Paolo Rosato, University of Trieste (IT) “Managing economic analysis of building envelope ”

The Future Envelope 12
It’s all about performances
The Economic Analysis of Building
Envelope: Private and Public Perspectives
Paolo Rosato
DIA -UNITS
www.interreg.net
FACEcamp final event | Bolzano, 20-21 May
2019
FACEcamp is funded by European Regional Development Fund and Interreg V-A Italy-Austria 2014-2020.

Summary
• The economic point of view
• Buildings quality and welfare
• Values and envelope
• Two case studies:
- Economic and environmental simulation of building
energy refurbishment
- Green Roofs vs. Cool Roofs: Economic evaluation of
private and public benefits
The Future Envelope 12 final event 20-21 May 2019, Bolzano

The economic point of view
In current language the word "economic" seems "prosaic" and
limited to the practical and material sphere, devoid of poetry and of
ideal tensions.
In reality, if we look to the origin of economic science, the concept
is different and is linked to the study of solutions to improve the
satisfaction of human needs from a practical point of view.
From this point of view it should be noted that the well-being of a
community depends essentially on the tangible and intangible
goods and services, namely:
• from the goods and services that bought with the income;
• from the utilities that the natural, social and institutional
environment provides for free.

In other words:
 , ,U f R P Q
Utility
Income
Price of private (market) goods
Non-market (public) goods and servicies
U
R
P
Q





But, there are market (private) goods capable of influencing the quality
and extent of free goods and services:
 
1
, ; ( , )
n
i i k
x i
U R p x Q g xMax 
 
   
 
X Q Q
= Market goods
Q= Non-market goods and servicies
= Income
Prices of market goods
Market goods that influence Q
= Other non-market goods and servicies
Prices of x
i
k
k k
X
R
p
x
p



Q

Building quality and welfare
Normally these goods (xk, mixed goods):
• have a market value (pk) that depends on the quality of the
surrounding environment (Q);
• affect the value of surrounding goods.
The most striking example are the buildings:
• their value strongly depends on the quality of the location (≈ 30%
variability);
• the quality of the location depends, in turn, on the quality of the
buildings.
Moreover, from a dynamic point of view, the buildings have the capacity
to shape over time, both positively and negatively, the built environment:
• a growing quality of the building generates a positive trend of real
estate value;
• a decreasing quality generates a negative trend into the real estate
value. The Future Envelope 12 final event 20-21 May 2019, Bolzano

The buildings value dynamics are very important because
the "built environment” plays an crucial role in social
welfare, since:
• it absorbs a significant slice of income (30% on € 2.5k /
month);
• constitutes the major part of the family assets (60% of €
10 bn);
• occupies about 5% of the national soil (10% excluding
the forests)

The buildings, especially the larger ones located in mixed urban
contexts (residential / tertiary / productive) are paradigmatic objects to
be analysed from the economic point of view "latu sensu" because they
have a:
• private value, which derives from direct use and is represented
monetarily by rent and / or capital value;
• option value, linked to the persistence of the use value over time
due to their flexibility / adaptability to known and unknown future
uses;
• "external" value generated by the factors that influence the well-
being of the community and the value of the surrounding real estate.

Values and envelope
Among the various physical components of the building, the envelope,
although not very important in the construction cost (10-20%), is among
the most significant because:
• it affects some important technical-economic performances (summer
and winter energy consumption, durability, etc.);
• it is the «business card» of the building towards the market and
influences its rental and market value;
• It is a link between the object in a private sense and the surrounding
environment and conditions the sign and the extent of its perception
in terms of value and externalities.

Economic and environmental simulation of building
Research Group: Marco Manzan (coordinator), Giorgio Lupato,
Amedeo Pezzi, Paolo Rosato, Alberto Clarich
Research goal:
Investigate the influence of a stochastic variation of economic
parameters in optimizing energy refurbished of a social housing
building applying different internal insulation layers to the walls and the
replacement of existing windows with more efficient ones.
The optimal solutions are searched considering two objective functions
related to the energy performance and economic feasibility of the
intervention.

The case study: The energy retrofit of a social house building in Trieste,
built in the sixties.

The case study features:
• Four blocks
• Four floors
• Two small apartments per floor
• No insulation and single-layer glass with high thermal transmittance
The simulations:
• Different insulation performances of opaque walls
• Different thermal and solar performances of windows

The simulation workflow

The economic valuation
0
j
r n i i
n i
f

The economic valuation
Assuming:
• a constant (S) Sj
• an increasing annual operating cost (energy) (real rate re)

Stochastic simulations:
• Investment cost (IC)
• Future energy price trend (re)
Optimization:
• Minimize primary energy consumption (PE)
• Maximize NPV with 90% probability to be exceeded (risk adverse
DM)

Pareto efficient frontiers (Northern façade)
Constant
investment
cost
Stochastic
investment
cost

Synthesizing:
1. The optimization leads toward solutions with different choices
between north and south facades;
2. Introduction of variability in investment cost leads to the selection of
more performant windows type respect the constant cost;
3. The risk aversion of the decision maker influences the
4. The Pareto efficient technological solutions show that is possible to
improve significantly the economic performances of the retrofit
investment with little improvement of primary energy consumption.
Economic and environmental simulation of
building energy refurbishment

Green Roofs vs. Cool Roofs: Economic evaluation
of private and public benefits of industrial buildings
retrofit
Research Group: Paolo Rosato (coordinator), Raul Berto, Carlo Stival, Edino
Valcovich
Research goal:
Green roofs (GRs) represent an interesting option for industrial buildings
refurbishment, providing several private and social benefits.
The research performs a probabilistic Cash Flow Analysis (CFA) and Cost-
Benefit Analysis (CBA) to evaluate private and social benefits and costs in
industrial areas of extensive GRs compared to Cool Roofs (CRs), in order to
define sustainable policy and economic measures to encourage GRs
diffusion in three different Italian climate contexts.

Green Roofs vs. Cool Roofs
Specific objectives:
• Evaluate the convenience from the owner's point of view to
replace the conventional roof with an extensive green roof in
various climate conditions;
• Evaluate the public / social convenience to the spread of
extensive green roofs;
• Evaluate the efficiency/efficacy of incentive policy for the
spread of extensive green roofs.

ENVIRONMENTPARK,TORINO(I),
E.AMBASZ,B.CAMERANA,G.DURBIANO
An Extensive Green Roofs

LIBRARYOFUNIVERSITYOFTECHNOLOGY,DELFT(NL)
Another Extensive Green Roofs

Green Roofs vs. Cool Roofs………
Green Roof
Cool Roof
Existing rooftop

……..in different climate

Green Roofs vs Cool Roofs
Methods:
• Cash Flow Analysis (CFA) for private benefits evaluation;
• Cost benefit Analysis (CBA) for public/social evaluation.
The study evaluates, for each settlement:
• Construction and maintenance costs for CR and GR solutions;
• Costs associated to heating and cooling services, with both CR and GR
solutions, through probabilistic (Montecarlo) simulation of energy
performances in each climate condition;
• Monetization for both CR and GR externalities.

Private costs and benefits comparison
Private costs and benefits Roof
Unit value [€/m2
]
Trieste Ancona Palermo
Construction costs
Green 140.88 140.88 140.88
Cool 81.39 81.39 81.39
Energy consumption per year
Green 3.65 3.65 3.52
Cool 4.02 3.70 3.44
Maintenance costs per year
Green 2.00 2.00 2.00
Cool 2.86 2.86 2.86
GR vs CR NPV (r=4%) -34,69 -37,86 -38,33

Private costs and benefits plus externalities
comparison
Externalities Roof
Unit value [€/m2]
Trieste Ancona Palermo
Landscape aesthetic benefit Green 48.98 104.30 85.60
Biodiversity preservation per
year
Green 3.40E-03 1.00E-03 7.60E-05
Carbon emission reduction per
year
Green 0.23 0.23 0.18
Cool 0.26 0.23 0.18
Air quality improvement per
year
Green 0.13 0.13 0.13
Sewage control per year
Green 1.20E-02 1.10E-02 7.00E-03
Cool 3.30E-03 3.30E-03 2.20E-03
Reduction of drained
stormwater volume per year
Green 9.20E-03 2.00E-02 1.20E-03
Cool 3.00E-03 6.50E-03 4.40E-03
Reduction of stormwater
infrastructural costs per year
Green 1.70E-02 1.80E-02 3.50E-02
Cool 5.70E-03 6.10 E-03 1.30E-02
GR vs CR NPV plus Externalities (r=3%) 12,28 54,48 38,38

The value of externalities
The landscape positive externality was quantified with the willingness to pay
a higher price for the houses with a view on industrial sites with Green Roofs
rather than with Cool Roofs

Synthesizing:
1. The private NPV shows little convenience in
adopting a green roof instead of a cold roof;
2. The social NPV shows a clear advantage in
adopting a green roof instead of a cold roof;
3. Social convenience is mainly due to the positive
improvement in the landscape and its effect on the
value of surrounding real estate assets.
Green Roofs vs Cool Roofs

Thank you for your attention!
www.interreg.net
Paolo Rosato
DIA - UNITS
paolo.rosato@dia.units.it
FACEcamp is funded by European Regional Development Fund and Interreg V-A Italy-Austria 2014-2020.

Paolo Rosato, University of Trieste (IT) “Managing economic analysis of building envelope ”

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Paolo Rosato, University of Trieste (IT) “Managing economic analysis of building envelope ”