What if cities could afford to make green urban oasis? Imagine looking down from an airplane onto a forest of green and not seeing the buildings that make up the city. The economics presented in this article can help you reach that goal.
Urban green spaces have been decimated due to urban growth of cities. Satellite imagery shows urban land-use in many cities grew by more than 50% between 1985 and 2010.[i] Bangkok (Thailand) grew by 250% in that period. At the same time there was massive green space loss across the board. Beijing (China) lost 79% of a combination of green spaces in that time, Brussels 64%, Seoul 69%, Los Angeles 44%. This loss comes at a time when trees are more important than ever.
Climate change is resulting in hotter summers and milder winters, with more frequent extreme rain events. Vegetation can help moderate heat and absorb rainfall. Where cities don’t grow enough trees they suffer from ‘urban heat island’ effect and flash flooding. When cities get hotter, energy use rises, air pollution increases and more greenhouse gases are formed. This leads to more climate change and hotter cities – A vicious circle.
However tree-lined streets with gardens and lawns can be a couple of degrees cooler. The effect of vegetation is so powerful that in desert cities a strange thing occurs[ii]. Irrigated lawns and trees actually make the city cooler than the surrounding desert.
Green urban oases could be possible but for one problem. Both public and private finance have fallen victim to the same misconception – That green space costs money but doesn’t bring returns. Everybody wants to save the expense of green space.
Actually, the research shows urban greening is economically viable.
This article presents the strategies cities can use for urban greening without a massive city budget.
Don’t take our trees please
Whose trees are they anyway? The responsibility to create, preserve and maintain green-space is often seen as a liability. Public bodies have limited resources and private land development can see forests canopies turned to blank sky. Even though green space is something everyone loves, and as it turns out, needs, it is often perceived as a cost.
Land ownership: Private land ownership separates the public from decisions about green space. Consider just how much the average back yard contributes to the urban environment[v]. In London (UK) around 25% of the “urban forest” is found in residential gardens[vi]. So back gardens can be valuable habitats of native species. Yet these same back gardens are dwindling. Housing prices are putting pressure on them. As the average house footprint increases and the blocks subdivided, the gardens are shrinking or disappearing. For example, infill development in suburbs in Adelaide (Australia) lost private green space and no new public green space was provided[vii]. Increasing density could actually be good for Australian suburbs, where the urban density is some of the lowest in the world, but only if green space is preserved.
Housing trends: The trend for housing is simple. More. The world needs ever-increasing amounts of housing. There are 3 million people moving to cities every week.[viii] Cities are either going up or going out. Even though compact development has been shown to be better for conservation of species compared with sprawl development the average city is spreading out[ix]. According to the World Bank the global urban population has been growing at 1.7% per year. Yet the density has fallen by 2.2% year[x]. It’s like a thin layer of impermeable lacquer that coats the countryside. Stopping the water getting in and preventing the plants from squeezing out. A rolling wave of houses that steam roller the market farms in the peripheries. That is why most cities are working on strategies to increase urban density. London requires that 60% of new developments on brownfield land since 1999. This policy will help the city reach its densification targets.[xi]
The use of space: One of the effects of using space for housing is the loss of urban and peri-urban farms. Unfortunately it is only with economy of scale that farmers can earn enough income. One article describes the U.S. farm size needed to provide any substantial farm income. It required a gross value of produce to be over $250K per annum[xii]. Once the suburbs reach small farms and surround them they are under increasing pressure to sell for housing. Farms aren’t the only green space affected by economics. Councils are too.
Allocation of public money: When budgets are tight local authorities find maintaining parks a challenge. A report published in 2014 on the state of UK parks found that 86% of parks managers reported cuts to revenue budgets since 2010[xiii]. Street trees can become financial burdens for councils if they become beset by disease. Besides that, they require ongoing maintenance, so a cash-strapped local authority that can only see their potential cost is likely to fell them[xiv].
Climate change is rebalancing the books
These forces within the city are played out by multiple actors and can seem entrenched. However the costs of climate change are rebalancing the books. For example, Hamburg determined the cost of an extreme rain event on the 6 June 2011 was between 27.3M and 46.1M Euro[xv]. These types of costs will continue to increase and become more frequent in all cities around the world.
Just like the costs in Hamburg were split across the public and private sector so are the benefits of green space. The following economic analysis of four green space types looks at both the public and private realm. By linking these both together cities can harness the profits to grow a virtuous cycle of improvements.
The economics of biophilia
The French national policy on green roofs is a trailblazer. It requires all new commercial buildings to install either green roofs or solar panels. It is only one of many cities that require green roofs, but it is the first national law of its kind.[xvi]
As urban spaces become denser it is necessary to think laterally about the problem. Or vertically, as the case may be. The list of cities that uses this kind of regulation includes Toronto (Canada), Copenhagen (Denmark), Tokyo (Japan) and Munich (Germany).
Green roof grants provide direct financial incentives. Indirect financial incentives can include stormwater taxes, density or floor area ratio (FAR) bonus, tax incentives or fee waivers, and fast track building permits. Market incentives for green roofs exist too if you have a long view.
Private value: For one green roof: stormwater, energy & building = 5 year cost of $128,803 and 40 year saving of $403, 632 (US EPA 2013)[xvii]
Whether you are building a new or retrofitting an old building you can save money with a green roof. Firstly, there is the increased roof life: 40 years instead of 15 to 25 years. There are the reduced storm water costs, which sometimes hit the owner in the form of a tax. Plus the building running costs of heating and air conditioning are less too. The private value shown above comes from a cost benefit analysis by the US EPA in Portland.
The Portland case study didn’t include the economic benefits of reduced noise levels. Sell that flat near the airport for more? Nor the increased market value of attic flats. With green roofs their summer microclimate is comparable to one on the base floor.
Public value: For one green roof: stormwater, climate, air, heat island and habitat = 5 year savings of $101,660 and 40 year savings of $191,421 (US EPA 2013)[xviii]
Then there are the public benefits that save the local authority money. The Portland study calculated the public benefit of: Smaller stormwater infrastructure, carbon reduction, improved air quality, and habitat creation. The careful reader might notice stormwater valued twice. The private landholder saves on stormwater taxes, while the public infrastructure provider saves on the cost of expanding stormwater capacity.
Other studies have put additional financial benefits on the reduction of stormwater overflow events, fewer flooding events, reduction in energy demand and infrastructure, urban heat island reduction and job creation. [xix]
Fighting climate change with green roofs
Green roofs are able to address two important aspects of climate change; hotter temperatures and more extreme rain events. Green roofs have been shown to reduce the heat island effect, creating city wide saving from reduced energy for cooling ($12m p.a.), and cost avoided due to reduced energy peak demand ($80m) (City of Toronto).[xx]
Cities are becoming denser to house more people and reduce environmental impact. In the process they need to introduce new parks. In the United States planners are changing back alleys into green space for informal play and exercise and social interaction.[xxi] This project took a novel approach to finding space for parks in areas of existing housing. It also offers a distributed strategy for urban runoff infiltration and habitat provision.
Another hurdle is funding. Traditionally park funding comes from local government – the public purse. While this has provided cities with many parks, it depends somewhat on the trends of the time. Thus communities who value the benefits of city parks have been willing to invest time and energy on park improvements. One famous example of this is the Central Park Conservancy in New York which now operates and funds the majority of the park.[xxii] The collaboration between community and local government improves the funding available and the quality of the park. This is far from the only strategy. Councils can levy direct funding for parks. Bonds, income-generating activities and endowments also provide local authorities funding opportunities.
In Malmö (Sweden) Bo01 district, planning agreements give the private sector responsibility for constructing and maintaining parks. This ensures that private developers contribute to the establishment and maintenance of parks. It helps increase the value of their assets and investments. Developers organise for long-term maintenance via service fees to new property owners. Property owners are happy to contribute to fees that provide them with quality green spaces.[xxiii]
This private funding model might leave some concerned about equal access to parks. A common standard of measurement is percentage of residents within a given proximity of green space. Hamburg the European Green Capital (2011) has 89% of the population within 300m of a park[xxiv]. Among the 100 largest cities in the U.S., 70 have explicit distance goals, with 43 (61 percent) using a half-mile standard[xxv]. This ensures that there is equality in access to green space. However, underprivileged groups can suffer from poor quality parks. Going a step further, the quality of urban green space and the quantitative aspects would be considered. The “Urban Neighbourhood Green Index” from Delhi, (India) uses both these measures. [xxvi]
Private value: Wealth-increasing factors for citizens: property value from park proximity $10m + net profit from tourism $295m = $305m plus Cost-saving factors to citizens: direct use value $337m + health value $38m = $375m (Total = $680m p.a.) (Virginia Beach, USA)[xxvii]
In Virginia Beach (USA) the economic analysis considered both the wealth increasing factors, such as property value and tourism, and also the community benefits of having the park nearby. The effects on property values are well known. For example in Washington, D.C., researchers estimated a 5% premium on those properties within 500 feet of a park[xxviii].
Public value: Revenue-Producing factors for city government per annum: Tax receipts from increased property value $2m + Tax receipts from increased tourism value $8m = $10m plus Cost-saving factors to city government: Stormwater management value $1m + air pollution management $4m + community cohesion value $4m = $9m (Total = $19m p.a) (Virginia Beach, USA)[xxix]
Apart from the environmental and social benefits that have remained intangible in the above analysis there are features that save or make the city government money. In Virginia they included increased taxes, stormwater reductions, air pollution removal, and community cohesion. This cohesion value was based on the number of volunteer hours donated to the parks each year. The study didn’t include the value of biodiversity nor the cooling effects on the urban heat island.
Fighting climate change with public parks
Parks provide many of the same benefits of other vegetation. However the unique value provided by (large) parks is biodiversity. Research has found compact-urban-developments with large green spaces are essential for delivering the benefits of ecosystem services to humans. Parks harbour higher species richness than other types of urban green space. This is especially important as climate change puts pressure on landscapes outside of cities.[xxx]
Cities in Europe, Unites States and Australia are using a new strategy to help justify investments in major urban greening projects. It addresses declining urban tree cover, increasing population and urban climate change.
Street trees are already common. Most cities have a program to plant and maintain street trees. However when budgets are tight street tree maintenance is often cutback. There are some cities that are taking a more proactive approach. The itree software looks at the total number of trees. Then it tells you exactly how much you benefit from the services the city trees provide. The software has been deployed in European cities including London, Edinburgh, Barcelona and Strasbourg.[xxxi]
The London i-Tree study represents the most extensive urban tree survey carried out in the world to date. The total benefit of London’s urban forest was found to be £132.7 Million per year.[xxxii]
The wave of street tree popularity is growing. Australia has announced it will set national goals for increasing urban tree cover[xxxiii]. The extent of tree cover has already been mapped, and now the aim is to improve on this baseline[xxxiv]. The City of Melbourne’s Urban Forest Strategy aims to increase canopy cover to 40 percent by 2040. The 202020 Vision network released a crowd-sourced action plan for a 20 percent increase in urban green spaces by 2020.
Private value: property value $2.02m + energy savings $1.81m = Total $3.83m (Green Bay, Wisconsin)[xxxv]
Cities in the United States, where i-Tree was developed, have also used the software. In Green Bay, Wisconsin (in the box above) the calculated the benefits of street trees to include the willingness to pay for houses on roads with street trees is higher plus energy saved by houses on streets with trees.
Public value: Stormwater runoff reduction $1.78m + CO2 reductions $233,998 + air quality improvement $296,206 = Total $2.31m (Green Bay, Wisconsin)[xxxvi]
Street trees provide energy savings by offering shading and reduction of the heat island effect. They also remove carbon dioxide and clean air pollution. Stormwater runoff is reduced.
Fighting climate change with urban forests
In London the temperatures were 10C lower under the shade of grand planes than in the open street during the recent heatwave. That’s going to be really important when temperatures increase with climate change.
In sub-Saharan cities 40% of households are also urban farmers[xxxvii]. African market gardening can be highly productive. In a year, one hectare of land in Accra can yield five crops of lettuce, amounting to 180 tonnes. In some large cities, gardeners’ incomes can place them well above the poverty line. It clearly depends on where your urban farm is as to whether it is economic[xxxviii].
Renewed demand for urban agriculture is stimulating growth. New York has no less than 28 urban farms[xxxix]. Several of them are relatively large producers that are showing urban agriculture can have a significant impact in sustainable food production. Gotham Greens has four state of the art greenhouses where its workers grow organic greens year round. Brooklyn Grange operates the world’s largest rooftop soil farm out of two buildings in New York City. Both of these urban farms produce large tonnage of vegetables each year. [xl]
Private value: Job creation + economic savings on food $915,000 p.a. per community garden = $915,000 p.a. (Literature review)[xli]
The economic modelling (above) calculates significant the economic benefits. For example, in Michigan 1,800 jobs and $211.5 million in income could be created. It isn’t possible to say from this example how many jobs and what value would stem from one community garden. Increased home values and heath benefits could also be examined and included in further evaluations.
Public value: Savings for municipal agencies $4100 p.a per site. + Increased home values (9.4%) tax revenue $0.5m 20yr per site. = $29,100 p.a. per site (Literature review)[xlii]
Including social and health impacts would expand on the economic impacts provided by urban agriculture. This could include the community capital provided and mental/physical health benefits. For example the access to fresh fruit and vegetables has been linked to lower obesity. These provide savings to local authorities.
Fighting climate change with urban agriculture
Urban agriculture provides many benefits similar to green roof and parks. However it is food security that gives it a unique appeal. Following the large storms such as Hurricane Sandy and blizzards, there were still supplies of locally produced vegetables in the supermarkets. Other supply chains had broken down but it was still possible to deliver the produce from Gotham Greens[xliii].
Getting to Urban Oasis
The technology that allows us to put accurate numbers on the value of our green infrastructure is new. As is the urgency with which we need to adapt our cities to changing circumstances. Unfortunately the pressures of climate change, resource shortages and population growth put a huge strain on city finances. Yet as we have seen, each of the four types of city greening projects delivers savings and profits.
Some synergies can be seen by considering all elements of green space economics side by side.
Green roofs provide the public with a quick positive return on investment. The private investor may need to consider the increased property value to break even within 15 years. This insight shows us just how important it is that France has made a national policy for green roofs, and where perhaps financial incentives could help the industry grow faster.
However, a different picture emerges with public parks. The figures suggest that the private profit from parks is significantly more than the public profit (although both benefit). Perhaps park funding models, like Malmö Bo01 district, that require private inputs are reasonable.
Likewise street trees are clearly valuable for both the public and private sphere. The crowd-source program 202020 in Australia is an interesting approach to engage the private sphere into street tree programs.
Urban agriculture is an interesting question. It clearly has very low maintenance costs as a portion of public land, plus high public value creation. However, it also appears that high intensity bio-organic farming is able to meet the economic requirements for private investment. It’s logical that we will see more urban agriculture within our cities.
Above and beyond these conclusions it is clear that the economic analysis also left several important factors out of their calculations. For instance, what are the insurance premiums that both public and private will need to pay for climate change?
Since green space is the front line in our defence against climate change it is essential that we start growing our supply now. Cities who take action now will win the massive benefits of:
- More resilience to climate change
- Healthy population (air pollution and obesity)
- Happier (stress, depression)
- A more comfortable and livable climate (urban heat island)
- Lower infrastructure expenses (stormwater and energy)
- Greater food security (local food production)
- Lower insurance premiums (climate change)
- Better reputation and better economy
It is not merely profit that is motivating. It is also what we need to do to make our cities safe places for the future.
Flying over a city of the future it might not be possible to see the buildings anymore. Vegetation would cover the roofs and walls of the buildings. Street trees would become arteries connecting to large parks where bees and butterflies pollinate wild flowers and trees. Cuisine could flourish from food production contained within the urban ecosystem. Tendrils of green might wander out of the urban periphery into the browned landscape, a contrast to the vibrant environment preserved within the urban oasis.
Which environmental valuations matter to you? Let me know in the comments below!
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Below are ~40 resources cited in this article to help you overcome the barriers to green space.