The use of economic valuation to create public support for green infrastructure investments in urban areas

http://www.sciencedirect.com/science/article/pii/S0169204611002428
Abstract: Increasing urbanization has created pressure on land use. Today more and more land in urbanized areas is used for housing, industry, community services or other economic functions. However, green spaces have a proven positive effect on people living in the neighborhood of green spaces, as well as on people working or recreating in the urbanized area. Therefore, green infrastructure investments have been put high on the agenda in many European countries. In order to convince the public and other stakeholders of the usefulness of these kind of green investments, it is necessary to give a correct, understandable and easily repeatable method to value the investment. The current article describes a model that can be used to put the value of green infrastructure investments into economic terms. Evaluating the project at site scale and regional scale will give a complete overview of all direct, indirect and use values of the investment. By using cost–benefit as well as multiplier analyses the monetary values can be estimated. The article shows that using this model helps to justify policy's support for and investment in green space.

Highlights:
► Investments in green infrastructure are difficult to value.
► A correct, repeatable and understandable valuation contributes to public support.
► Combining cost–benefit and multiplier analyses shows the complete value of green investments.
► The VALUE model, as described in the article, can be used to estimate this value.

by Valerie Vandermeulen 1, Ann Verspecht 1, Bert Vermeire 2, Guido Van Huylenbroeck 1 and Xavier Gellynck 1;
1. Department of Agricultural Economics, Ghent University, Coupure Links 653, 9000 Gent, Belgium; Tel.: +32 9 264 59 43; fax: +32 9 264 62 46.
2. Regionaal Landschap Meetjesland, Marktstraat 65, 9990 Maldegem, Belgium
Landscape and Urban Planning via Elsevier Science Direct www.ScienceDirect.com
Volume 103, Issue 2; 30 November 2011; Pages 198-206
Keywords: Urban planning; Economic valuation; Green infrastructure

Valuing Green Infrastructure in Portland, Oregon

http://www.webmeets.com/files/papers/AERE/2011/74/GreenStreets-5-24-2011.pdf
Abstract: This study uses the hedonic price method to examine if proximity, abundance, and characteristics of green street facilities affect the sale price of single-family residential properties in the city of Portland, Oregon. Different methods for measuring proximity and abundance are explored with distance based on street network, and abundance of green streets at the census tract and census block level, producing statistically significant results. Sale prices increase as distance from the nearest green street facility increases although the magnitude of this effect is small. Preliminary results find that older green streets (10 years+), and those with a large number of trees (7 or more), have a positive effect on the sale price of nearby properties.

Over the past 20 years Portland has invested $1.4 billion in physical infrastructure projects to reduce combined sewer overflows. These projects, which are scheduled to be completed in December 2011, will reduce the number of overflows to the Willamette River to an average of four times each winter and once every third summer (Portland Bureau of Environmental Services 2011). Projects are funded, in large part, by Portland’s combined sewer/water bills, which are amongst the highest in the country (Frank 2011). Further rate increases to fund large capital projects may not be politically feasible, so in 2008 the city launched a new strategy, the $55 million “Grey to Green” program, to control stormwater runoff. Program goals include planting 33,000 yard trees and 50,000 street trees, adding 43 acres of ecoroofs, controlling invasive plant species, purchasing over 400 acres of natural areas, and constructing 920 new green street facilities.
...
Green streets are a low-impact development technique that use “vegetated facilities to manage stormwater runoff at its source” and include curb extensions, street planters, and rain gardens as well as “simple” green streets, which involve changes to existing planting areas between curbs and sidewalks.... Additional benefits attributed to these facilities include increased property values, traffic calming, better bike access, enhanced pedestrian safety, and added green space and wildlife habitat. These facilities “are more cost-effective than piping stormwater to a treatment plant” ...and are increasingly being promoted by city managers as an effective means for controlling stormwater runoff.

While green space and wildlife habitat have been estimated to increase the sale price of single-family residential properties (Donovan and Butry 2010; Mahan, Polasky, and Adams 2000; Netusil 2006), literature examining the relationship between green street facilities and the sale price of single-family residential properties is extremely limited. Ward et al. (2008) estimate that properties located in low-impact development project areas in Seattle, Washington sold for 3.5-5 percent more than properties in the same zip code located outside project areas. Williams and Wise (2009) reach the opposite conclusion finding that lots in Gainesville, Florida with low-impact development stormwater systems are valued less than lots that use conventional approaches.
...
Home characteristics are of the expected sign and magnitude across specifications—a property’s sale price is estimated to increase at a diminishing rate as lot size and building square footage increase. Additional full and half bathrooms, increases in elevation (a proxy for views), and neighborhood characteristics such as percentage white and median income at the census tract level, are also found to have a significantly positive effect on sale price. Land cover variables on a property and in surrounding buffers are included to avoid omitted variable bias because green streets are often located in areas with a high percentage of impervious surface area.

Tree canopy on a property, and in surrounding buffers, is found to have a positive but diminishing effect on a property’s sale price; water, which is only present in the 200-foot to ¼ mile and ¼ mile to ½ mile buffers, has a large and significant effect on sale price.
...
The economic magnitude of proximity, however, is small—increasing a property’s distance from a green street by 1,000 feet is estimated to increase its sale price from $430 (1/4 mile street network) to $851 (1/4 mile Euclidean).
...
The EPA estimates that between $331 and $450 billion of investment is needed over a 20-year period (2000 to 2019) to replace or update the existing sewer infrastructure in the United States.
...
by Noelwah R. Netusil 1, Zachary Levin 1 and Vivek Shandas 2
1. Reed College, Department of Economics, 3203 SE Woodstock Boulevard, Portland, Oregon 97202
2. Portland State University, Nohad A. Toulan School of Urban Studies and Planning, Portland, Oregon 97201
Association of Environmental and Resource Economists www.aere.org/ 2011 Summer Conference Seattle, Washington http://www.webmeets.com/AERE/2011/
June 10, 2011
Keywords: low impact development; green streets; hedonic price method; stormwater; Portland, Oregon

New Tactics and Billions to Manage City Sewage

http://www.nytimes.com/2011/10/20/nyregion/new-york-city-set-to-commit-2-4-billion-on-storm-water-control-tactics.html
The Bloomberg administration is set to commit $2.4 billion in public and private investment to applying new environmental technology to an old problem: the flow of untreated sewage and storm water into New York City’s waterways.

City officials announced ... that the State Department of Environmental Conservation had tentatively assented to a proposal by the city to introduce infrastructure to retain storm water before it reaches the sewer system and overloads it.  The approach reflects a shift from traditional sewage-control methods like underground storage tanks and tunnel systems to techniques like green roofs with plantings, porous pavement for parking lots and depressions for collecting water in parks.
...
The federal Environmental Protection Agency promotes these newer forms of infrastructure as a cost-effective and environmentally preferable alternative to conventional overflow management.

Sewer overflows are the biggest water-quality problem in the metropolitan region, preventing many waterways from meeting federal standards for fishing, swimming and healthy habitats for wildlife. Each year, up to 30 billion gallons of overflow enters New York Harbor, Jamaica Bay, Newtown Creek and other waterways.

The city plans to spend $1.5 billion of its own money in the next 20 years on the infrastructure project. An additional $900 million in private investment is to be secured by imposing requirements for residential and commercial development, like limits on the amount of runoff allowed from a new project. (The city will still spend $1.6 billion more over the same period on traditional sewage-control projects.)
...
City officials said features like plantings would help reduce the sewage overflows by 40 percent by 2030 and cut the city’s sewer management costs by $2.4 billion over 20 years, helping to keep water bills down for utility customers

by Mireya Navarro
FOR FULL STORY GO TO: 
http://www.nytimes.com/2011/10/20/nyregion/new-york-city-set-to-commit-2-4-billion-on-storm-water-control-tactics.html
The New York Times www.NYTimes.com

October 19, 2011

Rooftop farms sprouting in Brooklyn -Urban pioneers cater to restaurants and markets

http://www.crainsnewyork.com/article/20110828/REAL_ESTATE/308289984
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Atop an industrial building in Greenpoint, Brooklyn, the crew at Gotham Greens can harvest the equivalent of six acres of salad greens and herbs without getting their hands dirty. Bibb lettuce, basil and other leafy plants spout from a stream of recirculated, nutrient-rich water in the company's 15,000-square-foot hydroponic greenhouse.

The process actually uses 20 times less water than a soil-based farm, according to Viraj Puri, Gotham Greens co-founder and CEO. “It's a very efficient, productive way to grow,” he said.

...

Gotham Greens, with 25 employees, had its first harvest in June. Two soil-based operations—Eagle Street Rooftop Farm, in Greenpoint, and Brooklyn Grange, in Long Island City, Queens—have started up within the past two years, selling their crops to restaurants and markets throughout the city.

...

But it remains to be seen whether these rooftop farms can compete in a system dominated by national growers.

... The cost of a hydroponic rooftop is about $2 million to $2.5 million, says Paul Lightfoot, CEO of Manhattan-based BrightFarms, a firm that finances hydroponic outfits.

... Mr. Puri would not disclose startup costs for the 0.3-acre farm....

The urban farm's strategy is to focus on growing items that are highly perishable and expensive to ship. “Food goes bad while people own it,”....

Eagle Street co-founder and head farmer Annie Novak says keeping labor costs low is essential to its success. The 6,000-square-foot farm relies on volunteers, apprentices and a partner organization, Growing Chefs, to assist its four paid employees.

The farm focuses on leafy greens and herbs, which provide the best return, says Ms. Novak. “An herb is perfect, because it has a high price and requires zero labor,” she said.

Eagle Street breaks even on crops, with annual revenues of about $1.25 to $1.50 a square foot. The business makes an additional $2,000 from sales of T-shirts and nonperishables such as honey, Ms. Novak said. Building owner Broadway Stages paid for the $60,000 roof, which was designed and installed by New York-based Goode Green. The cost—amounting to about $10 a square foot—was significantly lower than that of many similar projects.

Because Gotham Greens can achieve a denser yield and harvest year-round, Mr. Puri forecasts first-year revenues to be higher “by a factor of hundreds” than those of the average soil-based rooftop farm.

Demand for Gotham Greens items already outstrips supply. Mr. Puri is in talks to open another Brooklyn facility next year and expects to establish several more.

...

According to The Eagle Street Rooftop Farm Fact Sheet at http://rooftopfarms.org/wp-content/uploads/2010/01/EagleStreetRooftopFarmFactSheet2010.pdf :

• The green roof base system is comprised of 2” of built-up components: polyethelene, drainange mat, and retention and separation fabrics.

• With the approval of the building's engineer, 200,000 pounds of growing medium were lifted onto the roof by crane, in "super-sacks", over the course of a single day. The growing medium, laid directly onto the green roof base, is a mixture of compost, rock particulates and shale and is manufactured in Pennsylvania. It is a green roof component that at the same time retains water, allows for air circulation and is lightweight.

• The green roof can hold over 1.5” of rain, providing a significant reduction in storm water runoff. The captured water, in turn, can help to cool the warehouse below yielding a reduction in cooling costs.

• Installation cost was approximately $10 per square foot. This is significantly lower than most green roof installations due in part to two main factors: the three story building and open expanse of roof were very accessible and, two, that recycled materials such as used rafters were utilized for edging.

• Upon completion of Goode Green's base system installation, the growing medium was moved into by place by a team of farming volunteers over the course of three days. It was arranged into 16 north-south beds measuring thirty inches to four feet in width and divided down the middle by a single long aisle. The beds have a soil depth of 4-7”. The aisles were filled with mulched bark.

• Since overhead watering on a rooftop often evaporates or blows away, irrigation was inititally provided via black plastic drip lines, using city tap water. In 2010, the drip irrigation system was de-installed, as the root systems of the crops rotated and intercropped through the farm during the growing season were incondusive with drip watering (e.g. carrots, microgreens, radishes). Currently, the Farm relies on hand watering (via hose) for seedlings and transplants, and rainwater for established plants (kale, chard, tomatoes).

• In its first season, the Eagle Street Rooftop Farm grew over thirty types of produce, from watermelon to cabbage. Having seen what fared poorly in a greenroof growing environment, in 2010 Annie tightened the crop list to a wider range of varities within a smaller number of crops.

• In 2010, the Farm grows a narrower crop list, with a wide diversity of heirloom and rooftop-acclimated varities of produce within each crop type. In chosing her crops, Annie designed a special rooftop salad mix of seed stock designed to do well on rooftop conditions, yet provide the same colors and spice of traditional popular salad mixes. Currenly, the Farm grows cucumbers, hot peppers, tomatoes, eggplants, spinach, radishes, kale, swiss chard, carrots, peas, beans, salad greens (lettuces, mustards, arugula) herbs (sage, tarragon, oregano, parsley, chives, cilantro, dill), and flowers (cosmos, zinnias, calendula, tobacco, daisys, hops). Additionally, the Farm grows a small amount of corn and squash (winter and summer).

by Sara Eckel
FOR FULL STORY GO TO:
http://www.crainsnewyork.com/article/20110828/REAL_ESTATE/308289984

Crains New York Business www.CrainsNY.com

August 28, 2011

Citizens Budget Commission (CBC) of New York Report on New York City's Green Policies - How Competitive Are They Really?

http://ec2-50-17-180-122.compute-1.amazonaws.com/sites/default/files/press_release_04042011.pdf
On April 4, 2011 The Citizens Budget Commission (CBC) released a report that examines New York City’s “green” policies from the perspective of urban competitiveness, not exclusively in terms of promoting environmental sustainability. The report – “New York’s Green Policies: Too Much or Too Little – A Competitive Perspective” – builds upon the City’s PlaNYC, a comprehensive plan for the next quarter century of New York City that was unveiled on Earth Day 2007. The CBC report assesses how New York compares to other cities in pursuing green objectives and suggests how New York’s leaders can set priorities for taking additional steps to promote environmental goals in ways that align with goals of economic growth and urban competitiveness.

The report’s findings and recommendations include the following:
...
* Air – With respect to greenhouse gas emissions, New York ranks 13th among 21 international cities and 2nd among 16 large U.S. cities. On measures of air pollution, New York ranks 12th of 21 internationally cities and 22nd of 34 large U.S. cities.
* Water – International comparative data are not available, but among large U.S. cities, New York ranks 13th of 27 in terms of water quality and 11th of 23 in terms of conservation.
* Solid Waste – New York lags internationally and domestically, generating nearly as much waste as London and diverting less of it to recycling programs and waste-to-energy plants than most European nations.
...
Four recommended guidelines to help clarify municipal decision-making are:
* Limit municipal government activities to those appropriate to the local level of government;
* Give preference to practices that support and encourage consumer choice and responsible consumer behavior;
* Elevate the use of cost-effectiveness as the basis for decision-making, and rethink existing subsidies and regulations (both mandates and prohibitions) with an aim of revising or eliminating those financial incentives which are too generous and changing those regulations which are too burdensome;
* Assess innovative ideas before citywide adoption through evaluation of efforts in other localities and/or pilot programs within New York City.

Consistent with these guidelines, the report identifies specific measures that could enhance New York’s competitiveness in terms of getting greener. The proposed agenda items include the following:
* Three current initiatives that should be dropped because they appear to fall short in terms of cost-effectiveness: the local tax credits for solar energy and for green roofs, and the requirement for recycling of certain types of plastic;
* Three initiatives currently underway that are candidates for acceleration to gain greater benefits: enhanced metering of electricity use and of water consumption, and facilitating deployment of Combined Heat and Power (CHP) facilities;
* Four new initiatives, which appear to be desirable in order to enhance New York’s competitive position:
o Vigorous implementation of the newly enacted Greater, Greener Buildings Plan (GGBP) which seeks to promote greater energy efficiency in existing commercial buildings in ways consistent with the CBC guidelines;
o A renewed effort to adopt congestion pricing to stimulate mass transit use and raise funds for its improvement;
o Reduction of solid waste generation and promotion of recycling by pilot testing a “pay to throw” program in selected neighborhoods;
o Planning new “waste to energy” facilities in New York City to gain the combined benefits of cleaner electricity sources and reduced reliance on landfills for waste disposal.

“PlaNYC was an historic step forward in terms of long-range planning for New York City,” said CBC President Carol Kellermann. “This report augments it by raising crucial policy issues that New York must consider if it is to be both economically competitive and environmentally sustainable.” “This report suggests ‘green’ priorities for the City and specific actions that align with those priorities,” said CBC Executive Vice President and Research Director Charles Brecher. “In tough economic times, it’s especially important that environmental sustainability and economic competitiveness be pursued jointly, with great attention to ensuring the most cost-effective use of resources.”
...
Given that the federal government has established significant subsidies, and states have supplemented these policies with regulations in the form of renewable energy portfolios and additional tax subsidies, existing municipal subsidies may be wasteful.

Consider the case of New York City’s property tax abatement for solar panels, implemented as a three year pilot program. A commercial firm investing in a panel to generate five kilowatts and costing $38,000 would be eligible for a federal tax credit of $8,633. In addition, New York State provides an income tax credit of $5,000 and a rebate from NYSERDA of $9,056. New York City has established a property tax abatement for the panel that is 5 percent of the cost in each of four years, for a total of 20 percent or $7,600. The additional local tax subsidy is likely to fail a cost‐effectiveness test in two ways.

First, the additional municipal subsidy may be more than is necessary, on top of the more substantial state and federal incentives, to induce the private investment; that is, the $7,000 may bring the combined public subsidy to more than the difference between the cost of solar production and the cost of electric energy supplied by plants relying on other fuels. Second, a local tax subsidy seems inappropriate, since the external benefits are not primarily local, but the cost to taxpayers is borne locally. This municipal program was initiated as a pilot‐effort (expiring after three years); assuming the post-pilot evaluation confirms the outcomes anticipated here, this subsidy is a prime candidate for expiration.

The full report is available at http://ec2-50-17-180-122.compute-1.amazonaws.com/sites/default/files/report_green_04042011.pdf

The Citizens Budget Commission (CBC) of New York, NY www.cbcny.org.
2 Penn Plaza * 5th Floor * New York, NY 10121; 212-279-2605, ext. 322 212-279-2605, ext. 315
April 4, 2011

Building Greenhouse Farms on Urban Roofs - Cash Crops Under Glass and Up on the Roof -NYTimes.com

http://www.nytimes.com/2011/05/19/business/smallbusiness/19sbiz.html
When Lufa Farms began selling produce to customers in Montreal in late April, it signaled what could be the beginning of a tantalizing new era in the gastronomic fortunes of that Canadian metropolis.

In all but the short summer season, the availability of fresh, locally grown fruit and vegetables has been little more than a pipe dream for Montreal residents.

But Lufa Farms, founded by Mohamed Hage and Kurt Lynn, turned an unassuming office rooftop into a 31,000-square-foot greenhouse that grows tomatoes, cucumbers, peppers and other produce year-round and is a working example of a developing trend known as urban rooftop farming.

... The advance of hydroponic growing techniques and innovative, cost-effective greenhouse systems, together with increasing consumer desire for organic produce, has redefined the term locally grown and spurred entrepreneurs to create a variety of greenhouse technologies and business models.

The Lufa Farms model is to sell directly to consumers through a co-op. Other urban farms are forming partnerships with supermarket chains by building large greenhouses on supermarket roofs and selling their produce to the store below.

A third concept, called vertical farming, involves growing food in skyscrapers or even warehouses using artificial light and organic growing materials. In theory, a 30-story, one-square block farm could yield as much food as 2,400 outdoor acres, and with less spoilage because it would travel less distance, according to Dickson D. Despommier, a Columbia University emeritus professor of public health and microbiology and a leading proponent of vertical farming.

TerraSphere, a unit of Converted Organics with offices in Surrey, British Columbia, and Boston, designs and builds vertical farm systems and sells its lettuce and spinach through Choices Markets, an organic grocery chain in western Canada.

... A crucial question remains: Can rooftop farmers make a profit?

After four years of developing the business, building the greenhouse and refining growing techniques, Lufa Farms has started delivering baskets of produce to local subscribers: $22 for a six-pound basket and $30 for a basket weighing about nine pounds.

With more than 400 customers signed up and more joining daily, Mr. Lynn ... says Lufa Farms can enroll a thousand customers, break even this year and reap a 15 percent profit in the future.

... A land-based farmer is restricted to a 24- to 28-week growing season while a rooftop greenhouse can produce year-round.

The capital costs to get started are higher for rooftop farms — from $1.2 million to $2 million to find a building and set up a greenhouse — but the operating costs are much lower. That is because rooftop farms require less labor, land, water, fertilizer and heavy equipment and because they all but eliminate shipping costs by selling to the local market. The result, proponents say, is a fresher, tastier, longer-lasting, more nutritious product.

Most rooftop gardens use hydroponic cultivation, a water-based growing system in which no soil is required, nutrients are carefully controlled and natural pest control using insects is favored over pesticides. These greenhouses extend the already popular green-roof concept, using recycled water and lowering energy consumption in the buildings upon which they sit. Lufa Farms says it has saved its host building 25 percent in heating costs since it completed its greenhouse.

Rooftop farms can command a similar or slightly higher price for their produce, but the biggest advantage for Lufa is that its urban location means it can attract more customers and deliver more than a thousand baskets of produce a week, compared with 200 to 300 for a typical land-based co-op. The company’s business plan calls for rapid expansion to more rooftops in Montreal and other cities with similar climates.

New York has 14,000 acres of unused rooftop space, according to Laurie Schoeman, director of New York Sun Works, a nonprofit group that promotes the use of rooftop greenhouses. Rooftop gardens abound in New York, but without an enclosed greenhouse, the growing season is limited. Ms. Schoeman said that if all of these unshaded rooftops installed greenhouses, the resulting produce could feed as many as 20 million people in the New York metropolitan area.

It is tempting to wonder why it took so long for rooftop farming to emerge. Part of the problem in Montreal was that there was no zoning for agricultural buildings, which meant that getting the permits required for Lufa Farms took time and intense negotiation with the city. Finding a suitable rooftop also took time....

... The rise of the locavore movement in the past decade began to change attitudes and desires. Rising gas prices sent transportation costs soaring, and consumers became less willing to buy mediocre fare.

In 2006, BrightFarms opened as a consulting business for rooftop growers. It advised Gotham Greens, a New York-based company that recently built a 15,000-square-foot greenhouse on a Brooklyn rooftop with the intention of producing more than 30 tons of vegetables, fruit and culinary herbs a year for sale through local grocery stores, farmers markets and restaurants. Gotham Greens expects to begin producing crops this year.

More ambitiously, BrightFarms recently created a business model and started building its own rooftop farms. Instead of embracing the co-op model or selling to restaurants, it decided to specialize in making exclusive deals with supermarkets to build and operate farms.

Paul Lightfoot, chief executive of BrightFarms, said it could build a one-acre or 43,560-square-foot rooftop farm for about $2 million. BrightFarms has signed up eight supermarket chains around the country, including three of the largest 30 national chains, he said. Four of the farms are under construction.

Mr. Lightfoot predicted each farm would generate $1 million to $1.5 million in annual revenue, and that he would sell produce for similar or even lower prices than traditional farms. He says he expects his gross margins to be extremely attractive because the company’s business model eliminates farming’s biggest expense, shipping.

For a traditional farm, he said, it is not unusual for lettuce to travel more than 1,500 miles over five or six days to a supermarket shelf, which can cost as much as $1 for a head of lettuce that will sell for $2....

“Our plan is to achieve $100 million in revenues by the end of 2015 and $1 billion by the end of 2020,” he said.

Because the rooftop farm concept is so new, a true profitability picture will not emerge for a couple of years, said David Furneaux, a venture capitalist based in Waltham, Mass.... He says a direct-to-consumer model “has the potential to be extremely profitable, generating 25 percent net income for this type of business.”
...
by Glenn Rifkin
The New York Times www.NYTimes.comMay 18, 2011
FOR FULL STORY GO TO:
http://www.nytimes.com/2011/05/19/business/smallbusiness/19sbiz.html

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