Block Method may represent a way of facilitating this difficult stage. Figure 4 The Context of Community Integrated Resource Planning 58 In order to execute this bottom-up planning method a tool kit is required to facilitate execution of the five steps. A tool-kit is comprised of a suite of software applications -or modules - that make the method easy to understand and suitable for execution by a wide range of people, including municipal and regional planners, community groups, resource planning commissions, environmental planners, regional utilities, colleges and consultants. Some of the "tools" within the tool-kit will be building modelling programs that can function independently, but also work as a component of the method. The software modules that need to be developed are illustrated in Figure 6. The different components of this tool kit are briefly introduced below: 5.1.1 Step 1 Inventory: Collect empirical data on the built and natural environment, and on the baseline population and development path. This first step requires an easy-to-use data entry program for surveying buildings in the community and generating statistics needed for building modelling. It includes options for creating inputs that permit use of a variety of resource models - depending upon the scope of the planning exercise. The tools could include a number of software "utilities" for screening, converting and structuring existing data bases available to the community so that they can be used by various modelling programs and by the community data base itself. The actual data source would vary for each community, and would reflect the regional and national corporate environment. If BC is used as an example, some of the larger empirical data bases which need to be managed in this fashion include": • Statistics Canada, • BC Assessment Authority, • Environment Canada, • Utility Billing data, • ICBC vehicle stock profile, • C M H C housing starts, • NRCan R2000 program participation, and • Community planning and engineering (approvals and permits). 5.1.2 Step 2 Archetype: Develop a set of representative archetypes for the base year and for future years The second step requires an archetyping process that sorts and matches the building survey data so as to create a series of representative * Presently, all of this data can be accessed electronically, for a fee, as part of generating a commtinity data base, although most communities are unaware of the procedures. 59 archetypes for the community. These archetypes are statistical representations of building technology and occupant behaviour. Each archetype may represent a single building in a neighbourhood, or any number of buildings. Community supply systems are also modelled, so as to represent the various water, energy, and material supply and processing systems available to the buildings. The building archetypes are "connected" to the infrastructure systems to reflect the typical breakdown for each category of building. In some cases the archetyping process is a fairly automatic procedure, once the empirical data is made available. For example, Stats Can and BC Assessment data can be used to automatically divide the stock into "energy archetypes" which might look like the list in Table 8. A similar, but less detailed list of archetypes is required for other resources such as water and waste. Table 8 Sample List of Building Energy Archetypes Residential Energy Archetypes Single family detached advanced (R2000) new post 1970 1945-1969 pre 1945 Row and town and duplex as above Apartment, Condominium as above Mobile Commercial Energy Archetypes" Existing / New Warehouse Warehouse - Refrigeration Elementary School Secondary School Hotel motel Restaurant Fast Food Hospital Office pre79, <20,000ft2 Office pre 79 20,000 to 100,000 ft2 . Office pre 79, >100000 ft2 Office post 79, <20,000ft2 Office post 79, 20,000 to 100,000 ft2 Office post 79, >100000 ft2 Retail, non food mall Retail, part of building Retail stand alone Grocery Supermarket Shopping Centre University/ College Hotel/motel Hospital . Mall Gas bar X 1 Categories and vintages of buildings are adapted from two DOE 2.1 archetype libraries: BC Hydro's Power Smart BEST program, & the Demand Analyser program, ITEM Systems, 1402 Third Ave. .Seattle 98101. 60 5.1.3 Step 3 Model Resource Transformations Model resource flows for each of the building archetypes. The third step includes processing the archetypes though a series of "engines" that model each archetype's resource flows. Each of the engines should be capable of being expanded as necessary to accommodate varying time periods in the life cycle of the building archetypes. Examples of engines that can be applied to the residential energy archetypes include: • Residential Operating energy: HOT 2000, AUDIT2000 • Residential Embodied energy: OPTIMIZE • Commercial Operating energy: DOE 2.1 5.1.4 Step 4 Aggregate Results Forecast the total the community's resource flows, and calculate the quantity of "stressors" related to any impacts of concern The fourth step involves aggregating the results for each of the archetypes to create a BASELINE resource flow. The result is a community-level analysis of resource flows, impacts and costs. This step simply multiplies archetype outputs by their community stock and sums the results. 5.1.5 Step 5 Forecast '"what-if?" Scenarios Change the numbers and types of archetypes over time, and analyzing the effect on impacts of concern. The fifth step uses scenario design techniques to develop and forecast alternative futures for the community. The mix of energy, water, land and other system archetypes can be altered, as can the mix and numbers of building archetypes over time. Ideally these changes reflect plausible impacts of policies and programs that could be implemented by the community. The complete suite of tools described above should represent an important contribution to achieving more practical and effective community integrated resource management. At present, however, no such tool kit exists. The tools work together to permit a modelling exercise based on the routines illustrated in 61 Figure 5. The architecture for the data bases and engines and reporting functions is presented in Figure 6. Data Input Routines End Use Models Relational Data Bases with Custom Default Values Comprehensive Model Simulation Optimization Reporting Options (graphics & numbers) Figure 5 Functional Components of a Community Model 62 N E I G H B O U R H O O D S End Use Models Audit 2000 OPTIMIZE DOE 2.1 Water Waste Transport Data Collection and Generation Routines: Commercial Archetypes Residential Archetypes Infrastructure Archetypes Systems Empirical Generic Data Bases: Stats Can Environment Relational Data Bases Commercial Archetypes Residential Archetypes Transport System Energy Systems Water Systems Waste Systems Demographics Climate Ecology Aquatic Land Air Quannnes Quality Rate of Change Resources Total Resource F l o w Calculator 1 Impacts Impact Assessments Costs Valuations Reports Time Periods End Use Resource Physical Scale Units Concern Assumptions /Source Figure 6 Possible Architecture for a Software Tool Kit for Community Integrated Resource Planning 63 6. Chapter Six Case Study of a Single Housing Archetype Much of the original research work contained within this thesis consists of the design of a comprehensive conceptual framework and method for full cost accounting of housing developments, and for integrated resource planning, at the community level. Application of the framework and method is the next step, to create a demonstration case study. This chapter represents the beginning of such a case study. The resource flow quantities and associated costs presented in the case study that follows are 'order-of-magnitude' estimates, intended to serve illustrative purposes only. Moreover because the impacts cover a very broad range of categories, the data is drawn from a large number of secondary research sources, not all of which are consistently accurate. The costs are defined and categorized according to the framework and terms introduced in Chapters 5 and 6. The format is designed to permit easy comparisons of alternate house designs, and to estimate the potential range of costs by housing type. The case study includes one or more examples of group costs for each major cost category. Table 9 lists the specific costs that were examined in the case study. Due to a lack of data and time, only a portion of these costs have been'estimated for the case study house. The table indicates the units used to express costs. In cases where impacts have not been quantified, the units are "none". 6.1 INTRODUCTION TO THE COST DATA SHEETS For convenience, a single archetype has been chosen as representative of typical new single-family suburban dwellings in Canada. The archetype is located in the community of Surrey, B C , and hereafter will be referred to as the Base Case house. After analysing the resource flows and costs for the base case house, the next step normally involve the analysis of other archetypes (e.g. multiple unit residential low rise, small scale commercial, and so on), until it is possible to aggregate the total resource flows and the community level. For this example, however, only the single house archetype will be examined. 64 Table 9 Examples of Specific Costs that Were Addressed in a Case Studyx Categories and Types of Costs Considered Units FINANCIAL Subsidy for infrastructure: roads Municipal water infrastructure : wastewater Infrastructure: generation and distribution INDIVIDUAL HEALTH Respiratory disease and irritation from NOx and ozone Accidents and Loss of productive time or life Noise irritation Life expectancy related to environmental toxicity Provincial Health Care Costs Loss of productivity of individuals COMMUNITY HEALTH Opportunity for participation and control by residents PHYSICAL PROPERTY Reduced solar access Loss of view Destruction of materials from air pollution NATURAL ENVIRONMENT Lost revenue to fishing industry SUSTAINABILITY Natural Environment Functions: Climate Regulation Natural Environment Functions: Protection from Harmful Cosmic Radiation Natural Environment Functions: Loss of Soil Fertility Natural Environment Functions: Regulation of biological control mechanisms and protection of ecosystem integrity Natural Environment Functions: Maintenance of biological diversity $ $ $ kg, $ km, $ km, $ none none none % of possible none %, $ none $ % target, $ none none none none x u Only a portion of these social costs have been estimated in the current study 65 This Base Case house is intended to represent the predominant housing archetype in Surrey. Once analysed in detail, it provides a useful base line for adjusting external monetary costs of other housing types. If, for example, an energy efficient case study house has only half the life-cycle air emissions as the Base Case house, then it is assumed that the external costs associated with air emissions would also be halved. The resource flows and cost data for the base case housing archetype are summarised in this chapter. The detailed resource flow data is presented in Appendix I. Detailed Cost Data Sheets are presented in Appendix II. A standardised format has been developed for the cost data in Appendix II, using the following terms and categories: • Cost Description: Defines who pays what, and how. • Cause and Effect Chains: Explains the process through which the housing services transform resources and impact the group of concern. Provides references, where appropriate, to documented cases in environmental, legal and economics literature. • Simplified Damage Cost Methodology: Describes the limited approach that will be used to arrive at a damage cost. • Assumptions and Limitations: Describes the key assumptions used to estimate the damage and costs, and also the areas of greatest potential error or misinterpretation. • Major Sources for Data: Lists sources for data used in obtaining Impact Data and Valuation Data. • Impact Data: Lists and quantifies the key resource transformations that occur in a Base Case house. These are the stressors most likely to correlate with impacts on the group of concern. The inventory data on these stressors is based on a careful analysis of actual resource use. Impact Data represent a simple, non-monetary method for expressing costs and comparing different houses. They can also be used to adjust average costs for residences in a region, to reflect the design of a specific house. • Valuation Data: This is a listing of the key functions used to estimate the monetary costs. Usually the costs are based on average housing services for the region in which cost data is available. The value and units of each variable are defined. 66 • Cost Estimate: This is an equation, producing a dollar cost if possible. Usually costs are expressed both annually, and for the house life cycle. Life cycle costs are discounted where appropriate, based on the rationale presented in Chapter 3. In the case of sustainability costs, no dollar value is calculated, and instead the house performance is rated against targets. 6.2 DESCRIPTION OF BASE CASE HOUSE DESIGN FEATURES The Base Case Housing Archetype is similar to the new, 2 storey, single family residence described for CMHC's OPTIMIZE program.xii i For purposes of this case study, the OPTIMIZE program was updated with more accurate energy intensity data, and expanded to include materials take-offs for the surrounding residential development (i.e. a portion of the roads, sewer pipe, fire hydrants, and so on required for the house). The Energy and Materials sections in Appendix I contains the OPTIMIZE outputs for both the Base Case house, and for its portion of the surrounding subdivision infrastructure. The Base Case house was carefully selected by the OPTIMIZE programmers to represent the most typical Surrey residence in 1991. It is a 3 bedroom house with a design occupancy of 4 persons, and an expected life time of 50 years. The house is North oriented, with an attached double garage. Heated interior space consists of an unfinished basement and two storeys above grade. Space heating is provided by a natural gas furnace and forced air system with a 30 kW capacity. No central ventilation or cooling system is installed. Construction specifications are summarized in Table 10. Table 10 Summary of Base Case House Construction Building Assembly Construction Specifications Floor Area 350 m2 Foundation Walls Poured concrete, 3.5 inch glass fibre Exterior Walls 2x6 frame, V2 in. gypsum 5V2 inch glass fibre, part cedar siding and part brick veneer Interior Walls 2x4, V2 in. gypsum, 2 coats paint Ceiling and Attic 12 inch blown mineral fibre, asphalt shingle, Floor finish kitchen/bathroom Vinyl Floor finish other rooms Carpet Water heater capacity 10 kW Water supply lines Polybutylene pipe x l i iOFTIMIZE is a computer program that uses a detailed materials take-off to estimate the embodied energy and associated air emissions over the life-cycle of a house. 67 6.3 O C C U P A N T T R A N S P O R T A T I O N A N D A C C E S S T O C O M M U N I T Y S E R V I C E S The Base Case house is well removed from services in the community , there is no convenient public transportation system, and no bike paths or other options for accessing services. In addition the house has been designed wi th a two car garage, and parking in front of house. For these reasons it seems reasonable to assume that this Base Case house requires the use of an automobile for access to all community services, similar to most suburban "sprawl" developments. However some use of bus and automated light rapid transit ( A L R ) is assumed for a portion of the trips to the central business district, and for trips by non drivers. The pr imary dependency on automobiles has a major impact on externality costs, since a portion of the extensive road infrastructure for the community can be v iewed as part of the housing services. The externality costs of transportation in the lower mainland of B C have already been documented in a previous research study ( K P M G 1993). These costs vary depending u p o n the mode of transportation, and the number of kilometres travelled. The K P M G study concluded that the external costs of transportation by automobile represent about 23% of the total costs. This represent a subsidy of $867 per year by each resident in the Lower Main land of B C . O n l y a portion of these external costs can be attributed to housing services, since transportation system is also used for freight, recreation, and other non-residential uses. A l t h o u g h the K P M G cost categories are not easily adapted to the full cost accounting framework used i n this study, they have been applied for all transportation-related externalities T o calculate the external costs of accessing housing, some general assumptions had to be made about trip lengths by transportation mode. Error! Reference source not found, lists the assumptions used for this case study. Table 11 Transportation of Case House Occupants Between the House and Essential Community Services Mode of Transportation Trip Type Km/day Days/yr. Km/yr. Cars Work 20 200 4,000 Shopping 10 100 1,000 Misc. 4 200 800 Subtotal 11,600 Buses and A L R T School bus-diesel 10 200 2,000 Other Bus 5 100 500 A L R T 5 100 500 Subtotal 3,000 Total for all modes 14,600 68 6.4 COMPUTER MODEL A N D RESOURCE DATA BASE The computer model developed to calculate the full costs of housing in this thesis is comprised of a series of Excel 5.0 worksheets, integrated in a single workbook. The workbook includes a view utility - using point and click labels -to permit easy movement between different views within the sheets. The opening screen for the utility includes a summary breakdown of total costs, along with labels for each of the costs categories. Each label on the opening menu leads to a more detailed menu of information on resource transformations and costs. Separate worksheets have been developed for each resource (energy, air, water, etc.) and include tables describing the resource flows for the Base Case house at various spatial and time scales. Some of these tables have been created using data originally derived from other computer models - or 'engines' - such as OPTIMIZE and HOT2000. Additional worksheets have been developed for each of the cost categories (Financial, Health, etc.). Within these worksheets the cost calculations are completed, usually referencing the data from the resource transformations. Editing of the resource transformation data sheets, or the economic data in the costing sheets, results in new cost values. Comparing the full costs of different housing types in the same location requires only editing of the resource transformation worksheets, to replace the house specific resource data. Extracts from the worksheet costing tables have been included in the cost data sheets. Most of the economic data is crude, due to a lack of prior research in this area. At this point in time the value of the exercise is largely related to testing and evaluating the suitability of the conceptual framework and data organization. Another benefit from the current framework is that the Excel workbook format, and use of a Base Case house, facilitates easy comparisons of housing designs for a similar region. All that is required to compare housing costs for different types of technology and services is to change the data in the resource tables. The cost data is automatically updated to reflect the level of impact for the new housing design. 6.5 RESOURCE TRANSFORMATIONS FOR BASE CASE HOUSE Resource transformations for the Base Case house have been separately calculated for each spatial scale and time period. In this way the resource transformations can be used to generate costs for specific impacts of concern. Resource transformations include energy, materials, air emissions, water use and 69 land use. The remainder of this section displays summary charts for each of the resources. For a complete neighbourhood or development, a similar process would be followed for all the building archetypes, and the results aggregated to create a community level assessment. Then the numbers and mix of archetypes would be revised to reflect specific growth scenarios, and the impacts recalculated. This overall process is outlined in Figure 7. The scenario evaluations are not part of this case study. 70 CUSTOMIZE Customize the data base x INVENTORY ARCHETYPE MODEL ASSESS Research Completion nventory the natural resource base, infrastructure, buildings, demographics ± Generate archetypes of buildings Model building archetypes and create representative data base Assess base year and future resource flows, impacts and costs SCENARIO PLAN IMPLEMENT Develop alternative scenarios Satisfy constraints and optimize benefits Implement strategies Figure 7 The Full Cost Accounting and Planning Process for the Base Case Housing Archetype 71 ENERGY RESOURCES Life cycle energy use for the Base Case housing archetype totals 16,290 GJ over 50 years. Figure 8 illustrates how this energy is used. Of the total energy pie, 57 % is used for operating the building, 14% is used for accessing the house through transportation systems, and 29% is energy embodied in the building materials, or in the surrounding infrastructure. Most of the energy resource transformations have been carefully modelled using the OPTIMIZE and HOT2000 computer programs. However in a number of cases the data represents rough estimates only. Municipal infrastructure energy is estimated using data provided by the municipality for development cost charges, and using an assumed mix of construction materials for embodied energy estimates. Transportation energy does not include the embodied energy in vehicles. Figure 9 illustrates the division of energy use at the level of building and site only, for each time period in the lifecycle. Figure 10 illustrates energy use at the subdivision level, and Figure 11 shows the municipal infrastructure. Operating 9,316 Building 2,305 Embodied 3,307 Figure 8 Energy Use for House and Infrastructure (GJ) 72 Extract + Mfg 1,775 Operating Total 9,316 2,305 1st year Operation 141 Figure 9 Energy Resources for Building and Site by Time Period (GJ) Repair 510 Demolition 21 Extract + Mfg 642 Figure 10 Energy Resources Used by the Subdivision Infrastructure (GJ) Extraction 224 Demolition 7 Repair 178 Figure 11 Energy Resources Used by the Municipal Infrastructure (GJ) 73 6.6 MATERIAL FLOWS Materials use by the Base Case house has been derived from a revised version of OPTIMIZE, for the building and site only. Lifecycle wood products total 37,142 kg; other building products total 368,637 kg; site preparation includes 672,320 kg. A breakdown of these weights, by commodity, is shown in Table 12. Table 12 Materials Use (kg) for Base Case House (Building & Site Only) Materials Construction Repair/Replace Lifecycle Wood Products: LUMBERS TIMBER 15,035 7,265 22,300 VENEER AND PLYWOOD 7,443 2,904 10,346 MILLWORK (WOODWORK) 2,870 1,626 4,496 Sub total 25,347 11,795 37,142 Non-wood products READY-MIX CONCRETE 192,289 64,178 256,467 SAND AND GRAVEL 45,140 2,376 47,516 PLASTERS & OTHER GYPSUM PRODUCTS 10,945 6,884 17,829 BRICKS AND TILES, CLAY 10,276 4,747 15,023 BUILDING PAPER 2,524 3,000 5,524 CEMENT 2,223 936 3,158 MIN. WOOL & THERMAL INSULATION 2,112 989 3,101 ASPHALT AND COAL OILS, N.E.S. 2,089 660 2,749 CONCRETE BASIC PRODUCTS 2,028 564 2,591 PAINTS & RELATED PRODUCTS 936 1,635 2,571 CARPETING&FABRIC RUGS, MATS, ETC 407 2,163 2,570 PIPE FITTINGS, NOT IRON & STEEL 877 1,089 1,966 METAL PIPES.FITTINGS & SIDINGS 1,182 132 1,314 GLASS, PLATE, SHEET, WOOL 949 297 1,246 TILING, RUBBER, PLASTIC 205 919 1,124 SMALL ELEC.APPLIANCES, DOMESTIC 210 895 1,105 PLASTIC PIPE FITTINGS & SHEET 330 129 458 REFRIG, FREEZERS & COMBINED DOMESTIC 80 341 421 STEEL PIPES & TUBES NES 234 180 414 WIRE AND CABLE, INSULATED 105 281 386 HEATING EQ.WARM AIR EX.PIPES&E 85 255 340 UNIT&WATER TANK HEATERS NON-EL 75 195 270 GAS RANGES&ELEC.STOVES,DOMESTIC 50 213 263 ENCLOSED SAFETY SWITCHES ETC. 71 159 230 Subtotal 275,422 93,215 368,637 Site Preparation EARTHWORKS: Excavation 297,960 297,960 595,920 SEWAGE DISPOSAL SYSTEM: Excavation 19,100 19,100 38,200 LANDSCAPING: Topsoil 19,100 19,100 38,200 Subtotal 336,160 336,160 672,320 Grand Total 636,929 441,170 1,078,099 74 6.7 AIR EMISSIONS A i r emissions from energy transformations are summarized in Figure 12 and Figure 13 below. Carbon Dioxide represents that vast majority of emissions by weight, and has been separately charted by time period. Life cycle emissions for a range of other gases and particulates are summarized in Figure 13. Emission quantities are calculated in OPTIMIZE, but have been supplemented for this research to include access-transportation emissions. In some cases the transportation emissions are significantly greater than emissions from building operation and embodied energy. For example transportation access generates 90% of the VOCs and about 60% of the particulates and NOx. Occupant 157 Aquisition 49 Construction Life Operation 315 Figure 12 Energy-related C 0 2 Generation for Building and Municipal and Subdivision Infrastructure by Time Period (tonnes) Figure 13 Total Gas Emissions for Building and Infrastructure, including Transportation (kg) 75 6.8 WATER CONSUMPTION Fresh water consumption for the Base Case house is estimated at 658 cubic metres per year. This is separated by end use in the figure below based on the assumptions in Table 14. Not all fresh water ends up in the sanitary sewer, since some water is consumed by occupants and expired, other water is used outdoors. Total annual waste water is estimated at 517 cubic metres per year. Figure 14 Annual Fresh Water Consumption by End Use for Base Case House Municipal Waste 66 Outdoor 124 Cooking 18 Dishes 37 Clothes 100 Toilets 204 Bathing 175 Table 13 Annual Contaminant Loading from Base Case House Site (grams/yr.) No estimate has been made of water consumption at the level of the subdivision (e.g. water public grass and trees, street cleaning). Municipal infrastructure is assumed to involve wastage of fresh water equal to 5% of the total consumption. No estimate has been made of water consumption during time periods other than house operation. For example, water embodied in building materials, and in energy resources, has not been considered. Run-off water from the housing site has been estimated from average figures on run-off volumes in the lower mainland of BC (Dorcey, 1991) An average value is estimated at 17,640 m3 per hectare, annually, or about 630 m3 run-off from the Base Case house. (Surrey has no residential storm sewer system.) Assumptions for contaminant loading of the run-off are presented in Table 13. Contaminant grams/yr for site BOD 5988.8 Suspended Solids 29818.7 Ammonia 121.4 Total Phosphorus 75.9 Cadmium 2.8 Copper 23.9 Lead 45.2 Zinc 81.6 76 Table 14 Fresh Water Use for Base Case House Building & Site Amount (litres) Unit Frequency (day) Ucapita/day Uhousehold/day toilets 20 flush 7 140 560 showers, baths, washing 120 shower 1 120 480 clothes washing 86 load 0.8 69 275 dishwashing 25 cycle 1 25 100 cooking and drinking 4 meal 3 12 48 Outdoor - - - 85 340 6.9 L A N D U S E The building site for the Base Case house is 668 m2. This is divided according to use as shown in Figure 15 below. Of the total, approximately 290 m2 remain productive biologically - used for grass, trees, gardens and so on. The remaining land is removed from productive use. The subdivision infrastructure represents another 445 m2 of land use, divided by use according to Figure 16. Of this area, about 25% remains in productive use as parks and leave strips. No estimate has been made of the considerable land use by the municipal infrastructure, including land dedicated to water catchment, hydro dams, and utility right of ways. Land use by the building materials has been estimated for wood products. Approximately 4560 m2 of productive forest land is required in perpetuity to supply the wood materials embodied in the house and used for repair and replacement purposes. This represents an area about 7 times the total site area. A greater area is needed if other materials such as concrete, sand and gravel are considered in addition to wood. House 159 Figure 15 Land Usage on Site (m2) Figure 16 Land Usage by House for Subdiv is ion (m2) 77 6.10 I N T E R N A L COSTS OF B A S E C A S E H O U S E The total internal capital costs for the Base Case house are approximately $100,000, excluding labour. Labour is estimated at $56,000, for a total as built cost of $156,000. This does not include the land value for a lot in Surrey, at approximately $200,000. Nor does it include taxes of $25,000 for GST and about $5,000 for the BC. Property Purchase Tax. Total capital costs are therefore approximately $386,000. A breakdown of Internal Capital costs by category is shown in Figure 17 below. The allocation of Service Charges and Cost Charges is shown in Figure 18 and Figure 19. None of these capital costs include access transportation facilities (vehicle, garage, roadways, and so on). If the first year of operation is included, the initial house cost rises to $400,385. Over a 50 year lifetime, at a 4% discount rate, the lifecycle costs for the house represent a present value of $567,353. Labour 56 Servicing Charges 14 Hydro Hook-up Natural Gas Hoo Inspection Costs Design Costs 5 Bldg Materials 81 Figure 17 Internal Capital Costs by Category (excl. transportation facilities) Street Lighting 410 Roads 4 ,621 Utility 2,280 Engineer 1,000 Sanitary 1,078 Water mains 921 Storm 3,347 Figure 18 Lot Servicing Costs Paid by Developer to Construction Sector ($) 78 Water 756 Figure 19 Development Cost Charges Paid by Developer to Municipality ($) Gas 963 Electricity 543 485 Veh,Fixed.2,644 Figure 20 Allocation of Property Taxes Paid by Homeowner for First Year ($) 79 7. Chapter Seven Overview of External Costs 7.1 DESCRIPTION OF EXTERNAL COSTS BY CATEGORY This chapter presents an overview of selected external costs for the base case housing archetype. Each cost is first defined and the costing method is outlined. Much more detailed information on how the costs are defined, and the estimation procedure, can be found in the Detailed Cost Data Sheets in Appendix II. Table 15 provides a summary of the calculated costs for each category. Only those costs are included that could be estimated within the constraints of this research study. For the impacts listed the total first year external costs total $7,693. Life cycle external costs total $88,803 (present value). Except where noted, all life cycle external costs have been discounted at 4% over 50 years. Table 15 Summary of Costs for Base Case House Group Type of Impact As -bu i l t and Life-cycle Cost Impacted First Year Cost $1995 Alternative $1995 Alternative Units Units Financial Taxpayer Taxpayer Ratepayer Subsidy for Infrastructure: Roads Municipal water infrastructure: wastewater Electricity Infrastructure: generation and distribution $488 $666 $3,465 N / A N / A N / A $10,913 $14,894 $7,117 N / A N / A N / A Individual Health Individual Individual Individual Respiratory disease and irritation from NOx and ozone Accidents and Loss of productive time or life Noise Irritation (traffic) $124 $2,019 $59 85 kg N / A N / A $851 $29,119 $1,331 1,220 kg N / A N / A Community Health Community Opportunities for participation and control by community residents N / A 10% N / A 10% PI lysical Property Neighbours Loss of views N / A N / A $17,500 N / A Natural Environment Business Economic impact on Fisheries $40 N / A $880 N / A Sustainability Future Generations Natural Environment Functions: climate regulation $832 344% of target $6,198 N / A 80 Subsidy for road infrastructure includes costs related to the development and maintenance of that portion of the roads and highways required by housing, but not covered by homeowners through their property taxes or through user charges such as gasoline taxes and registration permits. For the base case house, taxpayers provide subsidies estimated at $650 in the first year, and $14,500 over a 50 year life cycle. Subsidies for the municipal waste water infrastructure include costs related to the development and maintenance of municipal wastewater and sewage treatment systems, excluding the dollars received from development cost charges and property taxes. These subsidies are estimated at $670 in the first year, and $14,900 over a 50 year life cycle. Subsidies for municipal fresh water infrastructure include costs paid by taxpayers for the development and maintenance of the municipal infrastructure that provides fresh water to residences. No cost estimate has been quantified. Subsidies for the electricity generation and distribution infrastructure include money provided by the utility ratepayer (BC Hydro customers) related to the additional capacity and distribution infrastructure needed by the electrical utility to cover the expected load and peak requirements of a new residence. First year costs are estimated at $ 3,465. Life cycle costs total $7,137 over a 50 year life cycle. The tax burden on businesses includes financial costs borne by business in excess of their use of municipal services due to unfair allocation of tax burden between property classifications. The value of this tax money for the Base Case house in not known. Respiratory disease and irritation from NOx and ozone are the uncompensated health costs borne by individuals who suffer from lung disease or irritation due to smog. These costs do not include the cost of health care provided through the provincial health care insurance. An estimate of costs for the Base Case house is $124 for the first year, and a total of $851 over a 50 year lifecycle. Accidents and Loss of productive time or life include the individual health costs resulting from loss of productive time due to damage to health or life, and not fully compensated by health insurance. The as built and first year costs are estimated at $2,019. Life Cycle Costs total $29,119. Noise irritation is a cost to individuals resulting from discomfort and loss of property value associated with the additional noise created by housing services. 81 As built and first year costs for the Base Case house are estimated at $ 59. Lifecycle costs total $ 1,331. Life expectancy and the loss of productivity related to environmental toxicity is a cost to individual health, from increased risk of cancer, poisoning and chemical sensitivities for individuals exposed to toxic substances in the environment as a result of housing services. No estimate has been made of these costs. Provincial health care costs include costs to human health borne by society, for the health care services provided by publicly supported health care systems, to compensate for the risk to health and safety from specific housing services. Costs for the Base Case house have not been estimated. Costs related to loss of views, include the costs borne by adjacent property owners for because of obscured views and loss of light. A total life cycle cost is estimated at $17,500. Lost revenue to fishing industry includes the cost borne by fishers due to wastewater and run-off effects on water quality, nursery habitat, and fish mortality. These costs are estimated at $40 annually, and at $880 for the entire lifecycle of the Base Case house. Costs to community health represent the lost opportunities for participation and decision-making by neighbours, community groups, and future occupants in the Base Case housing design and construction. A dollar value for such costs is not estimated. At least 90% of the opportunity for such participation appears to be lost, however. The natural environment function of regulating climate includes costs from the risk of climate change incurred by future generations. The as-built and first year cost is estimated at $830, based on abatement costs (tree planting). Life cycle costs total $6,200, over 50 years at a zero discount rate. Because climate change is clearly a threat to sustainability, the Base Case house is compared against the proposed national emission reduction targets; the emissions total 2,406 kg/person*yr: for the Base Case housing services, or 344% over the target. 82 8. Chapter Eight Summary and Conclusions 8.1 SUMMARY This thesis began by summarizing the principles of ecological economics, as a way of creating a context for examining the need for improved resource management at the local level. In this context, current levels of economic activity cannot be sustained, and major changes are urgently needed in order for communities to live within the fundamental ecological constraints of the natural environment. It was then argued that a number of other emerging forces are providing communities with a strong rationale for becoming more involved with integrated resource planning and full cost accounting. These forces include the need to cope with high growth rates and an inadequately maintained infrastructure, the downloading of responsibilities to municipal and regional governments, the increased commitments by residents to satisfy ecological constraints, and physical resource scarcities. An argument was also made that local planing could result in significant efficiency improvements at the community level that would not otherwise occur. A review was then conducted of the existing tools and methods available for use by those communities undertaking IRP. These tools included procedural manuals on impact assessment, such as the SETAC manual, as well as a collection of software tools addressing various resources at either the individual building level, or at the level of municipal/utility infrastructure. None of the tools reviewed were comprehensive in terms of categories of resources or components of the community. Most operate like black box models that limit the transparency of the outputs, and the flexibility of their use. Almost none of the tools are actually being used by municipalities for planning purposes. The implications of this review were that new tools are needed, that the tools should be designed to work together, that the models should be designed to provide varying levels of analytical detail, and that the models should allow the user to select a range of resource types, scales, and time periods. The thesis then provided a detailed look at full cost accounting methods. This included an analysis of all the costs that need to be addressed, and the reasons why residential developments are likely to include high external costs. The importance of discount rates was illustrated, and a argument put forward for using different discount rates for different categories of costs. Costs related to sustainability were analyzed, and found to require separate accounting systems from other types of costs, since they cannot always be fairly traded off against other categories of costs. A combination of approaches was suggested for expressing cost values, including physical and monetary units. Multiple 83 attribute analysis was described and an argument was made that this approach is necessary to cope with the results of full cost accounting in ways that facilitate informed and creative decision making. A conceptual framework was then presented for a new method of community IRP, referred to as the Building Block Method. This new method involves the use of archetyping, to cope with the complexity and quantity of data for the built environment. It also incorporates an end use model of the community components, and uses existing software to generate accurate modelling data on the performance of buildings, vehicles, and infrastructure archetypes. Some suggestions were made on how best to obtain data needed for end use modelling of communities, since data is often hard to find. Various software packages were proposed as suitable for use with archetypes in preparing the end use data for the Building Block Method. A partial application of the Building Block Method was then presented, using a case study house in Surrey BC. This example included the use of software modelling tools to generate accurate and detailed data on all aspects of resource consumption over the life cycle of the house, at various physical scales. This detailed data was then used for full cost accounting. The total internal capital costs for the Base Case house were $106,348, excluding taxes of $35,000 and land costs of $200,000. Life cycle costs totalled $567,353, at a 4% discount rate over 50 years. Life cycle energy use for the Base Case house totalled 16,290 GJ. Life cycle material use for the house, excluding landscaping, totalled 368,637 kg. Ten percent of the material was wood products. Life cycle C02 generation for the house, including infrastructure and transportation, totalled 570 tonnes. Fresh water consumption for the Base Case house was estimated at 658,000 litres. Total annual waste water was estimated at 517,000 litres. Run-off water from the housing site was estimated at about 630 m3 annually. Land area required for the building site was 668 m2. Another 4560 m2 of productive forest land was required in perpetuity to supply the wood materials embodied in the house, or used for repair and replacement purposes. 8.2 INSIGHTS AND LESSONS The attempt to conduct full cost accounting of housing services has shown that, given the current state of the art, it is a very complicated process. A clearly defined method is needed in order to cope with the many variables for calculating resource flows and impacts. The framework and methods presented in this thesis appears to represent a worthwhile approach. The use of different modelling boundaries in the case study was particularly instructive, illustrating the importance of considering different spatial scales and 84 time periods. For example, if estimates of impacts and costs are based only on the life cycle operating energy requirements for a building, the analysis can miss almost half the total. The missing half is related to energy used for the municipal infrastructure, the subdivision infrastructure, the transportation of occupants to work and shops, and the energy embodied in the building materials over the life of the house. This approach clearly represents an substantial improvement to the methods currently used for evaluating buildings. Calculating external costs for housing requires a large amount of data -including data on both resource requirements, and regional economic and ecological environments. This is an impossible task without an extensive computer data base and spreadsheet program for handling the data. A useful method for addressing the impact of housing on sustainability is to compare the resource impacts against clear targets for the house sector, at the community level. Unfortunately, no such targets have yet been established. Comparing greenhouse gas emissions for the case study house against average emissions for the BC housing stock suggest that the Base Case house is far from sustainable. More thought is needed on how to make national and provincial targets specific enough to permit useful application to the mix of buildings within the residential sector. In order to properly identify external costs of housing it is necessary to prepare a detailed breakdown of the internal costs. For example, some of the fees, taxes, and charges paid by builders and homeowners serve to partially or fully compensate for specific impacts of housing, and need to be credited. To the extent that compensation is provided, costs are not external. External costs still represent an unknown portion of the total costs for a typical Canadian house, since many external costs identified in the case study have not yet been costed. The eight cost categories that have been monetized total $7,693 the first year, and $88,800 over the life time of the Base Case house. This represents 16% of the internal costs of the house, and could be considered a minimum. The inclusion of transportation costs in the analysis of housing has a significant impact on the total costs. For example, the essential transportation access for housing occupants, as defined in this thesis, represents a majority of the air emissions for a number of pollutants including particulates, NOx, and VOCs. The impact of the house on climate change - a Sustainability cost - was evaluated by calculating a target for BC houses of 2400 kg per person year (operating and embodied energy included), based on government commitments for greenhouse gas stabilization. The Base Case house exceeds this target by 344%. 85 7.3 LIMITATIONS A N D SECOND THOUGHTS Although the conceptual framework and Building Block Model developed in this thesis appear to represent an important contribution to the state of the art, the fundamental limitations of this approach should also be recognized. The most significant limitations are summarized below. Use of computer models for full cost accounting may be limited in the longer term because of increasing complexity in the housing product. As the residential sector becomes more integrated with other sectors of the community, and as the technologies for housing become more varied, models are likely to fail in accounting for significant impacts. Many of the external costs for an archetype are regionally determined and require extensive amounts of regionally specific data. Often such data sets are unavailable, or incomplete and poorly documented. For these reasons it is difficult to imagine a rapid application of the Building Block Method. Such an approach presupposes the existence of a robust and well supported data collection and management system. Until data management at the community level becomes a recognised activity of value to the community, analytical tools will be limited to "quick and dirty" techniques. The cost values will need to be viewed as rough order-of-magnitude estimates. The impact on community health of the Base Case house was judged to be poor, due to the limited opportunity for communications at the community level, and the limited influence of future occupants and neighbours on design decisions. However it is difficult to know how to evaluate this type of information. The use of a process-oriented definition of community health, emphasizing levels of "participation and communication" among stakeholders, presents a fairly radical departure from conventional approaches to impact assessment. Although this method is much less subject to political bias than the more obvious process of trying to establish cause-and-effect relationships between building design and community health, it fits poorly with an accounting procedure that is otherwise fairly tangible and objective. More thought is needed on how to interpret these results. In addition to community health impacts, housing developments can impact upon a whole range of culturally significant variables which cannot be modelled with an approach based upon end-use modelling and resource flows. Examples would be the ability of the development to accommodate disadvantaged groups, or to increase individual choice for educational, recreational, and employment activities. It is also difficult to imagine how a model that archetypes buildings and other components of a community, and then aggregates the impacts and costs, can ever incorporate the benefits of protecting ecologically sensitive areas, heritage values and other unique features of the urban landscape. In total, the 86 full cost accounting process followed in this thesis probably only addresses about 50% of the range of indicators that would be needed for a community to fully assess the value of any particular development. With all these limitations in mind, further research into full cost accounting of urban development is probably best focused on operationalizing the framework as part of a planning tool-kit, and evaluating its performance in the context of actual development projects. Ideally the projects involved would include the use of integrated technologies at the building and community scale. 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(1989) For the Common Good, Redirecting the Economy Toward Community, the Environment, and a Sustainable Future, Boston Davis, A., Kamien M . , (1969J Externalities, Information, and Alternative Collective Action in The Analysis and Evaluation of Public Expenditures: The PPB System, U.S. GPO de Groot, Functions of Nature (1992) Walters-Noordhoff, Amsterdam DeLCan, De Leuw Cather Western Ltd. (1986) Residential Subdivision Servicing and Design Practices, for Alberta Municipal Affairs Doering, R., Sustainable Communities: Progress, Problems and Potential, National Round Table Review, special issue on sustainable communities 1994 Ellliot, A., (1993) PLACE3S: Planning for Community Energy, Environmental and Economic Sustainability, Presentation for BC Hydro by Criterion Inc. and McKeever/Morris Inc. 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GVRD Air Quality Management Plan Hohmeyer O., (1992) External Costs and a New Tool for Hybrid Analysis in Life Cycle Costing, Fraunhofer Institute for Systems and Innovation Research 90 Hancock T., Healthy Sustainable Communities, Concept, Fledgling Practice and Implications for Governance, Alternatives Journal 22:2, April 1996 Holling, CS. (1992) New Science and New Investments for a Sustainable HUDAC (1975) Costs in Land Development Process, Economic Research Report Hull, B. (1993) Valuing the Environment, Full-Cost Pricing - an Inquiry and a Goal, Conference Board of Canada. Husseini (1993) Life Cycle Assessments - The Search for a Canadian Standard, for Canadian Standards Association, Full Cost Accounting and The Environment, Seminar Proceedings, Victoria B.C. Institute for Social Research (1992) Modelling Quality of Life Indicators in Canada: A Feasibility Analysis, for Centre for Future Studies in Housing and Living Environments, CMHC Jacobs, M., The Green Economy: Environment, Sustainable Development and the Politics of the Future, Pluto Press, London, 1991 Jank, R. Integrated Community Energy Modelling, 1995, Klimashchutz und Energieagentur Baden-Wurttemberg, Karlsruhe, Germany KPMG Peat Marwick Stevenson and Kellogg Management Consultants, 1991 The Cost of Transporting People in B.C/s Lower Mainland, for Transport 2021 Lawrence, R.L., (1987) Housing Dwellings and Homes, Design Theory, Research and Practice, University of Geneva Litman, Todd (1992) Transportation Cost Analysis: Techniques, Estimates and Implications, Draft 1. for B.C. Ministry of Transportation and Highways Maclaren V., Urban Sustainability Reporting, APA Journal, Spring 1996 MacRae, M., (1992) Realizing the Benefits of Community Integrated Energy Systems, Canadian Energy Research Institute MARBEK Resource Consultants Ltd., (1991) Sustainable Housing, A Background Paper for the City of Montreal's Proposed Housing Design Competition, for CMHC 91 Marbek, Allen, Sheltair, Timusk (1992) Energy and Power Needs and Availability in Houses, for CMHC MARBEK, Pacific Energy, Prism Engineering, Sheltair Scientific, MK Jaccard and Associates, (1993) Electricity Conservation Potential Review, 1988-2010 Phase I, Unconstrained Potential for the Collaborative Committee Marvin Shaffer & Associates Ltd. (1991) Economic and Environmental Costs of Electricity and Natural Gas in B.C. Lower Mainland space and Water Heating Applications, for BC Ministry of Energy, Mines and Petroleum Resources Mathur, B., (1989) Community Planning and the New Public Health, Plan Canada, 29(4) Mattock, Chris (1994) The Vancouver Healthy Housing Project, by Habitat Design and Consulting Ltd., for CMHC McDaniels, Tim (1993) Contingent Valuation and Multiple Objective Approaches Compared, Full Cost Accounting and the Environment, Seminar Proceedings, B.C. Environment Mitchell R.E., (1971) Some Social Implications of High Density Housing, American Sociological Review, Vol. 36:18-29 Moffett, G. The Challenge of Urbanization The Christian Science Monitor, March 25 p. 4,1996, 9referring to a U N report prepared for the upcoming second U N Conference on Human Settlements, Istanbul) Moffatt, P. (1993) Increasing Energy Intensity in the BC Residential Housing Stock, Sheltair Scientific Ltd., for BC Hydro Power Smart Division Moffatt, S. (1993) Integrated Community Energy Planning - A Case Study of Scenarios for Surrey Town Centre, for the B.C. Energy Council, Myers D., (1988) Building Knowledge About Quality of Life for Urban Planning, Community and Regional Planning Program, University of Texas OECD (1993) Environmental Improvement Through Urban Energy Management PACE University Centre for Environmental and Legal Studies (1992) Environmental Costs of Electricity 92 Planning Institute of B.C. News (1992) Twenty-six non-traditional Measures of Health, 31(3) Real-estate Board of Greater Vancouver (1992) Metrotrends Rees, W. Revisiting Carrying Capacity: Area-Based Indicators of Sustainability, Population and Environment: A Journal of Interdisciplinary Studies, Number 3, January 1996 Rees, W. Achieving Sustainability: Reform or Transformation? Journal of Planning Literature, Vol. 9, No. 4 (May 1995) Sage Publications Inc. Rees, W., Roseland M., Sustainable Communities: Planning for the 21st Century, Plan Canada, 31:3/May 1991 REIC Ltd. (1991) Residential Walter Conservation, A Review of Products, Processes and Practices, for CMHC Scanada Consultants Ltd. (1992) Environmental Impact Study: Phase I -Development of a Database on Housing Characteristics Representative of the Canadian Housing Stock (CMHC STAR-HOUSING Database) for CMHC Sheltair Scientific Ltd. (1993) Integrated Community Energy Planning - A Case Study of Scenarios for Surrey Town Centre, prepared for the B.C. Energy Council by Sebastian Moffatt for presentation at the BC Hydro Electricity Forum, Victoria, 1993 Sheltair Scientific Ltd. (1995) The Externalities of Residential Development, for CMHC Research Division Sheltair Scientific Ltd. (1995) OPTIMIZE VERSION 3.0 - A Canadian Database and Computer Program for Estimating the Lifecycle Energy and Environmental Impact of Residential Buildings, for CMHC Research Division Shullman and Bond (1978) Urban Indicators Society of Environmental Toxicology and Chemistry (SETAC) (1993) A Conceptual Framework for Life-Cycle Assessment, Pensacola, Florida 32501 Stern, P.C. Aronson, E. (1984) Energy Use: The Human Dimension, New York, W.H. Freeman, Tate, D.M. et al, Municipal Water Rates in Canada, 1989 Current Practices and Prices, Social Science Series No. 27,1992, Environment Canada 93 Tibs, H . , (1992) Industrial Ecology - An Agenda for Environmental Management, in Pollution Prevention Review, Spring 1992 Torrie Smith Associates, (1995) Realising Ottawa's Target for Greenhouse Gas Emission Reductions, International Council of Local Environmental Initiatives TRANSPORT 2021 (1993) A long-range Transportation Plan for Greater Vancouver, for GVRD and the Province of BC Ullmann, J., (1983) Social Costs in Modern Society, Quorum Books, CT. US Army Corps of Engineers (1995) REEP Renewables and Energy Efficiency Planning Program Interim Manual;, Construction Engineering Research Laboratories, Champaign, Illinois van Pelt, Michiel (1993), Ecologically sustainable development and project appraisal in developing countries, Ecological Economics, 7 19-42 Wackernagel, M. et al(1993) How Big is Our Ecological Footprint - A Handbook for Estimating a Communities Appropriated Carrying Capacity, for Task Force on Planning Healthy and Sustainable Communities Wackernagel, M., Rees, W. Our Ecological Footprint, Reducing Human Impact on the Earth New Society Publishers, Gabriola Island, B.C. 1996 Watson C.N. (1991) Residential Use Development Charges, Economic Reports for Various Ontario Municipalities Wichern P., (1991) The Politics of Sustainable Urban Development Policy in Canada, Colloquium on Sustainable Housing and Urban Development, Institute of Urban Studies, University of Winnipeg Willms S.M., Gilbert L., (1990) Healthy Community Indicators: Lessons from the Social Indicator Movement, UBC Centre for Human Settlements Young, M.D. (1992) Sustainable Investment and Resource Use, Equity, Environmental Integrity and Economic Efficiency, Man and the Biosphere Series, UNESCO 94 APPENDIX I DATABASE OF RESOURCE TRANSFORMATIONS FOR CASE STUDY Capital Costs for Base Case House (S1995)1 Total Cost Life-cycle $ 567,353 Total Retail Cost$ 360,348 Total Cost Including the First Year $ 400,385 Item Amount($) Assumptions Data Sources Bldg Materials $ 80,732 1991 dollars converted to Means, Optimize, Market 1994 Constuction Labour & $ 56,463 Ratio of Labour to Means 1991 General Contractor Materials Raw Land Cost $ 200,000 Servicing Charges $ 13,657 Inspection Costs $ 300 Hydro Hook-up $ 266 B.C. Hydro Natural Gas Hook-up $ 75 B.C. Gas Design Costs $ 4,844 Purchase of pre-drawn plans $1.50/ftA2 Legal Fees $ - included in design Subtotal $ 356,336 Ratio of DCC's to DSC's 0.35 Development Charge $ 4,011 Partial Cost Urban Planning Centre Sub-Total $ 360,348 GST $ 25,224 Property Purchase Tax . $ 5,207.0 Total $ 390,779 Developers Servicing Charge Distribution Sanitary Sewer $ 1,078 $/site Water mains $ 921 $/site Storm Sewer $ 3,347 $/site Roads, curbs, guitters, $ 4,621 $/site sidewalks Flows Subtotal $ 9,967 $/site Street Lighting $ 410 $/site elec, tel, cable $ 2,280 $/site Engineering $ 1,000 $/site Subtotal $ 13,657 $/site Property Tax and Development Cost Charge Distribution Sanitary $ 545 $/site Water $ 756 $/site Storm Drain $ 236 $/site Roads $ 1,784 $/site Public Open Space $ 157 $/site Taxes $ 280 $/site @ 7% of total Inpection Fees & Misc. $ 253 $/site Subtotal $ 4,011 $/site Sub total Flows $ 3,478 1 Floor Area of 3229 ft2, Lot size of 7200 ft2, Design Occupancy of 4, Lifetime of 50 yrs. A Procedure for Analyzing the Full Costs of Development at the Community Level Q_ 0 Appendix I Data Base of Resource Transformations for Case Study Annual Operating Cost Breakdown for Base Case House ($1995) *Property Tax Distribution Fire Services $ 203 RCMP $ 268 Engineering $ 186 Lifetime: 50.00 Planning & Developement $ 80 Discount rate: 0.04 Parks, Recreation, and Culture $ 177 Corporate $ 155 Capital Contribution $ 101 Other $ 49 Municipality General Subtotal $ 1,219 $26,177.39 Other Municipal Collections Water Parcel Tax $ 31 Sewer Parcel Tax $ 111 Water User Rate $ 129 Sewer User Rate $ 114 Garbage $ 133 subtotal $ 518 $11,127.77 *Other Allocations of Taxes GVRD $ 41 Hospital $ 71 MFA $ BCAA $ 44 SCHOOL $ 1,205 subtotal $ 1,362 $29,258.95 Total yearly tax contribution $ 3,099 $66,564.11 * Prorated from average $236,000 1994 Surrey House. Annual Costs for Energy First Year Real Fuel Price Escalation Rate (longterm Natuaral Gas $ 963.17 0.00 $20,690.89 Electricity $ 543.36 0.00 $11,672.56 Annual Costs for Transportation Gasoline for vehicle $ 752.84 $16,819.55 Maintenance & tires $ 484.88 $10,416.28 Fixed Costs for vehicle*** $ 2,643.64 $56,791.16 Transit (asisume 30% cost recovered, $ 109.80 ( $2,358.74 diseal bus @$2.44) Building Repair and Replacement Maintenance, Replacement & Waste $ 50,488.00 $21,691.85 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix I Data Base of Resource Transformations for Case Study OJ N o ^ I I O V O ^ C O ^ O J o i \ ro N -* ( N m N N n o vo H O O N i n t ^ * ^ ! T l ^ ID P I O M O ^ O H ^ t N l J CO H CO LT) LO O m (N ON CO N CO CN H CO IT) ! ^ ^ v O O ^ O C O L O C N O N ^ C N f N c N <-H rH rH " \ i f j -2 r-T so" CN rH CN TH NO j ^ O T-H !-<! Jt3 ! 1J I 00 CO LO CM o o o o o o a- .a o CO o o o o o o o H 0 r t o a 3 CN ^ O i O c N c O ^ C O C x c N ^ O L O O X r H L O O l J (N CO CM CO CO CO N C4 I O N N CO C O L O L O O L O C N O N TJH CS i-H r-< I-H O VO 00 O C M O t CM r- CO LO 00 CN i- i CN OS 6 c v .-5 D -o PU cri !!• O PU u C /5 -< CQ PS 0 PH C/5 PU U o PU r* a PU PU •a c to c v •O « t o >• » Si S. ™ I T ev H t3 £ CD c 0 U | ET l-H CN T * T « 00 rH rH rH CM Tt ON ^ r-i O ON O CN I-H ON 00 tN O ON ON O IN CO N CO r-i in r H O O O NO rH O r—< s 1 I N n o s N vo m g n » b I N j s LOOv O r H V O C O O O C N 00 CO C N T H C N T H ^ C O ^ C N LOCO CN rH CO VO CO u 5 l f ) r H <^ rH CN r H CN ^ rH rH VO CN VD i n sD T3 8>| 2 U o 3 G O fl, IH J 3 £ > r j g ' 2 K 1 13 o U ™ § K -a £ -a 1-g •s 2 (j uu 2 2 cj o o « "o! a, TJ 3 - 1 £ 8 i i S 7 1 l o •£ rC U 0 c a o cn •5 TJ r H C CU fl 4^ c « c 0 cm _c alo ubt E •3 o ;—J l-H 3 CO > 0 X cu > I I - H w fl 4 H ktf o <5 cn "fl CL ' u '5 3 - H S fl o 1 « cn t-K a £ o U Q o £ K L I =3 g ^ a cji O f l •5 -a Air Emissions for Base Case House Spatial Scale Time Periods Weight (kg) -> Materials Con- Life Repair Demolition Occupant Life cycle Lifecycle Acquisi- struction Oper- and Transport- Subtotal Building & Site tion ation Replace ation ment Carbon Dioxide (kg) 48,701 437 314,608 47,391 1,982 156,754 413,085 569,839 Particulates (kg) 18 0 117 18 1 231 153 384 Nitrogen Oxides (kg) 62 1 401 60 3 868 526 1,394 S u l f u r Dioxide (kg) 30 0 196 30 1 27 258 285 V O C s (kg) 17 0 113 17 1 1,452 148 1,600 Methane (kg) 3 0 18 3 0 161 24 185 Carbon Monoxide 153 1 990 149 6 633 1,301 1,934 (kg) Arsenic (grams) na na na na na 303 303 Beryllium (grams) na na na na na 37 37 Cadmium (grams) na na na na na 24 24 Chromium (grams) na na na na na 619 619 Copper (grams) na na na na na 458 458 Mercury (grams) na na na na na 17 17 Manganese (grams) na na na na na 1301 1,301 Nickel (grams) na na na na na 908 908 Lead (grams) na na na na na 146 146 Formaldehyde na na na na na 186 186 (grams) C F C s 0 0 0 0 0 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix I Data Base of Resource Transformations for Case Study L A N D USE BY BASE CASE HOUSE As built Life-cycle Spatial Scale (m2) (ha) (m2) Building & Site 668 0.06 668 house (footprint) 159 159 sidewalk & porch 15 15 deck and play areas 30 30 ornaments 4 4 garage 40 40 driveway 45 45 grass 350 350 sustainable permaculture 25 25 Land used for material excavation and fabrication 4563 Housing Development 445 445 Roads 278 278 Park, drainage 111 111 Commercial & other 56 56 Land used for material excavation and fabrication Municipal Infrastructure 89 0 89 Roads 89 0.0089 89 Sidewalks 0 Right of ways 0 Community Facilities 0 Resevoirs 0 Leave strips 0 Land used for material excavation and fabrication 0 Total Land Use 1203 0 1203 Biologically Productive Areas (sq. metres) Productive areas on site 293 293 Product ive land used in housing development 111 111 Product ive land used in muncipal i ty 0 0 Land flooded for energy generation 1 1 Land used for growing wood products 4563 6686 A Procedure for Analyzing the Pull Costs of Development at the Community Level Appendix I Data Base of Resource Transformations for Case Study WATER USE BY BASE CASE HOUSE Spatial Scale Direct Use of Fresh Water first year Building & Site Amount Unit Frequency L/capita/da Uhouseh L/househol (litres) (day) y old/day d/yr Indoor toilets 20 flush 7 140 560 204,400 showers, baths, 120 shower 1 120 480 175,200 washing clothes washing 86 load 0.8 69 275 100,448 dishwashing 25 cycle 1 25 100 36,500 cooking and drinking 4 meal 3 12 48 17,520 Outdoor 85 340 124,100 Sub-total 451 1,803 Housing Development 0 street cleaning, 1 0 0 irrigation, Municipal Infrastructure 45 wastage 1 45 180 65,817 Total 947 3,787 65,817 Wastewater first year Building & Site Amount Unit Frequency L/capita/da Uhouseh L/househol (litres) (day) y old/day d/yr toilets 20 flush 7 140 560 204,400 showers, baths, 120 , shower 1 120 480 175,200 washing clothes washing 86 load 0.8 69 275 100,448 dishwashing 25 cycle 1 25 100 36,500 354 1,415 516,548 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix I Data Base of Resource Transformations for Case Study 10/ APPENDIX II COST D A T A SHEETS FOR SELECTED EXTERNAL COSTS Housing Cost Data CONTENTS Subsidy for infrastructure: roads 1 Municipal water infrastructure : wastewater ' 4 Infrastructure: generation and distribution 7 Tax burden on businesses 9 Respiratory disease and irritation from NOx and ozone 10 Municipal water infrastructure: fresh water . 12 Accidents and Loss of productive time or life 13 Noise irritation 15 Life expectancy related to environmental toxicity 16 Opportunity for participation and control by residents 17 Loss of view 18 Lost revenue to fishing industry 19 Natural Environment Functions: Climate Regulation 21 103 Housing Cost Data Subsidy for infrastructure: roads Cost Category: Financial Group Impacted: Taxpayers Definition: Costs related to the development and maintenance of that portion of the roads and highways required by housing, but not covered by homeowners through their property taxes or through user charges such as gasoline taxes and registration permits. Cause and Effect Chains: Not all road infrastructure costs are covered by revenues collected on gasoline sales and registration permits, or through municipal property taxes. Provincial taxpayers help to cover the cost of road development and maintenance through direct investments, and through subsidies to municipalities. Some amount of road infrastructure is required by all types of housing, as a way of providing access by fire trucks, ambulances, and other essential mobile services. The amount of this infrastructure will vary depending upon the density of the housing, and its location relative to the fire halls, and hospitals. Typically the roadways required for essential housing access are estimated to include about 30% of urban roads.1 Additional road infrastructure is required to move occupants between the housing and essential community services, such as schools, employment centres, and shopping. The amount of additional infrastructure required for these purposes will vary with the style of the development, the availability of public transit, and the proximity of the community services. It is possible that as residential areas sprawl, up to 70% of roads are a direct result of housing services. The proportion allocated to housing services will vary as a function of the number of kilometers traveled by the housing occupants and the number of kilometers traveled by commercial vehicles and vehicles not involved in residential access. Simplified Damage Costing Methodology: In general, costs are determined by attributing to housing services a portion of the entire road infrastructure cost, and then calculating what this represents in annual provincial tax expenditures. This is then divided on a per house basis, and modified for specific houses based on their relative impact. 'Litman, Tod Transportation Cost Analysis: Techniques, Estimates and Implications A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 104-Housing Cost Data Approximately 95% of all road costs are attributed to the use of private automobiles. Consequently, houses that rely exclusively on the use of an automobile for access, would incur a larger portion of the housing-transportation infrastructure costs than those which are well integrated with alternate modes of transportation (cycling, walking, transit). Assumptions and Data Limitations: Apportioning road financial costs to the housing sector is a task that has major impacts on total costs. In the lower mainland of B.C. it is estimated that 10% of the traffic is commercial2, and the remainder is residential. Of the residential, approximately 70% is related to accessing essential community services. Consequently, a rough estimate based on usage results in approximately 62% of road costs apportioned to housing costs. Contributions to the provincial budget by homeowners, through their income sales tax and property purchase tax, have not been considered in this analysis, and would have the affect of reducing external costs related to road infrastructure. Major Data Sources: 1. Costs of road maintenance and construction have been extracted from The Cost of Transporting People in British Columbia Lower Mainland, KPMG 1993. Impact Data Kilometers traveled are related to the location of the house, and its facilities. The mode of transportation chosen will depend on the range of choice, and convenience and cost of service. Some of the convenience and cost issues relate -to physical features of the housing development, including such items as: • area provided for parking next to house; • number of garage berths in house; and, • walking time to a public transit stop. Ultimately these kind of features must be used to make a judgment about what modes of transport will be used by occupants. In some cases, such as the base case house, the judgment is fairly easy. The large investment in automobile facility, and the lack of convenient alternative modes of transport, virtually guarantee the use of automobiles as a primary mode for occupants. More 2 KPMG The Cost of Transporting People in the British Columbia Lower Mainland, 1993 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype Housing Cost Data compact housing developments require more detailed analysis of transportation modes used by occupants, and distances traveled. Other aspects of house location w i l l influence the total number of kilometers traveled. A key example would be the average distance between house and compatible employment centres. Unfortunately no data is available for municipalities in the lower mainland. As a rough measure of relative trip requirements, it is possible to compare densities between different locations, irrespective of distances to services. The average density for the 15 municipalities in the lower mainland is 10.9 households per ha.. Surrey has a density of 3.7 households per ha., for a ratio of 3.0 regional densities to 1 community density. Valuat ion Data The K P M G report estimates the total cost of road maintenance in the lower mainland at $ 59,430,000, in 1991. Cost for road construction are estimated at $92,430,000. The number of households in the lower mainland total 667,911, including 458,287 ground oriented units, and 209,624 apartments, based on the 1991 Statistics Canada census. Cost Estimate: Annual: Ratio of regional to base case community densities * Provincial costs * Portion of roads allocated to housing Number of housing units = $649/ house year Life Cycle: (@50 years, and 4% discount) = $14,500 / house life A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype v , I 06 Housing Cost Data Municipal water infrastructure : wastewater Cost Category: Financial Group Impacted: Taxpayers Definition: Costs related to the development and maintenance of municipal wastewater and sewage treatment systems, excluding the dollars received from development cost charges and property taxes. Cause and Effect Chains: Presently many urban sewer and water systems are receiving large federal and provincial subsidies to upgrade and replace old pipe and inadequate plant. For example, in the lower mainland of B.C. a federal subsidy of 70 million has been allocated in 1994 to sewage plant upgrades, with an equal payment from the local and provincial governments. Over the next 4 years, the total cost of upgrades is expected to reach $600 million. Only one third of these costs will be covered by the local taxpayers. Costs of upgrading sewage collection and systems treatment plants that are borne by provincial and federal taxpayers represent a financial externality. Presumably the dollars paid previously through Development Cost Charges and property taxes were inadequate to create the reserve capital needed for system overhauls and upgrades. This may be a result of inadequate accounting procedures used by many residential communities, which failed to capitalize for upgrades. Avoiding this capitalization may have been an oversight, or may have been politically expedient. Municipalities may also have failed to foresee the costly impacts of increasingly stringent environmental standards imposed by fish protection agencies. In addition to provincial and federal taxpayer subsidies, it is also possible that new houses in a community are subsidized by other municipal property taxpayers. For example, this would be true if the DCCs paid by developers do not adequately compensate for the effects of the new house on system capacity and operation. In such cases, the new house gets a free ride on the investment already made by previous house buyers. The taxes and DCCs levied by municipalities can also work in reverse. A house with a composting toilet, for example, and ultra low flow plumbing fixtures, would require very little additional capacity at the STP, but could end up paying the same tax rate as is levied against the highest using house in the neighbourhood. Lack of sensitivity to actually usage by households encourages wasteful use of resources, and leads inevitably to externalities between groups of municipal taxpayers and the new homebuyers. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 107 Housing Cost Data Simplified Damage Costing Methodology For simplicity, only two subsidies are considered: 1. those costs related to capitalizing the upkeep and replacement of the system, as estimated from the size of subsidies recently requested by municipalities from provincial and federal governments. 2. those costs borne by the municipality on an annual basis for upkeep, and expansion of the STP and sewage collection systems, in proportion to the percentage of the municipal budget that is subsidized by provincial taxpayers. Assumptions and Data Limitations: A number of assumptions have been made to keep the accounting simple: • Subsidy requests are an accurate reflection of the true costs of system upgrades. In reality, it is likely that such requests are overstated for purposes of negotiating positions. • Upgrades are adequate for the next 50 years, - a lifetime similar to the past system, and similar to the housing developments they serve. • Systems for financing upgrades and expansions will continue to rely on subsidies, as opposed to increasing municipal taxes sufficient to ensure no subsidies are required. • Costs are directly proportional to quantities of sewage generated. In reality the environmental impacts may vary greatly depending upon the daily pattern of generation. In some areas of the lower mainland of B.C., for example, peak loading of the sewage system, and high rainfall, can lead to overflows in combined storm /sewer systems, with untreated system spills into receiving waters. No consideration is given to such variables. • Annual provincial subsidies to municipalities are apportioned to sewage treatment plants and collection systems in proportion to their share of the total budget. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype I OS Housing Cost Data Impact Data: The base case house generates 320 litres per day of sewage, based on data provided for average houses by the GVRD. Valuation Data: The estimated size of federal and provincial subsidies for sewers in the region, is $2,000,000 a piece, based on figures provided in press releases (Vancouver Sun, 1994). The percentage of sewage attributed to the residential sector is 70 percent. The municipal budget for sewage collection and treatment is $ in Surrey. Approximately xx% of the municipal budget is subsidized by the province. The lower mainland includes 667,911 households, and the lifetime of the upgrades is approximately 50 years. Cost Estimate: Annual: Quantity of waste water from study house * Total subsidy for period/years in period * Percentage of sewage that is residential + Annual municipal sewage treatment budget * Percentage of budget received from province quantity of waste water generated by average house * number of residences in region = $666 Life C y c l e : (@50 years & 4% discount) = $14,894 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype J09 Housing Cost Data Infrastructure: generation and distribution Cost Category: Financial Group Impacted: Utility ratepayer: Hydro Definition: Costs related to the additional capacity and distribution infrastructure needed by the electrical utility to cover the expected load and peak requirements of a new residence. Cause and Effect Chains: Each additional residence connected to the electricity grid places an added strain on the ability of the utility to provide adequate power at peak times, and to deliver the power to the residence using the existing distribution system. The effect of a single residence is incremental and is normally accommodated within the excess capacity of the existing system. However, at some point the sum of impacts from new residences forces the utility to undertake a major investment in infrastructure, the costs of which are borne by all utility ratepayers. The extent of the impact from a new house may be low or non-existent if it is replacing an existing house that had equivalent power and energy requirements. However most new houses have much greater power and energy needs than existing stock. The recent energy efficiency standards are less significant than other trends in household energy use, including such factors as increased floor area, larger hot water tanks and Jacuzzis, increased plug load for all the latest electrical devices, greater use of lighting, and various types of electrical heating and ventilating services that are not present in older houses. The impact of a new house is of course much greater in cases where a community is growing, since the additions to housing stock will exceed the turnover rate. At present the hook-up charges by utilities generally reflect the actual labour and travel time for physically connecting a house to the transformer on the street. Little or no charge is made to recover infrastructure beyond the lot. An additional cost for the electrical utility ratepayers may be the line losses that occur when delivering electricity to residential areas that are more spread out than the norm. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype / Housing Cost Data Simplified Damage Cost Methodology: Table 6.2 summarizes the key variables used to calculate the cost of marginal energy and power from houses in the community of Surrey. Table 6.2 Data Used for Estimating Cost of Additional Power and Energy Value Units Source of data Driver Peak load 3 . 6 6 kW Marvin Shaffer and Assoc. Dec 1991 Base Load 1.028 kW Hot 2000 Annual Electricity Budget 9056 kWh Hot 2000 Key Variables Marginal cost of power delivery for region $ 900 $/kW Estimate from B.C. Hydro staff (C. Tun Marginal cost of energy for region ' $ 0.08 $/kWh Based on the 30% load factor from Marvin, Shaffer and Assoc. Current price of energy for region $ 0.06 $/kWh Sub-Urban Density Factor 2.40 houses /acre Managing Greater Vancouver Growth (GVRD) Lower Mainland Avg. Density 5.00 houses/acre SFD Increased Line loss from adding service 2453 kWh Related to P = IA2*R at 13% distributio losses Base Load Estimate Yearly load lights, appliances, other 8760 kWh yearly load forced air furnace fan (seasonal) 296 kWh base daily 25 kWh/day adjusted for unoccupied 10 days/year base load summer 1.03 kW base load winter 1.10 kW Estimated Load Factor for base 0.30 Peak Load 4 kW Major Data Sources: 1. B.C. Hydro Electricity Plan 1994, 2. Shaffer,M. and Associates, Economic and Environmental Costs of Electricity and Natural Gas in B.C. Lower Mainland Space and Water Heating Applications, 1991 3. Managing Greater Vancouver Growth, GVRD Cost Estimate: First Year Cost: $ 3,465.02 Life-cycle Cost: $ 7,137.12 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype Housing Cost Data Tax burden on businesses Cost Category: Financial Group Impacted: Business Definition: Costs borne by business in excess of their use of municipal services due to unfair allocation of tax burden between property classifications. Cause and Effect Chains: The use of appraised property values as a basis for most municipal revenue generation is a crude method for deriving revenue for municipal services, since property values are market driven, and may bear little relation to actual municipal services provided. This is especially a problem where one municipality encompasses a wide range of property values. In many municipalities business have complained that they cover a excessive share of municipal services, and have been subsidizing residences., If there is no intentional policy to transfer income from businesses to homeowners within the community, then such a tax inequity represents a financial externality for housing. Simplified Damage Costing Methodology: A comparison between revenue and municipal services received from business and residential sectors is needed to determine the size of any subsidy for a given community. This can then be allocated to residences based on numbers of houses, and on the amount of services used by the specific residence. Assumptions and Data Limitations: House use of municipal services would ideally be analyzed in detail, in terms of sewer, water, policing, roads, and so on. In lieu of such a detailed and difficult analysis, it is proposed to use the assessed property value of the house as a surrogate. No estimate has yet been completed. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype Housing Cost Data Respiratory disease and irritation from NOx and ozone Cost Category: Individual Health Group Impacted: Individual Definition: Uncompensated costs borne by individuals who suffer from lung disease or irritation due to smog. These costs would not include the cost of health care provided through the provincial health care insurance. Cause and Effect Chains: Combustion of fossil fuels by vehicles, household appliances, power plants, and by the residential supply and service industry as a whole all lead to emissions of NOx. NOx is created in the combustion process as Nitrogen is combined with oxygen. NOx, particularly in its acidic form - N0 2 - is a direct lung irritant that can cause scarring of lung tissue and increased incidence of respiratory disease. NOx is also a primary precursor to the formation of ground level ozone - or smog. Ozone is an extremely reactive gas that can have substantial short-term and long-term effects on human health. In the short term it can cause temporary ailments such as lung irritation, hyperactivity, minor eye irritation, inflammation of respiratory cells, coughing, reduction of lung function and pain upon inhalation. In the long term it can scar the lungs and contribute to increased lung disease and lung cancer. Both NOx and ozone are produced by residences throughout their life cycle-However the emissions occur in different places and at different times, and health impacts of a given quantity of pollutant will vary. Emissions that occur when airborne concentrations tend to be high, and at locations where people are more likely to become exposed, carry a higher risk of impact.. The damage, for example, is likely to be significant if NOx is generated in the lower mainland of B.C. in the early summer, since this is a region that tends to exceed the maximum desirable concentration at that time. On the other hand, if NOx is generated in a smaller town, in winter, (when ozone formation is unlikely), or in the forest perhaps as part of a logging operation to harvest wood for houses, the pollution concentrations would be much less and the risk of individual health impacts from NOx would be less significant. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 113 Housing Cost Data Simplified Damage Costing Methodology: Costs to individual health have been extracted from the economics literature. In most cases no distinction is made between health care costs and individual health costs, since the costs are viewed as societal costs. Hence it is difficult to identify the portion of costs borne by individuals, and the portion borne by taxpayers in support of the health care system. - exclusive of government health care costs and costs related to loss of productivity - Nox emissions have been totaled for the house lifecycle, and separated into two categories: high and low risk environments. The damage cost is estimated simply by multiplying the cost factors by the respective Nox emissions, and summing the results. Assumptions and Data Limitations: Ozone is primarily a problem in the lower mainland in the late spring and summer. Hence the damage costs may be overestimated because house heating emissions are included. Major Data Sources: 1. Evaluation of External Costs Associated with Natural Gas Use, G.E. Bridges and Associates Ltd., 1991 Impact Data Driver Near High Density Pop. Near Low Density Pop. Units Source Code Nox emissions/yr from use of vehicles for accessing essential community services 17 kg/yr 3 Nox emissions/yr from local electricity generation 0.3 kg/yr 3 Nox emissions/yr from household appliances 4.35 kg/yr 3 Embodied Nox emissions in house as built 62 Embodied Nox emissions in house from repair and replacement and demolition 1.2 Valuation Data: Key Variables Value Units Source Code Damage cost for individual pain and suffering caused by Nox in high density area 0.96 $/kg 1 Adjustment for density of population in Lower Mainland 1.9 1 Total NOx generated in high density areas by housing services for base case house for construction and first year of operation 88 kg 2 Total Nox generated for house over life time 1,222 Portion of health risk compensated by health care system 20% Cost Estimate: As built and first year operating Cost: $124 Life cycle Cost: $851 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 114 Housing Cost Data Municipal water infrastructure: fresh water Cost Category: Financial Group Impacted: Taxpayers Definition: Costs paid by taxpayers for the development and maintenance of the municipal infrastructure that provides fresh water to residences. Cause and Effect Chains: Development Cost Charges may not represent all the additional infrastructure costs involved with creating the capacity to store and deliver water to a new house. If not, the uncompensated costs represent an external cost to taxpayers. On-going costs for provision of water are not necessarily reflective of the actual water use and costs imposed by a particular residence. In the case of Surrey, water is charged at a fixed monthly rate, and thus houses with high water use are invariably subsidized by other houses. In fact the greater the water use, the cheaper the cost per litre, and greater the external costs. No cost estimate has been completed. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype us. Housing Cost Data Accidents and Loss of productive time or life Cost Category: Human Health Group Impacted: Individuals Definition: Costs resulting from loss of productive time due to damage to health or life, not compensated by health insurance. Cause and Effect Chains: Accidents occur on roadways that represent a cost of housing to the extent that transportation systems are dedicated to accessing the housing. Accidents also occur as part of the extraction, fabrication, transportation and installation of housing materials during the building and renovation stages of the house and its surrounding infrastructure. These occupational health and safety costs are not necessarily compensated by insurance schemes, and represent an external cost for the individuals who loose productivity and/or enjoyment of life. In the base case house, much of the occupational health and safety would be addressed by the Workers Compensation Board (WCB) of British Columbia. This is a self-supporting insurance program that provides compensation and rehabilitation for workplace injuries. None of the WCB costs are covered by taxpayers, either directly or through the health care system. Simplified Damage Costing Methodology: Accident costs have been previously calculated in a number of studies looking exclusively at the externalities of transportation. The proposed approach is simply to extract these costs for the lower mainland, and apply them to housing services to the extent that the housing design and location generate a need for private vehicle use. Costs related to occupational health and safety are difficult to estimate without a detailed distributional analysis of the social welfare costs. For convenience the total costs to individuals (i.e. pain, suffering, disruption, lost opportunity,) are assumed to exceed compensation payments provided by WCB by approximately 20%. This is a similar proportion to the cost paid by society for insured automobile accidents. Payments by WCB are based on the fees charged to general contractors, discounted by 20% to account for administrative and financing costs A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype lib Housing Cost Data Impact Data Driver Value Units Source Code Labour costs for construction $ 56,462.57 $/yr 3 Labour costs for repair and replacement $ 504.88 $/yr 3 Materials costs as built $ 81,236.85 $/yr 3 Materials costs for repair & replacement annually $ 504.88 Percentage of materials costs which is labour on average 20% % Number of trips by contractors to house in average year Round trip distance from business district to house 12 20 trips km Kilometers driven in average year by occupants 11600.0 km Valuation Data: Key Variables Value Units W C B charges for construction workers $6.71 per $100 payroll Percentage of W C B paid for administration 20% Percentage of health costs not compensated by W C B payments 20% Cost per kilometre for personal accident, in excess of what is compensated by ICBC $ 0.106 $ / k m Cost Estimate: A s built and first year operating Cost: $2,019 Life cycle Cost: $29,119 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 117 Housing Cost Data Noise irritation Cost Category: Human Health Group Impacted: Individuals Definition: Costs to individuals related to discomfort and loss of property value associated with the additional noise created by housing services. Cause and Effect Chains: Traffic noise leads to lower property values next to roadways. This is one indication of how the market values a noise nuisance. Because access to work, school and so on is a housing service, the cost of roadway noise is partly an external cost of the housing it serves. Noise of construction and renovation is a episodic form of nuisance for individuals living nearby. Hammers starting at 7:00 a.m.are never fun, although the impacts are unlikely to be significant relative to other housing costs. Some types of house designs generate background noise that can cause irritation for long periods. The use of fans to cool heat pumps outdoors for example, can cause noise irritation for long periods summer and winter. Simplified Damage Cost Methodology Only the costs related to traffic noise will be considered. These costs are reflected in the reduced value of land next to roadways. Assumptions and Data Limitations: The cost of noise has been calculated as part of transportation externalities for the lower mainland of B.C. (KPMP 93). Impact and Valuation Data Impact Driver Value Units Number of trips by contractors to house in average year Round trip distance from business district to house 12 20 trips km Kilometers driven in average year by occupants 11600.0 km Valuation Data: Cost per kilometre for personal accident, in excess of what is compensated by ICBC $ 0.005 $/km As built and first year cost: $ 59 Lifecycle Cost: $ 1,331 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype Housing Cost Data Life expectancy related to environmental toxicity Cost Category: Human Health-G r o u p Impacted: Individuals Definition: The cost of increased risk to health for individuals exposed to toxic substances in the environment as a result of housing services. Cause and Effect Chains: Housing services may introduce into the environment various toxic substances that pose a risk to human health. Potentially these include emissions from energy systems (heavy metals from thermal generating plants, radiation from nuclear plants), emissions from vehicle use (e.g. cadmium), and emissions and waste products produced during the production of building materials and construction and maintenance of houses (e.g. wood preservatives,) Generally the increasing level of environmental toxicity, the greater the risk of cancer and disease for the exposed population. The causative relationships are complicated and not always well understood. In many cases it is felt the a DOS/response relationship exists, such that below a threshold level of exposure the individual is safe. This theory tends to break down on close examination, and in any case is difficult to apply in cases where so many variable influence the individual's ability to cope, including the presence of other toxic substances in the background environment. A s s u m p t i o n s and Data Limitat ions: Data on toxic substances produced by housing is insufficient to make an estimate of costs. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 117 Housing Cost Data Opportunity for participation and control by residents Cost Category: Community Health Group Impacted: Residents of community Definition: Costs to community health that result from housing design and construction processes that fail to engage neighbours, community groups, and future occupants. Cause and Effect Chains: Simplified Damage Costing Methodology: Assumptions and Data Limitations: Community Residents and Participation in design and production Score Disadvantage Groups from 1 to 10 Encouraged community involvment in overall design concept 1 Implemented a process for expressing concern during the construction period 1 Considered community benefits when selecting construction processes. 1 Allowed for participation by community/future occupants in layouts of lots and 1 common land. Involved families and future occupants in interior layout. 1 Included adaptable designs that allow occupants to respond to changing 1 community priorities. Total Points 6 Score for house: 10% A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype no Housing Cost Data Loss of view Cost Category: Physical Property Group Impacted: Adjacent property owners Definition: The construction of a house can result in a loss of enjoyment for neighbouring property owners who no longer have the same viewing opportunities and access to daylight. The design and location of a house, along with the topography and surrounding environment, and lot size, can all influence the extent of impact from new house construction on the viewing opportunities of neighbours. Simplified Damage Costing Methodology: More extensive views and sunlight carry a definate market value. The Realestate Board of Greater Vancouver publishes average selling prices for houses in each area of the lower mainland of B.C. and their lists differentiate lot sizes and view opportunities. A review of this data indicates the market value of a view averages $35,000 (1994). This value has been used as a default in the Base Case house. Presumably an average house affects the views of all the surrounding property owners to some degree. As a very simple estimate, assumptions are made that the Base Case House obscures 10% or the view for each of four neighbouring houses. View Corridors Driver Value Units Percentage of view obscured by 20% 0 / lo neighbouring house No. 1 Percentage of view obscured by 10% °l lo neighbouring house No. 2 Percentage of view obscured by 10% 0/ 10 neighbouring house No. 3 Percentage of view obscured by 10% % neighbouring house No. 4 Valuation Data: Key Variables Value Units Difference in 1995 selling price between view lot and non-view lot 35,000.00 $ Lifecycle Cost: $ 17,500 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 121 Housing Cost Data Lost revenue to fishing industry Cost Category: Natural Environment Group Impacted: Business: Fishing Industry Definition: Revenue lost to fishing industry as a result of housing impacts on fish populations. Cause and Effect Chains: Residential developments can have significant impact on fish habitat and morbidity. Housing development can directly change the quantity and quality of water flows through increased run-off, pollution, diversion or elimination of natural drainage patterns, and loss of wetlands and nursery habitat. In addition, the embodied water use of housing resources may impact fish habitat in significant ways. For example, hydro electric power used by a house may further contribute to fish mortality if the dam has negatively influenced the fish habitats. Dams typically reduce sediment in a river system for example, which can lead to reduced plankton and organic carbon in downstream river and marine systems, with a subsequent reduction in fish populations. Simplified Damage Costing Methodology: Use the social cost generated by B.C. government for fish losses due to hydroelectric dams and apportion this to the house on the basis of the amount of hydro-electricity used. Use an estimate of fish losses in the Fraser and apportion these to residences. Rate the study house based on the amount of run-off and perturbations to water flows relative to an average house in the area. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype Housing Cost Data Impact Data The following design features and data are expected to affect the impact of housing on fish populations, and will be used as indicators. Key Variables Value Units Source of data Average area of non-permeable surface 150 on lot in region m2 Reduction in surface permeability of 50% average lot Road area for average house 3000 % m2 Quantity of wastewater/day 200 Percentage of run-off directly entering 25 fish habitat Area of non-permeable surface for Case 150 Study House litres % m2 Number of houses in region 667,911 houses all dwelling types Decrease in fish mortality i n Fraser 20% River watershed over past 10 years. lo Percentage of fish mortality related to 50% declining water quality % Portion of water pollution attributed to 64% residential area in Lower Mainland % Residential and roads Economic value of Fraser River fishery 428,015,267.18 $ Anglers and commercial fishery, including econom impact on the province Cost Estimate: First Year Cost: $40 Life Cycle Cost: $880 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix 11 Cost Data Sheets for Base Case Housing Archetype 1 2 3 Housing Cost Data Natural Environment Functions: Climate Regulation Cost Category: Sustainability Group Impacted: Future Generations Definition: Costs from climate change incurred by future generations. Cause and Effect Chains: Housing services can generate greenhouse gases and thus contribute to the risk of climate change. The most significant greenhouse gas for housing is C02. Other greenhouse gases also play a role, including CFCs, methane, N20 and Co2 from burning of fossil fuels is by far the biggest contribution from the housing sector, and occurs as a by-product of space heating, water heating, transportation of materials and occupants, and the energy transformed during the extraction and production of building materials. Methane (natural gas) is another potentially important contributor, in cases where houses use natural gas. Other contributions are related to: • methane leakage from the natural gas extraction and delivery systems • electrical power generation from thermal generating plants; • loss of biomass when the space consumed by buildings eliminates growing organic matter; and, • loss of biomass and ecosystem vitality when renewable resources like forests are harvested in non-sustainable ways. Simplified Damage Rating Methodology: The International Convention on Climate Change has established targets for stabilization of greenhouse gas generation. The goal is to stabilize generation at 1990 levels by the year 2000. Since Canada is a signatory to this convention, this target provides a convenient base line against which to rate the sustainability of housing services. The difficulty arises in translating global targets into units that apply to a single house. It is not clear, for example, whether all sectors of the economy are expected to conform equally to the target, or whether those areas with the greatest potential for reductions in the shorter term will be required to carry a greater share of the responsibility. In the absence of more direct targets, we propose to generate a specific target for houses based on an average C02 generation per person year for housing services in the area in 1990. Any house which now exceeds this average fails the target. In the case of a rapidly growing A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype l i t -Housing Cost Data community like Surrey, where the large majority of new houses represent additions to the stock of houses in the region, the target will be lowered to 80% of 1990 levels. Assumptions and Data Limitations: The Base Case house is compared to an average B.C. house. Since the average house is a statistical representation of all the stock, it includes a portion of electrically heated homes. Since hydro electricity contains only a small C02 emission, this makes it especially difficult for a gas heated home, like the base case house, to achieve the target, even with higher insulation and window performance in a new house. The C02 emissions from transportation have not been included in this analysis, since they are so variable from one house to another. Major Data Sources: 1. Driver Value Units C 0 2 generation embodied as built 49,138 kg C 0 2 generation embodied lifetime 98,510 kg C 0 2 generation operating lifetime 314,608 kg C H 4 generation embodied as built 3 kg C H 4 generation embodied lifetime 6 kg C H 4 generation operating annual 18 kg Design occupancy 4 persons A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 125" Housing Cost Data Valuation Data: Key Variables Value Units • B.C. dwelling units (1990) 1243920 dwelling B.C. population (1990) 3216225 persons Residential Nat. Gas 84,000,000 GJ Residential O i l 15000000 GJ Residentail Electricity 47000000 GJ Portion of Electricity from 2% Natural Gas Thermal Conversion efficieny 33% C 0 2 emissions for Nat. Gas 55.17 kg/GJ C 0 2 emissions for O i l 73.1 kg/GJ CH4 for Nat. Gas 0.056 kg/GJ CH4 for O i l 0.0002 kg/GJ Conversion of CH4 to C 0 2 3.7 equivalent Multiplier for embodied energy 31% in residential sector Target C 0 2 equiv. generation 1836 kg/person*yr from operating energy Target C 0 2 equiv. generation 2406 kg/person*yr from operating & embodied energy Base Case House Operating 6294 kg/person*yr Base Case House Operating & 8264 kg/person*yr Embodied External Cost of C 0 2 0.015 $/kg House performance Indicie 344% As built and first year cost: $ 832 Lifecycle Cost: (no discount) $ 6,198.10 A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype Housing Cost Data Natural Environment Functions: Protection from Harmful Cosmic Radiation Cost Category: Sustainability Group Impacted: Future Generations Definition: Costs from ultra violet radiation incurred by future generations as a result of damage to the ozone layer from emissions of ozone depleting substances. Cause and Effect Chains: Housing services can result in the emission of substances with Ozone Depleting Potential (ODP). Most significantly, CFCs are released as a by-product of some building materials production, and as a result of failure and breakdown in household refrigeration, air conditioning and heat pump systems. Simplified Damage Rating Methodology: No current target available for CFCs in housing products. A Procedure for Analyzing the Full Costs of Development at the Community Level Appendix II Cost Data Sheets for Base Case Housing Archetype 111 

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