How Do You Define Value?

Expensive doesn't mean unaffordable

It is another irony of our modern times, and of our definition of green building, that green is seen by some as a luxury only the wealthy can afford. Two hundred years ago, it was the poorest people who were living the greenest lives. Back then, you needed money not to be green, but to afford the oversize house and the imported marble.
The common argument against green building—that it costs too much—relies on a narrow definition of cost, typically reducing it to the amount of money paid up front. It ignores other costs, those that are less immediate and less visible, and it ignores any possible rewards. Yet the same people who dismiss photovoltaics as too expensive, who say the payback period is too long, happily plunk down money on luxury items—a Porsche, say, or a hot tub—without ever asking, “Where’s the payback?”
But because investments such as photovoltaics or extra insulation really can pay us back (and ultimately save money by reducing energy costs), because this is possible, many people focus only on the financial equation. They consider an investment in energy efficiency like any other investment. If the payback on solar panels is 15 years and they might sell the house in five, they don’t buy the panels. If they plan to keep the house, but the same money invested in the stock market would net a bigger return in 15 years, they buy stock.
Cost is not such a simple issue. What is the cost of your house? Is it the $350,000 price that you agreed on with the seller? Or is it the more than $796,000 you will pay over the course of a 30-year mortgage? And what about fuel bills over 30 years? How do they factor in to the cost of your house? Even these questions, which suggest that cost is more than just a number on the price tag, are still simple financial equations. When you consider the environmental costs of building or operating a house, things become complicated quickly.
"Before we can argue intelligently about whether the benefits of green building are a fair exchange for the price, we have to understand the true cost of building any other way."

Last year, the British newspaper The Observer reported that some clothing sold at Gap stores was being made in New Delhi sweatshops by children as young as 9 years old and working 16 or more hours a day. The Observer referred to this discovery as “the tragic consequence of the West’s demand for cheap clothing.” No one intended this consequence, not even the folks running Gap Inc. No one thought that child labor was a fair exchange for an inexpensive shirt. It happened because in this complex global economy, it is hard to know the consequences of our choices. But once we do know, we can decide for ourselves what is a fair exchange. Once we know that child labor is part of the cost of an inexpensive shirt, most of us will happily pay a little more for a shirt that might otherwise have seemed too expensive.
It’s no great leap for me, then, to wonder about houses, which are considerably more complicated and more expensive to make than shirts. What unknown costs lurk among the wires, pipes, studs, tiles, carpets, and cabinets? In the past, we discovered the dangers of lead-based paint and stopped using it. We learned the connection between asbestos and lung disease and found alternative materials for insulation and siding. Once we understood the importance of our wetlands to surrounding ecosystems, we stopped building on wetlands.
But what hidden costs, what potentially tragic consequences, have we yet to discover? What new ones are we introducing? Before we can argue intelligently about whether the benefits of green building are a fair exchange for the price, we have to understand the true cost of building any other way.
Value: the other half of the equation

When people dismiss green building as too expensive, they usually mean that adding green features—renewable energy, extra insulation, recycled materials—to the house they were already planning to build or remodel requires too much money. But such an evaluation hardly means that green building is too expensive. It simply means that some people value other things more highly. Those other things might be more square footage, extra bathrooms, a lavish kitchen, or a three-car garage. If a 4000-sq.-ft. house with green features costs more than you’re willing to pay, it might not be the green features that make it too expensive. It might be the size of the house.
Helped along by building codes and regulations, we have learned the value of many things that make our houses cost more. We have learned the value of digging foundations below the frost line, of expelling moisture from bathrooms with vent fans, of wiring homes for smoke alarms. And now we readily accept the worth of these additional costs.
Today, more and more people consider the cost of green building to be a fair price for a safe, comfortable, durable house that does less damage to the environment than a typical house. The effects of global warming, and the attention focused on them, make it easier to see the long-term cost of building so many homes that rely heavily on fossil fuels.
Even if you remain focused solely on money, green building’s value equation is constantly changing. With each increase in oil prices, photovoltaics and extra insulation will seem less expensive. I also wonder how soon the resale value of a house will be influenced substantially by its green features.
How much higher do energy costs have to rise before people will pay a premium for a smaller house or one that is LEED-certified? Maybe we’ll reach a point where status is conferred not according to how big a house is but according to the electrical output of the photovoltaic array.

From Fine Homebuilding 195 (Houses), pp. 10-16
April 16, 2008