Economists refer to these effects as negative ‘externalities’ that occur because we continue to operate in an economic system that focuses on financial capital and built/manufactured capital without properly accounting for the effects (positive or negative) of our planning, urban growth and land management choices on human health and ecosystems.
The built environment is resource-intensive and accounts for around 50% of all material extraction. Moreover, the construction sector is responsible for more than 35 % of the EU’s total waste production1, making it one of the sectors that the European Commission considers a priority in its Action Plan for the Circular Economy2.
2 COM (2020) 98 final
Green building has shown that there are ways to design, construct and manage buildings in a way that reduces the impact of construction on health and the environment as much as possible. The aim is to build buildings that ensure healthy living conditions in the city, and particularly inside buildings, while respecting existing ecosystems and saving on the use of resources. Fundamental to this is the use of materials and products with low energy consumption during both production and installation, with no emissions of harmful substances, easy to maintain and with reusable and recyclable characteristics.
However, the spread of building choices that respect these principles is hindered by the inability to map, measure and value the creation of ecological and social value linked to more sustainable building techniques. The adoption of advanced and sustainable materials and construction methods is in fact hindered by the perception that building “green” means paying more without this being matched by an increase in the value of the asset.
Oscar Wilde wrote that “nowadays we know the price of everything and the value of nothing”3. It is precisely the value generated that should be at the center of a paradigm shift in the approach to the decision-making processes that govern construction, questioning the costs as much as the value of the benefits that every design and construction choice brings. Cost Benefit Analysis (CBA), appropriately applied, provides for this. Typically, a CBA process requires the decision-maker to identify and/or quantify all costs and benefits of a project, policy or decision, including potential impacts on human lives and the environment. In early applications of the CBA, the environment (or environmental values) was largely regarded as immeasurable, i.e. not measurable in monetary terms, and this led to environmental costs and benefits being ignored or excluded from decision-making processes, especially for so-called intangible benefits, i.e. those for which there is no market, such as aesthetic or cultural value, and for which assessment must necessarily be made using specific methodologies.
3 The Picture of Dorian Grey
Although assessing costs/benefits in terms of decreasing/increasing environmental quality and human health remains an ambitious process, there is an increasing number of cost-benefit assessments addressing this challenge, often referring to the ecosystem services4 framework. In order to fully capture the cost and benefit implications of urban greening works, for example, reference is often made to categories of benefits that do not belong to traditional accounting, such as improved air quality, adaptability to the effects of climate change, energy savings, effects on surface runoff, reduction of CO2 emissions, etc. Considering these services generated by urban greening, it is estimated that the City of Lisbon’s green infrastructure provides benefits worth 7.5 million euro per year at an operating cost of 1.7 million/year. This means that for every euro invested, citizens see a return of €4.48 in energy savings, clean air, CO2 absorption, increased house values, a beautiful urban landscape, and opportunities for recreation and relationships.
4 Ecosystem services are the set of services that natural systems generate for humans: according to the definition proposed by the MEA – Millennium Ecosystem Assessment, ecosystem services are the “multiple benefits provided by ecosystems to humans”.
In the case of building, assessing all positive and negative externalities implies extending the assessment to all inputs along the supply chain. The definition of the built environment must therefore include not only buildings and infrastructure but the whole economy of materials that supports the design and construction industries.
Because of the huge quantities of materials used in the built environment, the choice of building materials has the power to affect entire markets and change established ways of construction that have led to the impacts we know. Materials should be considered not only in terms of their performance in construction and use, but also in terms of the impacts of their extraction, transport and processing, and the benefits their use can bring.
This would mean exploring, for example, the environmental costs from the point of view of potential impacts on ecosystems, wondering how extraction and processing affects habitats, the water cycle and climate over time, as well as wondering whether these same materials – once integrated into the built environment – lend themselves to generating benefits that have hardly been explored so far, such as providing a habitat for flora and fauna, sequestering carbon over time, supporting the collection and use of rainwater etc. Assessments of this kind pave the way for the real challenge of the future, which is to rethink our cities through buildings that are not only “sustainable”, i.e. “neutral” in terms of environmental and social impacts, but “regenerative”, i.e. capable of generating positive effects on resources and habitats. This is with the aim of finally starting to repay the ecological debt that our societies have accumulated over the centuries.
Alessandra Borghini is a researcher and consultant on circular economy and natural capital issues. She collaborates with the SUM (MANAGEMENT OF SUSTAINABILITY) laboratory of the Institute of Management of the Scuola Superiore Sant’Anna of Pisa, and with Ergo Srl, a spin-off of the Scuola Superiore Sant’Anna of Pisa that carries out consultancy activities focused on environmental management and sustainability management for SMEs, Clusters and Territories (“IMPACT focus”). She has been a member of the research team and consultants in dozens of projects on circular economy and resource efficiency. Her interests focus on the economic valuation of ecosystem services, natural capital governance mechanisms, and the development of strategies for the pursuit of circularity goals at both the enterprise and public organisation levels.