Thursday, November 24, 2016

Green Roof Cost-Benefit Analysis: Special Emphasis on Scenic Benefits

This article presents a green roof cost-benefit analysis (CBA). Green roofs are roofs which are partially or completely covered by vegetation. We discuss the benefits and costs of light self-sustaining vegetated roofs. The benefits of the ecosystem services (ES) provided by green roofs can be classified into private and public benefits. We apply the selected valuation methods first in Helsinki, Finland and subsequently explain how results can be transferred to other urban locations. Past research and this study show that private benefits are usually not high enough to justify the expensive investment for a private decision maker. However, when the public benefits are added to the private benefits, social benefits are higher than the costs of green roofs in most cases.

Past research quantified most types of the benefits, excluding scenic and biodiversity benefits. Scenic benefits denote the intangible benefits that people derive from the presence of green space, including at least aesthetic and psychological ones. In this article, special emphasis is placed on the valuation of the scenic benefits; these are among the most challenging benefits to valuate in monetary terms. We employ hedonic pricing theory, implemented via spatial regression models, and green roof implementation scenarios in order to estimate the aggregate willingness to pay for a “unit” of green roof. The results show that the scenic benefits can be a significant attribute in cost-benefit calculations. Yet, the amount of benefits strongly depends on the green roof design....
First, we estimated the value of any urban park, regardless of its size, within 30, 50 and 70 m of a building.... The value of a presence of urban green is significant in all of the tested distances. The average marginal value is highest for buildings within the 30 m radius from a park and decreases when increasing the allowed distance from the park. The average values for the respective distances are 134, 122 and 94 per m2 of living space. It has been empirically shown (Crompton, 2001) that the incremental of value attributable to the park significantly  increases with the size of the park; for instance, in an early study by Coughlin and Kawasima (1973) it was found that a 5-acre park (2 ha) had almost five times the increase in the price of a dwelling unit than a 1-acre park (0.4 ha) and it was also found that the incremental value attributable to a small park decreased more quickly as the distance to the park increased. Our findings were similar regarding the effects of park size. The value of a big park for buildings within 30 m from the park was in average 200 per square meter while the value of a small park was 130. However, when increasing the distance radius including also buildings within 50 m from the parks, the average value of a big park was almost 250 while the average value of a small park was around 50....

Based on GIS analysis, small parks are mainly visible to those building within 30 m radius, and the view is more or less blocked when increasing the radius. However, all of the services related to recreational or other use values of the parks are still present and (almost) as easily available at the radius between 30 and 50 m from the small parks. Consequently, we take the value that is attached to small parks at 30–50 m radius and deduct that from the total value of the parks available between 0 and 30 m radii. We define the residual as the “scenic value” of small parks. This is around 110 per square meter as the value of a small park decreases fast when increasing the distance as expected from the literature, and the mean value attached to a small patch of urban green is only around 20 per square meter at the distance between 30 and 50 m from the park.

In percentage terms, the range for the scenic benefit of the green roofs is 0–2.3% without taking the vertical location of the green roof into account. However, this undermines the fact that compared to a park, the view to a green roof is limited, as only those neighbors that live on a higher floor compared to the green roof, are able to actually enjoy the view. Consequently, the building heights distribution needs to be taken into account.... Around 37% of the buildings in the study area are buildings with 1–2 floors, and 63% of the buildings have three or more floors.... In total, the vertical location of the green roof would limit the view from 46% of those apartments that would have had a view to an urban park. To take this into account, the high estimate for the value of having a green roof within 30 m from the building drops to 1.2% 

We analyze two scenarios ...: (1) high benefit simulation (Simulation 1) in which all the roofs that are greened are placed in the CBD, which would result in 50% of roofs in the CBD being green and would yield the highest pay-off and (2) low benefit simulation (Simulation (2) with equal distribution of green roofs across the broader urban area of Helsinki in which 10% of the CBD roof tops are greened. In both of the cases we assume that (i) the average marginal value of increase in urban green drops linearly to zero once the last simulated green roof has been installed, and (ii) the average marginal value of the scenic value of a green roof is between 0% and 1.2% as explained above.

We start by surveying the current green cover in Helsinki and adding green space to those areas with the least green space. Before the simulation (1) 26% or 629 buildings out of 2,415 in our delineation of Helsinki’s CDB were situated within 50 m from a big park or within 30 m from a small park.
With assumptions (i) and (ii), the value of the increase per installed green roof would be 0–17=m2.
Out of the other benefits, only the air-quality benefits can be partly included twice if the scenic benefits are fully incorporated into the CBA. If air-quality benefits are conservatively – to avoid double counting – reduced from the scenic benefits of the green roofs, the scenic benefits of green roofs are between 0 and 10=m2

Costs of Green Roofs

The main barrier for green roof implementation is the additional costs compared to standard roof solutions.... The cost levels for extensive green roofs exhibit significant differences across the world.

The high estimate of the literature can be found in Sproul et al. (2013) in which cost level of 150=m2 for extensive green roofs is assumed. Almost as high figures were reported in Bianchini and Hewage (2012) in which the costs of extensive green roofs were approximated to be 90=m2–113=m2 in British Columbia, Canada. However, neither of the aforementioned studies elaborate whether the costs were additional costs compared to reference roof or total costs. Additional costs of 68=m2 were applied in a study by Carter et al. (2008) in City of Atlanta. In a literature review report from 2007, Toronto Region Conservation (Toronto Region Conservation (TRC), 2007) confirms the wide range of initial capital costs across the world. In North America, with very low implementation rates of green roofs across the continent, the additional costs of extensive green roofs ranged from 45=m2 to 190=m2. However, in Germany with established green roofs industry and higher implementation rates, the additional costs were only around 13=m2–41=m2.

To get an appreciation of the cost level in Finland, green roof suppliers were interviewed. Our example roofs are built on a supporting structure and the cost estimates are based on the assumption that the roof will be built on an existing building or to a new building with sufficient loading capacity. 
• The standard bitumen roof costs are around 35=m2 (CVAT 24%, D 43=m2).
This includes rubber bitumen layers, waterproofing and installation. These installations are needed also under green roofs (with some modifications, the costs remain approximately the same).
• The additional costs to install a green roof are on average around 50=m2 
(CVAT 24 %, D 62=m2). The additional costs include the sedum mats (53% of the additional costs), the installation costs (around 24% of the additional costs) and taxes (23%).
The least expensive green roof is achieved by installing a drainage layer, filter fabric, substrate, and plants from cuttings and seeds. These green roofs may allow for more plant diversity if a deeper substrate is used, but require more structural capacity to hold the weight of the soil. They are generally at least 20% less expensive than ready-made green roof sedum mat systems, the total extra costs being around 40=m2 (C VAT 24%).

Cost estimates from Finland are very high in comparison with estimates in those countries with established green roof industries, such as Germany. The low price level in Germany is a result of more than thirty years of market development.

In Switzerland low cost solutions cost only around 20=m2 (personal communication Brenneisen, 2013) despite the high price level of the country. In new markets competition is scarce and no economies of scale exist, labor is more expensive since installers lack experience, and there is a tendency to use custom-design systems. 

Obviously, adopting low cost techniques would support the proliferation of green roofs. The additional costs of a green roof have gone down by 33%–50% (Toronto Region Conservation (TRC), 2007) since the industry has established itself. In our scenarios we assume that the same would happen in Finland if 10% of roof top area in Helsinki was greened. For comparison in Basel, of which around 30% of flat roofs or 3% of total roof area is green, the additional costs have gone down from around 80 euros to only around 15 euros per square meter (ZHAW, 2013), making our cost-reduction estimate fairly conservative.

Results of the cost-benefit analysis
All of these benefits are of the same nature – they are avoided costs for the property owner and represent the WTP.... The analysis shows that the current level of costs is too high compared to the benefits for a private decision maker to have an incentive to install a green roof, the B/C-ratio is between 0.4 and 0.8 and the NPV is −36.5–−9.5=m2. The expected value for NPV is −257=m2; assuming uniform distribution for other benefits except sound insulation (0 for 98.5%; 20=2 for 1.5% population under flight routes) and taking into account that both cooling and heating benefits are hard to achieve with the same design of the green roof. These results are in line with results from other cities....

6.2 Social cost-benefit analysis with 10% installation scenario in Helsinki

... We assume that higher implementation rates would lower the additional costs of green roofs by at least 33% and at most 50%, as explained in Section 5. The social B/C-ratio is between 0.9 and 2.1, and NPV is between −4.7 and 37.9=m2 and possibly even higher on those areas with air-traffic noise. The expected value for the social NPV is 13.4=m2 with the same assumptions as for the private benefits.

The focus of this study – the scenic benefits – represent 13% of the total benefits in use the high estimate case, or around 13% of the expected value of the benefits. Consequently, while not insignificant, the addition of the scenic benefits only strengthens the conclusion that while the private benefits are not high enough to cover the installation costs, the social CBA shows positive results.

7 Conclusions

(1) As the reviewed literature would suggest, the private benefits are usually not high enough to cover the current level of additional private costs. In Helsinki, even in the low cost-high benefit scenario the private B/C-ratio is under 1.

However, in some circumstances, in warm climates the cooling energy savings can drive even the private B/C-ratio slightly over 1. The most important parameters determining the private benefits are: (1) cost of the reference roof so that higher reference roof price increases the benefits, (2) temperature profile of the location so that higher temperatures increase the benefits, (3) energy price so that higher energy price increases the benefits and (4) building code of the roof so that higher coefficient of heat loss increases the benefit.
(2) When adding up private and public benefits, the benefits would surpass the costs in most of the cases, especially if a higher implementation rate drives down the costs. The factors that have a positive effect on the public benefits, which are at a relatively low level in Helsinki, are: (1) the average annual precipitation and frequency of extreme rainfall, (2) the maintenance backlog of the current sewer system and (3) the concentration of particulate matter.
(3) Scenic benefits have a potential to be a significant factor in green roof CBA;
the increase in the property values in the buildings within 30 m of a green roof was assessed to be between 0% and 1.2%. 

by Väinö Nurmi 1, Athanasios Votsis 2, Adriaan Perrels 3 and Susanna Lehvävirta 4
Green Roof Cost-Benefit Analysis: Special Emphasis on Scenic Benefits
Väinö Nurmi (a1), Athanasios Votsis (a2), Adriaan Perrels (a3) and Susanna Lehvävirta (a4)
1. Socio-economic Impacts Research, Finnish Meteorological Institute, Erik Palménin aukio 1, PO Box 503, FI-00101, Helsinki, Finland and Department of Environmental Economics and Management, University of Helsinki, Finland, e-mail:
2. Socio-economic Impacts Research, Finnish Meteorological Institute and Department of Geosciences and Geography, University of Helsinki, Finland, e-mail:
3. Climate Service Centre, Finnish Meteorological Institute, Finland, e-mail:
4. Finnish Museum of Natural History, University of Helsinki, Finland, e-mail:
Journal of Benefit-Cost Analysis via The Society for Benefit Cost Analysis
Volume 7, Issue 3; October, 2016; Published online: 14 August 2016; pages. 488-522

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