Sunday, April 22, 2007

Uncertified Green Building Claims

About 18 months ago Auden Schendler and Randy Udall wrote a piece in Grist, “LEED is Broken; Let’s Fix It.” The U.S. Green Building Council (USGBC) did, at least in part, respond to the complaints about its bureaucracy by creating LEED Online, a paperless submission system that is relatively easy to use and which does ease some of the paperwork nightmares associated with LEED. It remains to be seen whether once the LEED submissions actually reach the evaluators, the process moves any faster. Many of the other issues cited by Schendler and Udall remain irritants to project teams involved in the LEED process ... more about this in a future blog.

Although there has been progress with respect to bureaucracy there is another problem that has not been addressed at all, namely the growing and dangerous trend of green building advocates making increaslingly outlandish and unsupportable claims about green buildings. Equally alarming is the uncritical acceptance of reports touting the benefits of going ‘green’ in the design and construction of buildings. A relatively recent October 2006 report by Capital E, “Greening America’s Schools: Costs and Benefits” is widely accepted as gospel by the green building community. Indeed the CEO of the USGBC, Rick Fedrizzi, gave it effusive praise at the annual GreenBuild Conference held in Denver, November 2006. Here is a quick summary of what this report claims are the costs and benefits of green schools:

Financial Benefits of Green Schools ($/ft2)

Energy $ 9

Emissions $ 1

Water and Wastewater $ 1

Increased Earnings $49

Asthma Reduction $ 3

Cold and Flu Reduction $ 5

Teacher Retention $ 4

Employment Impact $ 2

TOTAL $74

COST OF GREENING ($3)

NET FINANCIAL BENEFITS $71

The results are based on a life cycle costing analysis over a period of 20 years with a discount rate of 7%, a general inflation rate of 2%, and an energy inflation rate of 5%. In the table above the results are expressed as the present value of costs and savings per square foot over the 20 year analysis.

What struck me immediately was that the claimed savings of $71 per square foot were based almost entirely on soft costs. The Increased Earnings claim of $49 per square foot was clearly the dominant source of the savings, with $13 dollars of additional per square foot savings for other soft costs (asthma reduction, cold and flu reduction, teacher retention, and employment impact). Thus the soft costs totaled $62 of the claimed $74 worth of savings. I found this quite an extraordinary way to compute green building savings and I decided to finally sit down and read the Capital-E report word for word. I also did a critique of this report as a classroom exercise with graduate students in BCN 6586, Construction Ecology and Metabolism, a course that I teach each spring semester at University of FLorida. The following critique is based on this exercise and my personal experience with green buildings, life cycle costing, and a wide array of other subject matter connected to high performance buildings.

The Increased Earnings Claim

A good place to start in reviewing the Capital-E report is to look at the big ticket savings claimed for green schools, the Increased Earnings claim of $49. The authors state, and rightfully so, that “Faster learning and higher test scores are significantly and positively associated with higher earnings.” They cite an International Monetary Fund (IMF) study that states that one standard deviation improvement in average math scores, which would put a student in the 84th percentile, results in an average 12% higher annual earnings throughout the student's lifetime. Based on a study of Chicago and Washington, DC schools it was found that “…better school facilities can add 3 to 4 percentage points to a school’s standard test scores, even controlling for demographic factors.” Note that the study was about better facilities, not green schools. In fact any new school is almost certainly going to be classified as a “better facility.” Not satisfied with connecting the dots in this incredible manner, the authors then take this improvement in test scores and translate it to “…an earnings increase of $532 per year for each graduate of a green school.” Green schools were not mentioned in the IMF report nor in the Chicago/Washington, DC reports. The authors of the Capital-E report simply substituted the word green for the words better facilities in the report on Chicago and Washington, DC schools. Thus the authors imply that only green schools are better facilities, but do not acknowledge that new schools that are not green are certainly better facilities and may also improve test scores. The earning increase of $532 per graduate was further translated into a present value of increased earnings of $6,800 per student, and further to $49 per square foot. Even my graduate students immediately recognized this badly flawed methodology and results that should not have seen the light of day. The actual result should have been stated as: "We have no idea what the actual increase in earnings of students attending green schools versus non-green or non-LEED schools is." The USGBC should immediately repudiate this and all other similar claims that are based on unsupported assumptions, interpolations, and extrapolations and not on a dispassionate, rigorous and scientific analysis with well-structured protocols.

The Energy Savings Claim

The methodology for determining energy savings, claimed as $9 per square foot, is similarly flawed. Table B in the report summarized key information for 30 schools used as a baseline for parts of the report. It showed energy and water savings, the cost premium for the green schools, and dates of completion. I was initially struck by the claims for energy savings for several schools completed in 2006 because the Capital-E report was dated October 2006 and thus it would not have been possible to gather useful data about energy consumption in just a few months. It appears that the energy and water savings are not based on actual data but on the models used by the design teams to forecast energy and water consumption. It is well-known, particularly in the era of LEED-NC 2.1, which all of the schools probably followed for certification, that energy modeling using ASHRAE Standard 90.1-1999 produced very inaccurate results. The modeled energy savings of the 30 schools were compared to the average energy use for all operating schools during 2005-2006, which was stated as $1.15 per square foot. Note that the comparisons were not with non-LEED or non-green schools built at the same time, which would have been a far more useful comparison, but with all operating schools. This is a consistent analytical flaw in the Capital-E report on green schools, their comparison of new green schools to the existing stock of all schools when it would have been far more useful to use real data from both green and non-green schools built in the same time frame. Note that a school can be LEED certified even with zero energy savings depending on the project team’s strategy for getting points.

The authors, in spite of these obvious major flaws in methodology claim direct energy cost present value savings of $6 per square foot. But even more flawed is the claim of $3 per square foot of indirect savings. In determing the indirect energy savings, the authors cite a 2005 report by a national laboratory which found a 1% reduction in demand for natural gas results in a 0.75% to 2.5% reduction in average wellhead prices for natural gas. Through an unclear methodology, they translate this into indirect present value cost savings of $3 per square foot for schools. However neither the $6 direct cost savings nor the $3 indirect cost savings can be proven using the assumptions, interpolations, and abstractions contained in the report. To claim that green schools are going to result in reductions in natural gas prices is absurd. Natural gas prices are likely to increase over time because of increasing demand by a wide variety of actors. In short, the energy savings claimed in the report are not the least bit reliable. Again, the USGBC should reject these findings and either perform or support the performance of research that will produce outcomes in an unbiased, scientific manner. I will address the probable energy savings of green schools at the end of this critique.

The Asthma Reduction and Cold/Flu Reduction Claims

The savings for asthma reduction ($3 per square foot) and cold/flu reduction ($5 per square foot) are about the same as energy savings, a red flag that yet another flawed methodology was used for determining these figures.

A Carnegie Mellon University review of five separate studies stated that the annual health care costs for a student with asthma were $1,650 higher than for a student without asthma. The author, with no evidence at all, ASSUMES that the incidence of asthma will be reduced 25% in moving from unhealthy conventional schools to healthy schools. He also cites an American Lung Association (ALA) report that American school children miss more than 14 million school days a year due to asthma exacerbated by poor indoor air quality. The implication is that this lost school time is caused by schools themselves. No mention is made of the many other causes of asthma attacks that can occur outside the school, for example, at home. In fact, there is no such connection made in the ALA report cited by the authors. Indeed the ALA report is not the primary source for this information; rather the American Academy for Allergy, Asthma, and Immunology (AAAAI) is the primary source. See the ALA report at http://www.aaaai.org/patients/advocate/2004/fall/costs.stm to view the results of their research. The ALA report also notes 14.5 million lost workdays due to asthma attacks but does not attribute these attacks to the workplace. The ALA report states that childhood asthma is a disorder with strong genetic predispositions and strong allergic components. The triggers for asthma include: exercise, infections, allergy, irritants, weather, and emotions. All of these triggers can be experienced at home or in a wide variety of other locations. Perhaps one can point to possible mold problems in schools as a cause of allergies, but the authors present no evidence supporting this connection. And as is the case for other sections of their report, they compare new green schools to the existing school stock. It is probable that new non-LEED schools that follow current building codes will not have significant mold problems. It is equally probable that poor design and construction of green or LEED schools will result in mold problems. The authors' determination that there is a $3 per square foot savings due to asthma reduction in green schools has no basis in fact and the analysis is badly flawed.

Moving on to cold/flu reductions, the author relies on CMU and Lawrence Berkeley National Laboratory studies. The CMU study found an average 51% reduction in cold/flu occurrences due to improved air quality. The LBNL study states that better ventilation and air quality could reduce these occurrences by 9-20% in the general population with annual savings of $6-14 billion. Again the author calculates the savings due to green schools reducing these occurrences by extrapolating $10 billion of savings per the LBNL study, spreading the savings over the entire U.S. population to produce annual savings of $45 per person per year, further producing a remarkable $5 per square foot of savings for green schools. He does not address the fact that green schools and non-green schools use the same design standards for ventilation systems. The outcome of these assumptions and extrapolations is more highly questionable results. In fact the differences in cold/flu occurrences in green versus non-green schools are unknown. This is what the Capital-E report should have stated.

The Teacher Retention Claim

The report claims that green schools reduce teacher turnover based on a report by Paladino and Company. The Capital-E report states: “A recent report on green schools in Washington State estimated a 5% reduction in turnover.” However a closer reading of the Paladino report reveals that the Paladino report also relies on the earlier mentioned reports on Chicago and Washington DC schools as the basis for this statement. The report on Chicago and Washington, DC schools states that teacher turnover is rooted in health problems and poor environmental conditions and that higher quality facilities result in better teacher morale, probably an obvious outcome. The report on the Chicago and Washingon, DC schools used a method whereby teachers ranked their school facilities with a grade of A to F where A was for the highest level of satisfaction and F was for the lowest level of satisfaction. This report concluded that there was a 5% increase in the probability of teachers remaining at the same school when comparing A-rated schools to F-rated schools. Consequently the Capital-E report misstates the outcomes of the report that rated schools in which there was absolutely no mention of green schools, just better facilities. It seems that the Capital-E report authors do not acknowledge that a reasonably well-designed new conventional school would also be a “better facility.” This attribute is not exclusive to green schools. The Capital-E report somehow computes these mythical savings due to teacher retention as $4 per square foot savings. The truth is they have no idea if green schools increase teacher retention compared to contemporary non-green schools.

The Employment Impacts Claim

The Capital-E report states that the employment impacts of green schools are a benefit of $2 per square foot. This result is based on a 2004 report by the Massachusetts Division of Energy Resources and the Consumer Affairs and Business Regulation Agencies that states that each $10 million investment in energy efficiency improvements contributes 160 short-term and 30 long-term jobs. Capital-E extrapolates this information to somehow attribute 3 short-tem and ½ long-term job per green school based on $200,000 of additional investments in energy efficiency compared to a conventional school. There are several serious flaws in this line of thinking. First, taking the results of the 2004 Massachusetts report and extrapolating the result proportionately to green schools is a real stretch. Capital-E again cites the earlier debunked 33% energy savings of green schools compared to ‘conventional schools.’ There is no information provided about the energy conserving features of contemporary non-LEED schools which are substantial and growing in importance with rising energy prices. In fact a recent 2006 report from the Lexington, Massachusetts Superintendent of Schools indicates that they, like other school districts, are investing significant financial resources in upgrading the energy efficiency of existing schools. Using the Capital-E logic, each existing school being upgraded should also take credit for new short-term and long-term jobs. And indeed, except in fast growing regions such as Florida and Nevada, the number of new schools being built compared to existing schools is very small. In summary, the Capital-E claim of $2 per square foot savings is totally unsupportabe.

Revisiting the Summary Table

In reviewing the criticisms of the Capital-E report on the financial benefits of green schools, few of their claims stand up to scrutiny. It is laced with unfounded assumptions, interpolations, and extrapolations that are not supported by the evidence. The table below was derived by setting aside the Capital-E claims that cannot be supported. The water savings and emissions savings were simply retained. The direct energy savings were recalculated using a more reasonable 20% savings and based on inflating the Capital-E assumption of annual average energy costs of $1.15 per square foot to $1.25 per square foot. This is a better comparison of potential energy savings for new green schools versus new conventional schools where there are probably significant energy conservation measures being implemented. The 20% reduction results in a $4 present value savings per square foot. If the $3 increase in construction cost is maintained, the net present value of savings over a 20 year period is about $3 per square foot, a far cry from the $71 per square foot claimed in the Capital-E report.

The Provable Financial Benefits of Green Schools ($/ft2)

Energy $ 4

Emissions $ 1

Water and Wastewater $ 1

Increased Earnings $ 0

Asthma Reduction $ 0

Cold and Flu Reduction $ 0

Teacher Retention $ 0

Employment Impact $ 0

TOTAL $ 6

COST OF GREENING ($3)

NET FINANCIAL BENEFITS $ 3

Conclusions

The U.S. green building movement is plagued by hyperbolic claims that must be challenged if the movement is to have any integrity. There is a critical lack of methodologies and protocols, not to mention a severe shortage of pertinent research about high performance buildings. The Capital-E report critiqued here is just one of a number of similar reports that are badly flawed and which the USGBC, instead of embracing, should repudiate. Otherwise similar pseudo-scientific reports will become the norm. This approach to research and the repeating of green building benefits that cannot be substantiated will ultimately result in serious negative impacts on the green building movement. Reports that make unsupportable claims about the benefits of green building simply reinforce the countervailing forces that argue green building is too expensive.

I challenge the USGBC to address these inaccurate and unsupportable claims, to cease supporting and repeating them, and to organize a rigorous research agenda that finds the truth. The Capital-E report is but one of many that need to be scrutinized and criticized to set the record straight. It is not only the intergity of the USGBC that is at stake, it is also the integrity of every one of us associated with the high performance green building movement.

5 comments:

Kif said...

Professor Kibert,

Your analyis and it's underlying critique of the "hyperbolic claims" of green building benefits is a breath of fresh air to people who are passionate about green building but also are concerned with maintaining credibility. Thank you!

Jon Braman said...

Greening America’s Schools – Response and Corrections

As a contributing researcher to the 2006 Capital E report “Greening America’s Schools: Costs and Benefits” I would like to offer a response to Mr. Kibert’s April 22nd critique of the report, based on my involvement with the study and sense of the choices involved in this type of cost/benefit analysis.

While some of Mr. Kibert’s complaints do point to important areas for further research, his critique overlooks or ignores many of the report’s key findings and objectives. It may be that he simply disagrees with two assumptions underlying the study: 1) Cost/benefit analysis should encompass both “hard” and “soft” financial benefits on both the school and the surrounding community; and 2) There is immediate value for decision-makers and communities in using available data and research to make conservative estimates of future financial benefits, with the understanding that future research and data will be needed to refine those estimates over time.

Baseline issues
A basic question in assessing the costs and benefits of green design is: what is the appropriate baseline for comparison? For a green building, the ideal baseline would be the same building built using conventional design. Unfortunately, in the real world there are no ready-made control groups; identical green and conventional schools are not built at the same time on adjacent lots. The categories of ‘green’ and ‘conventional’ each encompass a range of quality and design, with LEED and other state-based green standards providing definitions of ‘green’ design, and local building codes providing minimum standards for ‘conventional’ design. “Greening America’s Schools” compiled data directly from the architects involved with 30 green schools on the cost premium and energy and water savings compared to conventional buildings. The baselines used for energy and water savings were national standards (ASHRAE 90.1 and EPA 1992) used by LEED and other rating systems. In estimating other benefits (health, productivity, teacher retention), we relied on a wide body of research, much of which looked at high performance buildings compared to conventional buildings. For the purposes of this study we viewed high performance buildings as functionally the same as green buildings in regards to the specific design-related impacts being evaluated. When using this type of data for comparison we consistently chose values for improvement from the lower end of the range found in the literature; that is, we assumed a smaller difference between ‘green’ and ‘conventional’ schools than between the high performance and conventional buildings in referenced studies. Given the dearth of data on green schools (most of which were built in the last 6 years), augmenting data from actual green schools with studies of high performance buildings is a reasonable method for estimating green school performance. The report is explicit in describing these studies when cited and does not claim that they look at green buildings: “There is a large body of research linking health and productivity with specific building design operation attributes.” (“Greening America’s Schools” page 9)

Health and learning
Based on these studies compiled by the Carnegie Mellon University Center for Building Performance, Lawrence Berkeley National Laboratory and others, the report uses a 25% asthma reduction (range in literature: 21-72%), a 15% reduction in colds and flu (range in literature: 9-87%) and a 3-5% productivity improvement (range in literature: 0.2-26% for individual changes in building performance, many of which are combined in green schools) in modeling health and increased earnings benefits from green schools compared to conventional schools. Once again, the report is explicit about where this data comes from: “Based on actual improvements in design in green schools and based on a very substantial data set… on productivity and test performance of healthier, more comfortable study and learning environments, a 3-5% improvement in learning ability and test scores in green schools appears reasonable and conservative.” (“Greening America’s Schools” page 13) Anecdotal evidence from green schools included in the study supports these conclusions and assumptions. As with the unquantified benefits described in the report, additional monitoring of student and teacher health and performance in green schools compared to conventional schools is an important objective for further research.

A more recent study by the Center for the Built Environment begins to address this question directly by comparing results of occupant surveys in ‘green schools’ against a database of responses from non-green buildings including new and old conventional buildings. The results (available at: http://www.cbe.berkeley.edu/research/pdf_files/Abbaszadeh_HB2006.pdf), show statistically significant improved occupant satisfaction in green buildings with overall building, comfort, air-quality, and thermal comfort, but not in the areas of lighting and acoustics. When the baseline database is limited to only new buildings, occupant satisfaction remains greater for indoor air quality in green buildings. Future estimates of the health and productivity of green buildings would certainly take into account this type of current research.

Student earnings
One of the most striking results of the benefit modeling in this study is the large impact of green schools on student earnings throughout life. When research on the impact of building design on productivity and performance is considered alongside research on the relationship between student performance and earnings, it becomes clear that even small (3-5%) improvements in student performance have dramatic long-term financial benefits. Even at lower (1-2%) levels of improvement, the financial impacts appear to be significantly larger than the easier to estimate benefits of energy and water savings. The school building environment is one of myriad factors impacting student performance and later earnings throughout life, and it was beyond the scope of “Greening America’s Schools” to tease out the interrelationships between factors including socio-economic background, higher education, teaching and curriculum, and building environment. Our task, however, was to estimate what impact on earnings could be expected from the 3-5% improvement in student performance, which we had estimated from green school design. This kind of estimation is no precise business, but an IMF review cited in the report (available at http://www.imf.org/external/pubs/ft/fandd/2005/06/hanushek.htm) pointed to three recent studies at the University of Chicago, Harvard University, and Stanford University that provided a basis for our model: all three found that one standard deviation increase in test scores was associated with a 12% increase in life-time earnings. We assumed a linear relationship between student performance and earnings. Considering the large body of peer-reviewed studies showing a significant positive impact of improved building environment on productivity and performance, and a significant positive impact of student performance on earnings throughout life, our estimate of $49 per square foot as the present value of increased earnings over 20 yrs from green school construction seems reasonable and conservative. As additional research quantifying student performance and earnings impacts in green schools becomes available, I look forward to reading it.

Energy
Mr. Kibert is correct in asserting that the energy savings data for the schools cited in the report come from both modeled and actual energy performance, but wrong in asserting that energy models are “very inaccurate.” Modeled energy use is widely used by Federal and State agencies, environmental firms and financial institutions as a basis for performance estimates and financial transactions, and is a valid basis for estimating future energy savings benefits.

While Mr. Kibert asserts that our calculation of an indirect, market-wide financial benefit from reduced energy use is ‘absurd’ he goes on to say that natural gas prices will rise because of “increasing demand by a wide variety of actors.” This is exactly the mechanism by which studies by the Lawrence Berkeley National Laboratory, Platts Research & Consulting, the State of Massachusetts and others have found indirect price reductions from reduced energy demand. While for an individual building a $3/sf price difference in energy prices spread over the entire market for 20 yrs is negligible, the potential impact of broader energy efficiency measures – in the form of green buildings or otherwise – are significant and merit inclusion in a broad analysis of costs and benefits.

Employment
“Greening America’s Schools” looks to a set of studies, including a 2004 Massachusetts report on actual job creation resulting from investments in energy efficiency made in Massachusetts in 2002, as a basis for estimating the employment impact of energy efficiency investments in green schools. Other recent studies examining energy efficiency and job creation with similar results include statewide analyses in a Iowa and Illinois, a 2007 Center for Integrative Environmental Research at University of Maryland report on the impact of Maryland’s participation in the Regional Greenhouse Gas Initiative, a 2002 report on energy efficiency in the Southwest: “The New Mother Lode,” and the 2003 Apollo Alliance report on increased investment in energy efficiency. To be conservative, we assumed that jobs are created at a lower rate per dollars invested in energy efficiency for green schools than for the general energy efficiency investments found in the studies cited above.

Teacher Retention
Mr. Kibert challenges the teacher retention benefit by again pointing out that the research we cite examines the turnover rate in higher quality facilities, not green schools, stating that a ‘well designed new conventional school’ might have the same benefits. It is true that individual ‘non-green’ schools may have high performance features which result in some of the benefits here attributed to green schools. As explained, the report assumes that ‘conventional’ schools are new and built to code. As with our estimates of health and productivity benefits we modeled a reduction and cost of teacher turnover in green schools more conservative than the average values found in the literature for higher performing schools.

Summary
As the “Greening America’s Schools” report describes, there are many features of green schools that are likely to result in financial benefits not quantified in this report due to insufficient available data and research. These include stormwater reductions, reduced teacher sick days, heat island reduction measures, lower O&M costs, C&D waste recycling, insurance and risk related benefits and educational enrichment. If quantified, these would substantially increase the estimated benefits of green schools. Mr. Kibert’s final revision of the financial benefits of a green school suggests that energy and water savings are the only features differentiating ‘green’ from conventional design (and still results in a favorable 2:1 benefit cost ratio). The evidence described in the report and above supports the existence of broader and larger set of benefits from green school construction.

Please contact me with any additional questions (jbraman@cap-e.com) and visit www.cap-e.com to download and read previous Capital E cost/benefits studies, including the 2003 report, “Costs and Financial Benefits of Green buildings,” a report to California’s Sustainable Building Task Force, and “National Review of Green Schools: Costs, Benefits and Implications for Massachusetts,” written in 2005 for the Massachusetts Technology Collaborative.

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Chuck said...

That is a very informative article. Thanks for sharing it.

green building said...

Hello, I am impressed by the idea of green building, it will be good to hear that other real estate agents are also taking interest in making more of these green building. But how much it going to affect the environment and cost for production.

green building