Green buildings and labour productivity

2008-07-08

in Economics, The environment

In an interview with the McKinsey Quarterly, Amory Lovins makes an excellent point about energy efficiency and building design:

Moreover, seldom-counted side benefits can be far more valuable than the direct savings. For instance, a typical office pays about 160 times as much for people as for energy, so a 0.6 percent gain in labor productivity would have the same bottom-line effect as eliminating the energy bill. But we routinely see not a 0.6 but a 6 to 16 percent gain in labor productivity in efficient buildings with better thermal, visual, and acoustic comfort. When people can see what they’re doing, hear themselves think, breathe cleaner air, and feel more comfortable, they do more and better work. We also see 40 percent higher retail sales in well day-lit stores, 20-odd percent faster learning in well day-lit schools, and better clinical outcomes in green and efficient hospitals. These often overlooked side benefits are frequently worth tens or hundreds of times more than the actual reduction in energy costs.

For instance, a famous aerospace building designed for day lighting gave a far faster payback than expected, because it spurred 15 percent higher productivity and 15 percent less absenteeism. The higher productivity and reduced overhead of the green building gave the company a competitive advantage in a tough contract bid. Winning that contract generated enough profit to pay for the whole building. When the Wall Street Journal was writing its third article about the building, the Journal’s reporter called me and said, “They’ve clammed up. I can’t get any data. Can you find out what’s going on?” Well, the CEO had realized that the building was an important source of competitive advantage and that they’d already said way too much about it.

In order to encourage the efficiency investments required to fight climate change, it will be important to quantify and value these kinds of co-benefits, as well as focus on developing and deploying designs that enhance them.

This is a situation where it is possible to deploy the opposite of a hair shirt environmental solution: create something that is both more sustainable and more comfortable and economically desirable. It just takes creativity, joined up thinking, and a willingness to consider at least the medium term when investing.

More on green buildings:

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{ 9 comments… read them below or add one }

Milan February 17, 2009 at 2:43 pm

It’s a shame this never sparked any discussion. Personally, I think the possibility that green buildings can be more pleasant for those who live and work in them is quite important, and that increases in labour productivity might be an important way to offset higher design and construction costs.

Tristan February 17, 2009 at 11:16 pm

I don’t find the research that surprising – making a building more humane will obviously be beneficial for the humans inside. The fact this can only be measured in terms of their productive output is a bit depressing, but understandable given what we value in technological society.

Of course, these issues all follow from a decision we don’t make – which is the decision regarding whether the existing division of labour in society is beneficial to society as a whole. In other words, are there many jobs which don’t really need doing? Why can we not distribute the massive surplus of wealth more equitably – and in such a way that less work must be done in order to “earn” a share of that wealth – especially considering most jobs don’t actually contribute to this wealth in any way I can see.

Reducing the amount of pointless work done, probably reducing our wealth, but distributing it more equitable, would likely have massive reductive effects on our CO2 emissions.

We should also consider that producing more wealth means, on average, an increase in CO2 emissions. In other words, if the green building is 15% more productive and that means the bosses all get bigger bonuses, if they spend all that money on CO2 intensive leisure, like say, running a 40 foot high speed powerboat which burns hundreds of liters of fuel per hour, there is no real CO2 reduction from the efficiency increase in the building.

What we really need, it seems to me, is a lot less wealth, and for it to be distributed a lot differently.

Milan February 18, 2009 at 8:56 am

It’s not just the cigar puffing taskmasters who benefit from higher labour productivity.

Personally, I find work more pleasant when I am productive. Given that I need to work somewhere, I would rather work in a comfortable and ecologically-aware building.

Milan February 18, 2009 at 8:58 am

The fact this can only be measured in terms of their productive output is a bit depressing

For office jobs, measuring productivity can actually be pretty hard. It would be easier to poll people about how pleased they are with their workplaces, look at the effect on their health, track rates of absenteeism, etc. Arguably, each of those is a better measure of worker welfare than worker productivity.

Tristan February 19, 2009 at 1:18 pm

I didn’t say there was anything wrong with “cigar puffing taskmasters” being the ones profiting from the increased productivity, except insofar as that leads to increased CO2 emissions. The paradox is, wealth causes pollution.

Milan February 19, 2009 at 1:48 pm

If humanity is going to survive, that needs to change.

As I said before: “It is only when the most selfish and environmentally-indifferent individuals are nonetheless living low-carbon lives that we will have successfully dealt with the problem of climate change.”

Technologies like green buildings help us move in that direction.

Tristan February 19, 2009 at 3:06 pm

Taxing carbon would help us move in that direction a lot faster. Put a price on externalities, rather than moralizing consumption. Moralizing externalities guarantees that real change, i.e. their internalization, will be delayed.

On the other hand, we could shift away from a market-based economy which produced much less wealth and distributed more equitably, but this is considered even more politically impossible. The idea that “selfishness” is innate and not a product of our material conditions is historically naive.

Milan February 20, 2009 at 1:12 pm

One of the major effects of taxing carbon would be to encourage more efficient buildings.

Since a carbon tax is politically impossible right now, trying to advance the same ends by different means is appropriate.

There are also market failures beyond GHG emissions that can be corrected through green building policies: for instance, they could force builders and landlords who don’t generally care about efficiency to do so.

Tristan February 20, 2009 at 6:00 pm

I think it’s politically impossible because people don’t understand what an externality is – externalities are theft. How about the liberal party run a Music-industry stryle “awareness” campaign about how not having a carbon tax means you’re stealing from the planet whenever you consume energy intensive products. It’s stealing, I’d say, in a more real sense than stealing music online is stealing.

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