Efficient social housing

2010-04-16

in Economics, Law, Politics, The environment

Here is a nice idea, social housing developments designed with an eye turned towards energy efficiency:

The boiler room houses a microturbine system, which generates energy for electricity and heat. It reuses heat that would otherwise be lost to the atmosphere, reducing carbon emissions while also cutting costs…

Enterprise [Community Partners] believes “green” and “affordable” are one and the same. It has created a national framework for healthy, efficient, environmentally clever and affordable homes which it calls the Green Communities Criteria. These criteria include water conservation, energy efficiency and the use of environmentally-friendly building materials. The criteria are aligned with LEED, a green rating system. Meeting the criteria increases housing construction costs by 2%, which is rapidly paid back by lower running costs. Even the positioning of a window to optimise daylight can help save energy.

To me, this seems like another example of the market ordinarily caring too much about up-front costs, and not enough about total cost of ownership.

If the ordinary building code was altered so as to make new buildings significantly more efficient, at an increased cost of about 2%, it seems likely that both the residents and the planet would benefit in the long run.

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{ 6 comments… read them below or add one }

Tristan April 19, 2010 at 6:03 pm

This is an example of how the lack of perfect information makes the free market pretty irrational.

Too bad we have an entire industry dedicated to keeping information imperfect.

Sarah April 19, 2010 at 10:32 pm

They’ve tried regulating stuff like insulation of buildings in the UK & experience suggests that the people who perform the inspections are incompetent and/or heavily bribed by the builders, so the regulations aren’t enforced. You’d need a very robust & independent regulatory & inspection regime for it to be effective.

Tristan April 20, 2010 at 2:55 pm

“You’d need a very robust & independent regulatory & inspection regime for it to be effective.”

Ya, or you could just not allow companies to incorporate, build one project, and dissolve. It’s not accidental that firms don’t take responsibility for their work – the market is set up to allow this, and people take advantage of it.

If it was more difficult to incorporate, and if incorporation were something valuable enough not to simply throw away – if you needed to demonstrate longstanding stand-up service and reliability, there would be an internal incentive in the market not to be build sketchy housing.

Sarah April 20, 2010 at 7:23 pm

As far as I’m aware, the problems with compliance in the UK have nothing to do with incorporation – it is simply standard practice for everyone not to follow the rules because there’s a financial incentive to cut corners & the inspections are inadequate. Buyers often don’t even know whether their own house has the insulation properly installed etc., let alone what the builder’s general reputation is, because the inspection won’t have been rigorous enough to yield that information.

Tristan April 20, 2010 at 10:57 pm

” it is simply standard practice for everyone not to follow the rules because there’s a financial incentive to cut corners & the inspections are inadequate. ”

If you don’t think this has anything to do with limited liability, I don’t really have anything to say to you.

Tristan April 20, 2010 at 11:20 pm

I can say this:

” Buyers often don’t even know whether their own house has the insulation properly installed etc., let alone what the builder’s general reputation is, ”

Why don’t the buyers know the builders reputation? If builders cherished their right to incorporate, their reputation would be associated with something semi-permanent and substantial – something that could be tracked by the BBB etc…

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