This article highlights key findings from an Environmental Economics PhD study recently completed by Queensland University of Technology’s Dr Omniya el-Baghdadi.
Today’s development industry is still ruled largely by neoclassical economics, where environmental conditions and impacts are difficult to address for many chief financial officers and executives.
Even though building concepts often include green aspirations, these aspects are usually in the frontline of project landscaping budget cuts and “value-engineered” out of the final deliverable.
The bottom-line issue is that neoclassical economics is not well suited to valuing anything that does not readily translate to a market value. This includes pollution such as carbon dioxide, pesticides, airborne particulates or sediment, and goods and services ranging from clean air and healthy soils, to soil conditioning, water purification and pollination.
For all its good intentions, the urban greening agenda is loaded with environmental considerations that are regarded as too difficult to convert into dollars. Over the past few decades, various fields have emerged within economics to address this gap, bringing to light the concept of externalities and setting the scene to discuss the potential value of nature in development.
In this article we discuss the potential for building – or proactively “stacking” – the business case for nature loving cities, also known as biophilic urbanism. Drawing on the economic fields of neoclassical, environmental, ecological and behavioural economics, we show that there is a logical pathway for considering biophilic installations in planning and budgeting for green infrastructure works.
A framework for valuing green infrastructure requires the integration of biology, psychology, economics and social policy to ensure the efficient and appropriate transfer of values between the environment, society and the economy.
The holistic economic platform for green infrastructure serves to remind us of opportunities to value nature in development processes, and helps to highlight gaps in data as a useful driver for future data gathering efforts.
The term biophilia means love of natural systems or love of life. It was originally introduced by Erich Fromm to define a psychological orientation of being drawn to all that is alive and vital.
Edward Wilson used the word in a similar notion and suggested that biophilia describes “the connections that human beings subconsciously seek with the rest of life”.
He pointed to biology as the reason human beings foster a deep sense of love and affinity with other life forms.
Extending this philosophy to city planning, Timothy Beatley suggests designing cities that embrace nature, encouraging city dwellers to generate a relationship with living systems. The environmental and social benefits of nature in cities are readily understood by the social sciences and have been extensively investigated.
The economics conversation, however, is still lacking as we continue to estimate the value of biophilic urbanism from a reductionist point of view. Services such as enhancing air quality, providing shade and reducing energy consumption in buildings contribute significantly not only to the identified pressure but also in addressing externalities that have been notoriously unaccounted for, causing a financial burden on the economy.
When we extend beyond neoclassical economics to include environmental economics and factor in externalities, the business case conversation opens up.
We begin to appreciate the role of biophilic urbanism in addressing costly issues such as the urban heat island effect, air quality control and public health concerns.
Although, environmental economics considers that environmental and manufactured services are largely substitutable. That is, if an environmental service is removed, the economy can replace it; perhaps not one to one, but in an economically feasible way.
It also takes the lead from orthodox economics in calculating marginal change in human utility as the primary measure of benefit. This assumes that people want things but don’t care where they come from and are comfortable substituting one need for another.
However, while schemes such as Green Star and NatHERS in Australia, and LEED internationally, are encouraging industry to quantify benefits of avoiding pollutants such as carbon dioxide, airborne particulates and extreme microclimates, environmental economics still struggles to make the cut in the current constrained market economy as some benefits don’t translate to a market value.
When we build on this appreciation further to incorporate ecological economics, we begin to realise opportunities to acknowledge that designing for nature becomes crucial to societal economic welfare – when nature thrives, we thrive.
Ecological economics considers the total value of an asset and what it produces, including intangibles. It assumes that human needs cannot be collapsed into a single measure of utility, taking a much more philosophical approach to value. It does so by combining science and economics.
Science plays a key role in identifying levels of substitutability, critical thresholds, biodiversity values and ecological health. The loss of a significant ecosystem, or a species, is considered to have an ethical importance on a par with the human right to existence.
We see a similar call for a more holistic approach to economic enquiry through the emergence of behavioural economics.
Behavioural economics highlights the irrational disconnect between orthodox economics and human psychology. Orthodox economics collapses human beings and assumes they will all act rationally when confronted with a decision.
This notion, which still serves as the foundation to most decision-making platforms, stunned prominent psychologists, such as Daniel Kahneman.
He expresses the need to integrate psychology with economics in order to make more informed decisions, and is now starting to play a growing role in informing public policy.
The economics of biophilic urbanism highlights the need to follow suite and adopt a transdisciplinary economic model, one that considers biology and psychology to provide decision makers with more informed decisions.
Using this stacked economic platform, biophilic elements can be evaluated in an urban development with regard to the multiple facets of their contribution to the built space.
This involves recognising the role a vegetated feature in an urban context addresses an urban-related challenge or pressure.
Building upon the term ecosystem services, we can readily imagine biophilic services as the services or benefits people obtain from biophilic elements.
This language then becomes critical in creating a conversation about the economic role and significance of biophilic elements in the urban environment.
For example, identifying stormwater runoff issues gives the green feature far greater purpose than a simple aesthetic benefit – it also offers a cost-effective solution to address a significant issue.
Shifting the conversation pressures such that biophilic urbanism has a relevant and significant role in addressing arising urban-related issues gives this technology functionality and purpose.
With the addition of this way of conceptualising the business case, and through introducing the term biophilic services to our conversations about green infrastructure, we can begin to articulate the numerous opportunities available within our cityscapes to replace what we call urban dead space with living habitat that offers great economic, social and environmental potential.
Furthermore, we can build on the work of Terrapin Bright Green and others to create a locally robust appreciation of the benefits of biophilic urbanism – for government, building owners, tenants and the surrounding community.
Dr Omniya el-Baghdadi is project coordinator at the Institute of Future Environments at QUT; Cheryl Desha is adjunct associate professor at the Science and Engineering Faculty at QUT.