CAPITAL E
Costs and benefits of city-wide adoption of smart surfaces across Washington, D.C., Philadelphia and El Paso to strengthen resilience, improve health and livability, reduce urban inequality, and slow global warming while saving billions of dollars.
Executive Summary
Cities can increase resilience, improve health and comfort, expand jobs and slow global warming through smart surface strategies – such as cool and green roofs – while also achieving hundreds of millions of dollars in net financial benefits at a city level, and potentially deliver half a trillion dollars in net financial benefits from urban deployment nationally.
With more paved area, less greenery and more dark surfaces, cities experience what is called an urban heat island (UHI) effect – substantially higher summer temperatures and worse air pollution than the surrounding suburban and rural areas. The damage and cost of increased temperature and air pollution are particularly acute for urban low-income urban areas. In 2005, Environmental Health Perspectives noted that “various aspects of the built environment can have profound, directly measurable effects on both physical and mental health outcomes, particularly adding to the burden of illness among ethnic minority populations and low-income communities.
Low income communities generally share some common attributes:
Air and temperature conditions are worsened by less tree coverage, fewer reflective and porous surfaces, and more unwanted heat absorption than more affluent city neighborhoods. This results in higher summer temperatures, worse air quality, increased health problems, and higher energy bills than in more affluent areas. Urban low-income residents also suffer disproportionally from the urban heat island effect, and have a higher likelihood of residing in inefficient homes. Health also suffers, and brings cascading costs relating to lost school and work days and reduced income.
The effects of excess heat from climate change on productivity is fast emerging as an area of public interest. A recent New York Times editorial entitled “Temperatures Rise, and We’re Cooked” summarizes findings that “students who take New York State Residents exam on a 90-degree day have a 12 percent greater chance of failing than when the temperature is 72 degrees”, and that in auto factories, “a week of six days above 90 degrees reduces production by 8 percent”. Low-income schools, neighborhoods, workplaces and homes are more likely to experience this kind of discomfort and productivity loss.iv
Many U.S. cities struggle with growing water quality and stormwater management issues and costs. Consider the Chesapeake Bay, a 200-mile estuary that receives water from 150 major rivers and streams from six states plus Washington, D.C. It is an enormously important watershed in terms of ecological diversity, quality of life, health, tourism and the economy. And like most watersheds, the health of the Chesapeake depends on how urban and built areas upstream manage the rain that falls on them, whether city surfaces are porous and whether smart surface treatments are applied or ignored.
Cities that fail to adopt resilience strategies risk credit downgrades that could greatly increase cost of borrowing. A November 2017 report by Moody’s Investors Service on the growing risk to city and state credit ratings emphasizes that there “will be a growing negative credit factor for issuers without sufficient adaptation and mitigation strategies.” The set of resilience strategies analyzed in this report would reduce the risk of credit downgrades.
Lack of understanding on the cost and benefits of technology and policy options has severely limited urban responses. This report is intended to fill this critical gap by quantifying these costs and benefits in detail, including quantifying more than a dozen significant benefits for the first time. By providing in-depth look at three very different cities—Washington, D.C., Philadelphia and El Paso—this report demonstrates that deployment of smart surface solutions would deliver very large city-wide net benefits, including reducing health and energy costs, increasing employment, resilience and livability—while reducing contribution to global warming.
Because integrated cost-benefit analysis of these solutions has not been done before, this report reflects the guidance of national and city partners, epidemiologists, technology, stormwater, energy experts and others, to assemble and analyze U.S. and international data and studies to build a detailed, integrated cost-benefit analytic/financial model.
We also developed a flow chart for each impact pathway to provide a clear visual representation of causal links between each smart surface technology (such as a cool roof or green roof) and quantified impact (such as increased ozone or reduced CO2). In order to simplify this representation and quantification of impacts, we include only impacts that are material. Figure 1 below is an example of an impact pathway diagram, in this case for the impact of increasing rooftop vegetation on ozone concentration.
Costs (such as operations and maintenance costs), and benefits (such as ozone reduction or job creation) are mapped and calculated for each smart surface technology. These costs and benefits are then aggregated based on modeled ward-wide or city-wide application of these technology solutions for each of the three cities analyzed: Washington, D.C., Philadelphia and El Paso. While we were able to quantify many benefits, additional significant benefits lack adequate data to allow quantification, so findings here substantially underestimate benefits and net present value of these smart surface solutions.
Low-income areas are characterized by higher poverty rates, worse health and higher unemployment. Deployment of smart surface solutions at scale in low-income areas can largely redress this systematic physical urban inequity. Energy costs make up a higher percentage of expenses for low-income residents. Recent research from the Joint Center for Housing Studies of Harvard University shows that for the lowest-income renters, tenant-paid household energy costs represent approximately 15% of income, while energy costs make up about 1% of total income for the highest-income renters.i “. With city training and job linking, a higher percent of jobs created from smart surface solution installations and maintenance could reduce unemployment in low-income areas. Although health benefits from adoption of the solutions analyzed in this report are greater for low-income than for wealthy city residents, these benefits also accrue city-wide. For example, excess summer heat in low income areas also heats up the city more generally. Excess heat in low income areas and worse air quality increase emergency room visits by low-income residents some of whom lack insurance and this imposes with large non-reimbursed hospital costs.
As smart surface deployment scales up, the urban cooling benefits would also grow proportionally, further reducing regional energy bills and smog, and improving health and livability in ways that bring compounding benefits, especially for low-income populations. Lower urban heat effects in adjacent regions that are upwind from Washington, D.C., such as Tysons Corner or Arlington would reduce summer excess heat and smog in those cities and also in Washington, D.C. This phenomenon that we call “downwind summer cooling” would bring very large comfort and health benefits both within cities and across larger regions, potentially doubling cooling compared with policies only within city limits. This report does not calculate these downwind summer cooling benefits from accelerating region-wide adoption of these technologies. Additional financial benefits to the cities would likely be large —but are not calculated in this report. However, it is worth noting that low-income neighborhoods are very commonly downwind in cities, so they suffer from excess heating and air pollution. These benefits and the policy implication and opportunities should be more broadly and better understood.
Download full version (PDF): Delivering Urban Resilience
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Capital E works with innovative companies, cities, banks and governments to accelerate the transition to a low carbon economy. Capital E is also an early stage investor in low carbon and clean energy companies.
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