Soft Benefits Aug 16-10

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The Monetary Value of the SoftBenefits of Green Roofs

Final Report

Prepared by:

Ray Tomalty, Ph.D.

and

Bartek Komorowski, MUP

with the assistance of Dany Doiron

Smart Cities Research Services, Montreal

Prepared for:

Canada Mortgage and Housing Corporation (CMHC)

August, 2010


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Acknowledgements

The authors would like to thank the following project advisors for their invaluableguidance in conducting this study: Hitesh Doshi (Ryerson University), Jamie Meil

(Athena Institute), Steven Peck (Green Roofs for Healthy Cities), Douglas Pollard(CMHC), and Ralph Velasquez (Tremco Inc.).


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Table of Contents

1 Introduction .................................................................................................................... i2 Valuation Methodologies .......................... ......................... .......................... ................ i

3 Valuation of Benefits ......................... ......................... .......................... ........................ iiProperty Values ............................................................................................................................. iiMarketing Benefits ...................................................................................................................... viFood Production and Food Security...................................................................................... viiSound Attenuation ..................................................................................................................... viiStormwater Retention ................................................................................................................ ixAir Quality ....................................................................................................................................... xGHG Sequestration ....................................................................................................................... xi

4 Case Studies ................................................................................................................ xiii901 Cherry Avenue, San Bruno, CA ...................................................................................... xiiiFairmont Waterfront Hotel, Vancouver, BC ....................................................................... xiii401 Richmond, Toronto, ON....................................................................................................xivRooftop Victory Gardens, Chicago, IL ...................................................................................xivThe Louisa, Portland, OR........................................................................................................... xv

5 Conclusions ....................... ........................... .......................... ........................... ............ xv

Bibliography ........................ .......................... .......................... ............................ ............... xix

1 Introduction ................................................................................................................... 1

2 Valuation Methodologies .......................................... ........................... ....................... 3

2.1 Revealed Preference Methodologies............................................................................. 42.2 Stated Preference Methodologies .................................................................................. 52.3 Avoided Cost Methodologies ........................................................................................... 6

3 Valuation of Benefits ......................... ......................... .......................... ........................ 83.1 Property value increase.................................................................................................... 93.2 Marketing .......................................................................................................................... 163.3 Food production and food security ............................................................................ 203.4 Sound Attenuation .......................................................................................................... 243.5 Stormwater Retention.................................................................................................... 273.6 Air Quality Improvement .............................................................................................. 323.7 Greenhouse Gas Sequestration .................................................................................... 36

4 Case Studies ................................................................................................................. 404.1 Case Study 1 901 Cherry Avenue, San Bruno, CA ................................................. 424.2 Case Study 2 Fairmont Waterfront Hotel, Vancouver, BC ................................. 494.3 Case Study 3 401 Richmond, Toronto, ON ............................................................. 564.4 Case Study 4 Rooftop Victory Gardens, Chicago, IL ............................................. 64 4.5 Case Study 5 The Louisa, Portland, OR ................................................................... 72

5 Conclusions .................................................................................................................. 80


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Interviewees....................................................................................................................... 84

Bibliography ....................................................................................................................... 86


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Summary

1 Introduction

The use of green roofs can offer a tangible solution to many challenges faced bycommunities across Canada today. Articulating the value of those benefits inmonetary terms provides an estimate of their contribution to local and regionaleconomies and permits governments, land developers and building owners toassess short- and long-term public and private gains.

While some benefits are directly measurable and have hard values (such as theenergy savings due the insulation provided by the soil and vegetation of a green

roof), many benefits are not readily measurable and their values are difficult toestimate (such as the health benefits of a rooftop garden). For the purpose of thisstudy, those benefits that are not directly measurable (or calculated based on anyline item on the buildings budget) will be defined as soft benefits.

The purpose of this report is to provide methodologies and case studies that canoffer guidance in attributing economic value to selected soft benefits of green roofs.We offer methodologies that can be easily employed by stakeholders with limitedinformation about the property concerned. In other words, our goal is to putforward heuristic methods that can be used with data that is usually readily at hand.Needless to say, this approach entails a trade-off between ease of use and the level

of detail and precision. Keeping this in mind, the results obtained with the proposedmethods should be applied prudently.

2 Valuation Methodologies

The soft benefits of green roofs are not directly tradable and therefore do not havedirectly measurable monetary values. To determine their monetary value, non-market or indirect valuation techniques must be employed. Estimating the totaleconomic value of a non-market good or service entails calculating the sum of allvalues associated with that good or service. The two main categories of value areuse and non-use values. Use values can either be direct or indirect. Direct use valuerefers to the value that is derived from actual or planned use of a particularenvironmental service or good. Recreation and food production are two examples ofdirect use values. Indirect use value occurs when people benefit from anenvironmental amenity without consciously using it. Water filtration, climateregulation are examples of the indirect use values of environmental amenities. Non-


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use value refers to the value that individuals place on an environmental amenitywithout having any planned use for it. An example of a non-use value is the intrinsicvalue that people attribute to an environmental amenity (like the boreal forest)simply for its existence. The methods used to estimate non-use values areconsiderably more complex and are beyond the scope of this report.

Non-market valuation techniques have been developed in order to estimate the netvalue that the public or individuals attribute to environmental amenities such asgreen infrastructure. Three general categories of nonmarket valuationmethodologies exist. The first category, revealedpreference methods (i.e., travelcost, hedonic pricing, market comparables, and cost avoidance) uses behaviours andinformation observed in markets to estimate non-market values. The secondcategory, statedpreference methods, which includes the contingent valuationtechnique, attributes economic value by asking people their willingness to pay for aservice or willingness to accept compensation to voluntarily forgo a service. Thethird category is avoided cost analysis, which can be used to determine the value of

green infrastructure by quantifying the costs that would be incurred if the servicesprovided by the infrastructure were not available or had to be provided by buildingconventional infrastructure.

3 Valuation of Benefits

The objective of our research is to provide readers with non-technical methods forestimating the soft benefits associated with a green roof project based on readily-available information and without the need for undertaking major research. Thebenefits that are included here are those for which we could find relatively simple

valuation methods that could be applied by non-specialists with limited resourcesfor data gathering. The proposed methods were gathered from current practicesand the existing literature.

Property ValuesGreen infrastructure investments have been shown to positively affect the propertyvalue and marketability of nearby real estate. In the case of green roofs, this benefitwould accrue to the owner or owners of a building with a green roof and, to a lesserdegree, to owners of surrounding properties. Hedonic valuation techniques havebeen used to measure the relationship between the selling price of a residence andits distance from an urban greenspace, park, community garden or wetland. Atpresent, there are no studies that have measured the potential of green roofs toincrease the selling price of a condominium or other residential building. In theabsence of hedonic pricing studies looking specifically at green roofs, we can useestimates of property value increases generated by other types of greeninfrastructure, e.g., an at-grade community garden or park.


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View onto a Green Roof

Assuming that having a view onto a green roof has a similar effect to new treeplantings, the value of the benefit accrued to owners of properties is 9% of the valueof the portion of a building that affords a direct view onto a green roof. This is basedon Wachters (2004) finding that tree planting along a street in front of a property

increases the property's value by up to 9%. Where neighbours of the green rooftopare concerned, we assume that greening a rooftop is equivalent to tree planting at-grade it adds greenery but does not change the amount of recreational green spaceto which they have access. We do not attribute any increased value to a green roofwithout trees.

Assuming that having a view onto a green roof has a similar effect to new treeplantings, the value of the benefit accrued to owners of properties is 9% of the valueof the portion of a building that affords a direct view onto a green roof. This is basedon Wachters (2004) finding that tree planting increases property values up to 9%.Where neighbours of the green rooftop are concerned, we assume that greening a

rooftop is equivalent to tree planting at-grade. For them, the greening of the rooftophas much the same effect as tree planting it adds greenery but does not change theamount of green space to which they have access. We do not attribute any increasedvalue to a green roof without trees.

For the purpose of estimating the value of the benefit for a whole building, weassume that only half the neighbouring storeys above the green roof are oriented soas to afford a view onto it. The increase in property value that accrues to a buildingwith a view onto a green roof can therefore be estimated using the followingformula:

b !0.091

2hvh

hv

vv

!0.045h

vh

hv

vv

Where:

y b = value of benefit ($)

y vv= value of neighbouring property with a view onto the green roof

($)

y h = height of the green roof host building (storeys)

y hv= height of the building with a view onto the green roof (storeys)

For the purpose of estimating the value of the benefit for a single unitin a buildingthat has a direct view onto a green roof, we propose using the following formula:


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Recreational Rooftop Garden

A rooftop garden that is accessible to building dwellers will offer recreationalbenefits that may be reflected in the value placed on the building. To estimate thisvalue, we turn to studies that have assessed the impact on housing values inlocations abutting public parks. Using the hedonic method, Crompton (2005) hassuggested that homes adjacent to public parks have about a 20% higher propertyvalues than similar homes distant from parks.. Given that an abutting park offersboth recreational and view benefits, we deduct the view benefit (9% of propertyvalue) calculated above to arrive at a recreational benefit of 11%.

We propose the increase in property value yielded by a recreational rooftop garden

be estimated using the following formula:

b ! 0.11 v

Where:

y b = value of the benefit ($)

y v= value of the green roof host property ($)

Productive Rooftop Garden

Assuming that having a productive rooftop garden is tantamount to abutting an at-grade community garden, we propose that the value of the long-term benefitaccrued to the owner of the property be estimated at 7% of the value of theproperty. This is based on Voicu and Beens (2008) finding that, on average,properties abutting typical community gardens increased in value by 7.4% by fiveyears after the construction of the garden. As we do not know from these findingswhat the effect is in the longer term, we assume the value remains constant at thefive-year level.

We propose the increase in property value yielded by a private, productive rooftopgarden be estimated using the following formula:

Where:


y v= value of green roof host property ($)


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If the productive rooftop garden is open to non-occupants of the building then it ismore likely that benefits will accrue to owners of neighbouring properties. In thiscase, we assume that the rooftop garden behaves exactly like an at-gradecommunity garden. In the long-term, the value of the benefit accrued toneighbouring property owners is 7% for owners in the building with the rooftop

community garden and the immediate vicinity of the host building, 5% for those upto 500 feet away, and 2% for those up to 1,000 feet away. Again, the values arebased on Voicu and Been (2008) and assumed to hold at their five-year level.

We propose the increase in property value accrued to a neighbouring property of apublicly accessible productive rooftop garden be estimated using the followingformula:

Where:


y v= property value ($)

y d= distance from green roof host property (meters)

y F= distance factor (function ofd)

Let:

y F= 0.07 when 0 d 5 m

y F= 0.05 when 5 m < d 150 m

y F= 0.02 when 150 m < d 300 m

y F= 0 when d> 300 m

Area-Wide Benefit

The above stated formulas are intended for calculating the value of proximitybenefits that accrue to individual properties. Municipal decision makers may be

more interested in the total, area-wide increase in property values resulting from agreen roof project. In this case, it is necessary to sum the values of the benefitaccruing to the host property with those accruing to neighbouring properties.

Where:


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y btotal= total area-wide property value benefit ($)

y bn = property value benefit of an individual property ($)

Marketing BenefitsThe mass media and the publics interest in environmentally friendly products andservices continue to rapidly increase in North America. Green roofs and other greeninfrastructure on or near a building can therefore be considered as a marketingamenity that increases a developments exposure and enhances the absorption rateof its units. Applying the comparable costs methodology, one way of estimating themarketing benefits of green infrastructure would be to assess the value of thepublicity gained as a direct consequence of green infrastructure investments.

The marketing benefits of green roofs will depend on a number of factors that areunknown in advance or difficult to quantify, such as the current interest of localmedia in green infrastructure and green buildings. The best way to estimate themarketing benefits is by basing it on the value of the publicity received due to thepresence of the green roof in the project. The value of the free publicity received canbe estimated by comparison to the cost of advertizing in three media: radio,television, and print. The cost for each of the three media is broken down into theproduction cost plus the cost of running the ad. The former can be assumed to beconstant as it is a onetime cost. The latter is the cost of having the ad aired on radioand television and printed in newspapers.

The value of free publicity can in principle be estimated according to the followingformula:

Where:


y pradio = radio ad production cost ($)

y rradio = radio ad running cost (airtime) ($/30s spot)

y tradio = total radio equivalent airtime (30s spots)*

y ptv= tv ad production cost ($)

y rtv= tv ad running cost (airtime) ($/30s spot)*

y ttv= total tv equivalent airtime (30s spots)


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y ppaper = newspaper ad production cost ($)

y rpaper = newspaper ad running cost (printing) ($/column inch)

y l= total equivalent column length (column inches)

* Total airtime is divided by 30 to convert to number of spots.

Food Production and Food SecurityGreen roofs and at-grade gardens can provide important opportunities for healthyfood production. Rooftop and community gardens can help meet nutritionalrequirements and reduce household expenditures on food while encouragingstewardship of land by site users. Urban agriculture can provide city-dwellers with asource of fresh produce, improved diet and important household budgetary savings.Combining average garden plot yields and cost savings from the purchase ofproduce (based on market prices) can help us evaluate the monetary value of urbanfood production.

From our review of existing urban gardens, we estimate that their productivityranges between $20,000 and $200,000 per hectare per growing month. It appearsthat mixed fruit and vegetable gardens are at the low end of the productivity rangewhile gardens focused more on flowers, herbs, and lettuces are at the higher end.The productivity of an urban garden also depends on the duration of the growingseason i.e., the number of months between the last spring frost and the first fallfrost.

We propose the value of the food production benefit be estimated using the

following formula:

Where:

y b = annual value of benefit ($/year)

y g = duration of the growing season (months)

y P= productivity ($/m2month)

y a = green roof area (m2)

Sound AttenuationVegetated surfaces provide important sound insulation properties and are oftenemployed for their noise reduction potential in urban settings. Green roofs canprovide important noise reduction opportunities for buildings, especially those


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under flight paths or elevated transit systems. Hedonic pricing and contingentvaluation methodologies have both been employed to assess the social costs of noiseand estimate values for noise reduction measures such as green roofimplementation.

Sound attenuation provided by a green roof will depend on the properties of thechosen substrate and on the substrates thickness. In the absence of data on thenoise attenuation properties of different substrates with different thicknesses, wepropose a low (5 dB attenuation) and a high scenario (13 dB attenuation) based onConnelly & Hodgsons (2008) findings on the sound attenuation of 75 mm and 150mm green roof substrates. The aforementioned findings are those for low- and mid-range frequencies; we assume that most ambient noise in an urban setting falls intothis category. We assume that a green roof would primarily reduce noises fromoverhead sources, such air traffic and elevated roadways and trains; it would havelittle or no effect on street level traffic noise. Thus, the benefit would only accrue toproperties affected by overhead noise.

When using the hedonic pricing technique, the cost of noise is measured by theNoise Sensitivity Depreciation Index (NSDI), which represents the averagepercentage decrease in total property value per 1-decibel increase in noise levelabove a baseline level. Based on the findings of Bateman et al (2000), for propertiesnear airports or under airport flight paths, we propose using an NSDI of 0.33%; forproperties near elevated roadways or railways that are above roof level, we proposeusing an NSDI of 0.64%.

We assume that a green roof would only affect noise levels only on the top floor ofthe building. For the purpose of estimation, we assume that each floor is worth an

equal portion of the total property value. Hence, the value of the top floor is the totalproperty value divided by the number of storeys.

We propose the value of the sound attenuation benefit be estimated using thefollowing formula:

Where:

y b = value of benefit ($/year)

y NSDI= noise sensitivity depreciation index (/dB)

y n = green roof sound attenuation (dB)

y h = building height (storeys)



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Using the values given above for the low attenuation scenario and for air traffic, weobtain:

b ! (0.0033 dB) (5dB)v

h

! 0.0165v

h

Stormwater RetentionVegetated surfaces on rooftops can retain considerable amounts of stormwater andreduce peak flows into the stormwater system during storm events. Less peakrunoff means that new storm sewer systems can have a smaller capacity or existingsystems can support more development before being upgraded, which translates tolower capital expenditures for developers and municipalities. Lower peak flowsmeans lower expenditures by the municipality in erosion control measures alongstreams and rivers. Thus, we propose that the benefit of this measure be estimatedby calculating the avoided cost of expanding stormwater treatment facilities and inerosion control measures.

For the stormwater retention benefit, Cunningham (2001) provides figures for thecost of three types of stormwater retention infrastructure, including: a surfacestorm water retention pond, valuated at $20.13/m3 of stormwater; mixed at-gradeBMPs, valuated at $212.15/m3 of stormwater; and an underground retention basin,valuated at $1,059.44/m3 of stormwater. For the erosion benefit, the City ofWaterloo (2005) estimates that conventional stormwater managementinfrastructure related to erosion control requires a one-time expenditure ofC$13.66/m3 of stormwater.

The values per unit of area of the green roof of the stormwater services that we areconsidering depend critically on the water retention capacity of the green roof. Forestimation purposes, we will assume an average retention capacity of 42.7L/m2roof,as used by Carter and Keeler (2008), which we take to be a typical figure for anextensive green roof.

We propose the value of the storm water retention benefit be estimated using the

following equation:

Where:



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y R = stormwater retention cost ($/m3water)

y E= erosion mitigation cost ($/m3water)

y C= average green roof retention capacity (m3water/m2roof)

y a = green roof area (m2roof)

Using the values for stormwater retention cost (for the cheapest alternative, aretention pond) and erosion mitigation cost given above, we get:

Air QualityGreen plants absorb gaseous pollutants through their leaf stomates (pores).Vegetations can also capture some of the particulate matter in the air. By mitigatingthe heat island effect, urban vegetation can further help reduce smog given that

higher temperatures favour smog formation. Air pollution adds to the burden of thehealth care system, causes disabilities or premature death, and reduces theproductivity of the workforce. In order to assess the economic value of this service,we can estimate the avoided cost of health care.

The critical determinants of a green roofs capacity to mitigate pollution and yieldhealth benefits include its area and the mix of plant species that is used, as somespecies absorb more pollutants than others. Other factors include the levels of airpollution at the given location and the climate. In terms of the latter, the pollutionmitigation provided by the green roof may be limited outside the growing season,particularly if it is covered with snow. We take a seven-month growing season to be

the baseline case.

We have calculated values for the pollutant removal health benefit using Yang, Yuand Gongs (2008) and Kowals (2008) findings (see Table S-1).

Table S-1 - Value ofannual pollutant removal health benefit for different types of

green roof vegetation (US$/m2year)

Type of vegetation SO2 N02 PM10 O3 Total


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Short Grass 0.0010725 0.0157275 0.00504 0.0303075 0.0521

Tall Herbaceous Plants 0.0013695 0.0198450 0.00684 0.0392175 0.0673

Deciduous Trees 0.0016665 0.0240975 0.00972 0.0483975 0.0839

Combining data from Yang, Yu and Gong (2008) and Kowal (2008)

We propose the following formula for estimating the annual value of the healthbenefit of pollution mitigation provided by green roofs:

Where:


y g = growing season (months)

y Hsg = health benefit for short grass pollution absorption ($/m2year)

y asg = green roof area covered by short grass (m2)

y Htg = health benefit for tall grass* pollution absorption ($/m2year)

y atg = green roof area covered by tall grass* (m2)

y Hd= health benefit for deciduous plant pollution absorption($/m2year)

y ad= green roof area covered by deciduous plants (m2

)

*tall herbaceous plant

Using the annual pollutant removal values cited in the table, we obtain:

GHG SequestrationA further benefit of green roofs and other green infrastructure is their ability tocapture and store i.e., sequester carbon dioxide. Valuating the carbon dioxidesequestration benefit of green infrastructure entails estimating the marginal socialcost of damages that would have been caused due to temperature increases if notfor the sequestration carried out by the vegetation involved.


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Our formula for estimating the value of sequestered carbon is based on the findingsof the David Suzuki Foundation (see Table S-2). We assume that the annual carbonuptake of these types of vegetation is the same on a green roof as at grade. As themethodologies reviewed estimate the sequestration value of trees on a large scalebasis (square kilometres or hectares), and because the values are relatively small,

we use hectares rather than meters as units of area.

Table S-2 - Carbon sequestration values per hectare for Greater Golden Horseshoe

Greenbelt land typesForest Grassland Agricultural Lands

Cropland Idle land Hedgerows Orchards

Stored carbon $919 $213 $332 $317 $328 $298

Annual carbon uptake $39.11 $28.46 N/A $28.59 $28.59 $28.59

Source: David Suzuki Foundation, 2008

We propose the following formula for calculating the value of annual carbonsequestration provided by a green roof:

Where:


y Sd= value of carbon sequestration by deciduous plants ($/hayear)

y ad= area of green roof covered by deciduous plants (ha)

y Sg = value of carbon sequestration by grasses ($/hayear)

y ag = area of green roof covered by grasses (ha)

y Sf= value of carbon sequestration by productive agriculture($/hayear)

y af= area of green roof covered by productive crops (ha)

Note:

y asg = area of green roof covered by short grasses (ha)

y atg = area of green roof covered by tall grasses (ha)


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4 Case Studies

In this section, we apply the methodologies developed in the last section to five casestudies in order to estimate the actual benefits associated with these green roofsunder realistic conditions. The information for these scenarios is drawn fromsources such as Steven Peck's 2008 bookAward Winning Green RoofDesigns, projectweb sites, and interviews with architects and developers.

The case studies were chosen in order to represent a variety of building types andlocations. Together, they provide opportunities for the use of all the calculationmethods presented in the last section.

901 Cherry Avenue, San Bruno, CAThe 901 Cherry Avenue building houses offices of the clothing maker GAP Inc. Thebuilding includes a number of sustainable design features, of which the centerpieceis an undulating 6,400 m2 (69,000 sq ft) semi-extensive green roof. The roof featuresa 15 cm (6) growing medium planted with grasses and wildflowers native to theSan Francisco Bay Area. A notable feature of the 901 Cherry building is that it islocated under the flight path of air traffic landing at the San Francisco Internationalairport and, as such, is exposed to considerable overhead noise. The green roofhelps provide an acoustic barrier that attenuates sound transmission from aircrafttaking off from and landing at the airport.

benefit type value

sound attenuation one time $303,829 $783,101

stormwater retention one time $9,216 $293,248air quality annual $568/year

GHG sequestration annual $18/year

Fairmont Waterfront Hotel, Vancouver, BCThe Fairmont Waterfront Hotel is a luxury hotel on the downtown Vancouverwaterfront. When the hotel was built in 1991, a green roof with ivy and pea gravelpaths was initially installed on the large third floor terrace on the buildings southside; the hotel has a total of 23 storeys. The southern portion of the terrace was

converted to an herb garden in 1994. The garden is maintained year round andharvested between late march and late fall by the hotels restaurant staff. Theproduce is used primarily in the hotel restaurant but consumers also include hotelstaff and patrons.

benefit type value

property value (host) one time $7,593,888


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property value (neighbour) one time $4,409,406

food production annual $3,121 - $31,210

stormwater retention one time $281 - $8,939

air quality annual $11.54 - $18.73

GHG sequestration annual $0.56 - $0.76

401 Richmond, Toronto, ONOriginally constructed in 1899, the buildings 18,580 m2 (200,000 sq ft) floor areanow houses over 140 artists and entrepreneurs. In 1998, a 603.9 m2 (65,000 sq ft)cedar deck was constructed on a portion of the roof and covered with numerousplanters with flowers, bushes, and vines. In 2005, a further 241.5 m2 (2,600 sq ft) ofthe roof were covered with a lightweight extensive green roof system, consisting ofa 2-inch growing medium planted with sedum. The 401 Richmond roof garden hasattracted a considerable amount of attention from the media in Toronto, providingpublicity for the company that owns and manages the building, and indirectly for

the buildings tenants. Residents living in the 14-storey District Lofts building,directly across Richmond Street enjoy the view onto the 401 Richmond roof garden.

benefit type value

property value

(host building) one time $1,379,756

property value

(neighbouring condo unit)one time $24,482

marketing one time $83,126

stormwater retention one time $1,217 - $38,736air quality annual $43.79 - $71.01


Rooftop Victory Gardens, Chicago, ILThe 163.5 m2 (1,760 sq ft) Rooftop Victory Garden is hosted by True Nature Foods,an organic food cooperative and neighbourhood recycling centre in the Edgewaterdistrict on the north side of Chicago. Urban Habitat Chicago (UHC), a local non-profitgroup promoting sustainable practices in urban environments, initiated the projectin 2005. The first harvest occurred in the summer of 2007. The produce grown

during the 2007 and 2008 seasons was mostly distributed among project volunteersand some was sold at the store below.

benefit type value

property value (host) one time $7,057

property value (neighbour)

proximity to productive gardenone time $20,660


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property value (neighbour)

view onto green roofone time $9,546

marketing one time

food production annual $2,289 $22,890

stormwater retention one time $235 $7,491

air quality annual $8.47 $13.73GHG sequestration annual $0.47 $0.64

The Louisa, Portland, ORThe Louisa is a residential high-rise apartment building with 242 apartments andground floor retail, situated in the historic Pearl District of downtown Portland. TheLouisa building is composed of a large podium at the base, which houses the retailsspaces, and a tower set at the back of the podium, which contains the bulk of theapartments. The green roof is situated on top of the podium and can therefore beviewed directly from at least half of the apartments in the tower. The green rooffeatures both extensive and intensive components. The larger (749.8 m2) portion ofthe roof is an accessible recreational rooftop garden with intensive vegetation. Thegarden is flanked on either side by non-accessible extensive green roofs (292.5 m2each). These are two storeys higher than the garden as they sit on top of two-storeytownhouse units facing into the garden. Both the intensive and extensive portionsare planted with drought-tolerant native species, which can withstand Portlandsrelatively dry summers with minimal watering.

benefit type value

property value(view) one time $2,189,385

property value

(accessible recreational garden) one time$5,641,117

stormwater retention one time $1,922 - $61,156

air quality annual $88.89 - $144.15


5 Conclusions

This report has provided evidence that soft benefits produce economic advantagesfor individual property owners, municipalities, and society at large. Despite the factthat the benefits depend on the local context, we have provided heuristic methods toestimate the economic value associated with seven soft-benefits. These are methodsthat can be used by property owners, developers, architects, municipal officials, and


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other stakeholders with information that is often readily-at-hand. The reader shouldkeep in mind the assumptions that had to be made in order to arrive at these quickcalculation methods. Some of these assumptions, along with the beneficiaries,benefiting period, and a short statement of the valuation method appear in the TableS-3.


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Table S-3 - Summary of Soft Benefit Valuations

Benefit Category Beneficiaries Assumptions Type Valuation

Property Value

view onto a greenroof

property owner*and/or neighbours

independent of area one-time up to 4.5%property value

(portion above

green roof)recreational

gardenproperty owner independent of area one-time up to 11%

property value

productive garden property owner occupant access,independent of area

one-time up to 7%property value

neighbours

(adjacent)public access,

independent of areaone-time up to 7%

property value

neighbours (150

m)public access,

independent of areaone-time up to 5%

property value

neighbours (300m)

public access,independent of area

one-time up to 2%property value

Marketing property owner one-time see Table 3

Food production property owner excluding labour andmaterial costs

ongoing $2-$20/m2per growing

month

Sound attenuation property owner affects top flooronly, air traffic noise

only, independent of

area but assuming

extensive coverage

one-time 1.6% to 4.3%property value of

top floor

Stormwater retention developer,

municipality

42.7L/m2

retention

capacity

one-time $1.44/m2 to

$45.82/m2

Air quality municipality, state ongoing $521/ha to

$839/ha per year

GHG sequestration municipality, state ongoing $28/ha to $39/haper year

*If the green roof can be seen from at least part of the host property

The case studies presented in this report show that the proposed valuationmethodologies can be applied in real-life situations without requiring large (ordifficult to obtain) data inputs. In general, the valuations returned by applying themethodologies seem to be of a reasonable magnitude.

Among the one-time benefits proposed here, the property value benefits are by farthe most significant. Properties with accessible green roofs are subject to a 11%property value premium, while those with rooftop food gardens gain 7% in propertyvalue. Neighbours of both types of green roofs also stand to benefit significantlyfrom their presence. Those who have views onto a green roof could gain up to 4.5%of property value, while those adjacent to rooftop food gardens could gain from 2%to 7%. It should be noted that the sum of the all the property value gains accruing to


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neighbouring properties could be considerably larger than the value of the benefitaccruing to the host property.

Sound attenuation offers one-time benefits on a similar order of magnitude, rangingfrom a 1.6% to a 4.3% property value premium on the value of the top floor.

However, this benefit only arises if there is a significant source of overhead noise,such as air traffic or an elevated train nearby. As for the marketing benefit, also aone-time benefit, the experience of the 401 Richmond building in Toronto suggeststhat it is relatively small 0.6% of property value in this case.

The value of the stormwater management benefit varies considerably when viewedas a fraction of property value. In the 401 Richmond case, for example, it isestimated to be worth between 0.01% and 0.28% of property value, whereas in thecase of the True Nature Foods Victory Garden, it is estimated to be worth 0.2% to6.9% of the property value. This benefit is not tied to property value but rather tothe area of the green roof; True Nature Foods has low property value but a relatively

large roof and the stormwater benefit is therefore much larger relative to propertyvalue.

Where ongoing benefits are concerned, the food production benefit is much morevaluable than the air quality and GHG sequestering benefits, according to ourmethods of estimation. We propose that the value of the food produced on a rooftopgarden is worth $2 to $20 per square metre per month in the growing season. Asmost of the North American population lives in places where the growing season isat least 6 months long, the benefit is therefore worth at the very least $12/m2 ofrooftop growing area per year. In places with a year-round growing season, such asin the southern coastal states, the benefit could be worth up to $240/m2 per year. In

contrast, the air quality benefit is worth between $0.0521/m2

to $0.0839/m2

peryear and the GHG sequestration benefit is worth $0.0028/m2 to $0.0039/m2 peryear.

The difference between food production and air quality/GHG benefits is wellillustrated by the two case studies that feature rooftop food production. On theFairmont Waterfront Hotel herb garden, food production is estimated to be worth$3,121 to $31,210 per year, while air quality improvement is worth $11.54-$18.73per year and GHG sequestration is worth a mere $0.56-$0.76 per year. On the TrueNature Foods Rooftop Victory Garden, food production is estimated to be worth$2,289 to $22,890 per year, while air quality improvement is worth $8.47-$13.73

per year and GHG sequestration is worth a mere $0.47-$0.64 per year.

Given how small the air quality and GHG sequestration benefits are, it is almostmeaningless to include them in an assessment of the benefit values for individualgreen roofs. Both of these benefits would be more meaningful if calculated fornumerous green roofs covering a substantial portion of a neighbourhood or city. Forexample, as reported above, Bating et al (2005) calculated that if all flat rooftopsacross the City of Toronto were extensively greened, the annual cost savings


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attributable to reduction in air pollution would amount to US$1,970,000(C$2,700,000 in 2008).

Readers are reminded that the methodologies offered here are heuristic in nature;they are rough estimations based on a number of assumptions that are reasonable

in most cases but may not be applicable in specific contexts. Changes in theassumptions will of course lead to a different evaluation of benefits. Also, the reportprovides calculation methods for a range of greenroof conditions. These are meantto serve as benchmarks only and of course do not cover all potential situations. Theuser is asked to use their own best judgment as to whether and how theassumptions made and range of conditions covered in this report can be usefullyapplied or adapted to their own unique situation.

As already noted, the goal of this report was to allow users to make roughcalculations of benefits without undertaking a major research effort. For the mostpart, this has been achieved: the equations require data that is usually readily

available such as property value, building height, roof area, and so on. The soleexception is the marketing benefit, which requires detailed information on publicitygained due to the green roof. Our experience with the case studies suggests thatmost green roof property owners do not have precise information on mediacoverage, if they track it at all. Future research might address this by tacking mediacoverage across many green roof projects and generating a more generic formulafor estimating the value of the marketing benefit.

To our knowledge, this is the first attempt in the growing literature on green roofsto offer a means for calculating the value of a range of soft benefits associated withthe use of the technology. Clearly, however, it is not the last word. Future research

may not only allow us to refine the approaches offered here but to expand the rangeof soft benefits covered to include, for example, habitat creation and communitybuilding. If this report has helped put us on this path, then it has served its purpose.

Bibliography

Bateman, I., Day, B., Lake, I., & Lovett, A. (2000). The EffectofRoadTraffic onResidentialProperty Values:A Literature ReviewandHedonic Pricing Study.

Edinburgh: Scottish Office, Development Department.

Carter, T. & Keeler, A. (2008). Life-cycle costbenefit analysis of extensive vegetatedroof systems.JournalofEnvironmental Management87, 350-363.

City of Waterloo (2005). Green RoofFeasibilityStudy andCity Wide ImplementationPlan. Public document (http://www.city.waterloo.on.ca/Portals/57ad7180-c5e7-


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49f5-b282-c6475cdb7ee7/LIBRARY_Plans_documents/GRReport2005Complete.pdf).

Connelly, M. & Hodgson, M. (2008). Sound Transmission Loss of Extensive GreenRoofs - Field Test Results. Acoustics Week in Canada, October 6-8, 2008. Vancouver,

BC: Canadian Acoustical Association.

Crompton, J. (2005). The Impact of Parks on Property Values: Empirical Evidencefrom the Past two Decades in the United States. Managing Leisure 10(4), 203-21.

Cunnigham, N. (2001). Rethinking the Urban Epidermis: a studyofthe viabilityofextensive green roofsystems in the Manitoba capitalwith an emphasis on regional

case studies and stormwater management. Masters thesis dissertation, Departmentof Landscape Architecture, University of Manitoba, Winnipeg, Manitoba.

David Suzuki Foundation (2008). Ontarios Wealth,Canadas Future:Appreciatingthe Value ofthe Greenbelts Eco-Services. Public document

(http://www.davidsuzuki.org/files/Conservation/DSF-Greenbelt-web.pdf).

Kowal, C. (2008). Measuring Urban Green. The NewPlanner, Winter(http://www.planning.org/thenewplanner/2008/win/measuringurbangreen.htm)

Peck, S. (2008).Award Winning Green RoofDesigns. Toronto: Green Roofs forHealthy Cities.

Voicu, I. & Been, V. (2008). The Effect of Community Gardens on NeighboringProperty Values. RealEstate Economics 36(2), 281-243.

Watcher, S. (2004). The Determinants ofNeighborhoodTransformations inPhiladelphia -Identification andAnalysis: The NewKensington PilotStudy . Universityof Pennsylvania, The Wharton School.

Yang, J., Yu, Q., & Gong, P. (2008). Quantifying air pollution removal by green roofs inChicago.Atmospheric Environment42, 7266-7273.


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1 Introduction

The use of green roofs can offer a tangible solution to many challenges faced bycommunities across Canada today. Vegetated surfaces offer social andenvironmental benefits to building occupants and owners, municipal governmentsand surrounding communities, from improved stormwater management, habitatcreation, absorption of air pollutants, and reduced energy requirements, to crimereduction, community building, and opportunities for food production. In short, theimplementation of green roofs can improve the overall functionality of theecosystem, contribute to economic efficiency, and enhance the quality of human life.

Articulating the value of the numerous environmental and social services of greenroofs in monetary terms provides an estimate of their contribution to local and

regional economies and permits governments, land developers and building ownersto assess short- and long-term public and private gains. While some benefits aredirectly measurable and have hard values (such as the energy savings due theinsulation provided by the soil and vegetation of a green roof), many benefits arenot readily measurable and their values are difficult to estimate (such as the healthbenefits of a rooftop garden). For the purpose of this study, those benefits that arenot directly measurable (or calculated based on any line item on the buildingsbudget) will be defined as soft benefits.

Green roofs and other green infrastructure1 have traditionally been thought of ascost centres that contribute little or no economic benefit. However, recent work in

the field of environmental economics has brought to light the vital economiccontribution that green infrastructure makes in terms of providing "services" (suchas purifying water and air) to society and individuals alike.2 Excluding soft benefitsfrom assessments of the value of green roofs could lead to a underestimation oftheir real benefit to society and less policy attention devoted to promoting theinfrastructure that gives rise to them. Moreover, without a quantified value, softbenefits cannot be objectively classified or compared to one another or otherbenefits, making rational decisions about the best return on public and privateinvestment difficult to make. Soft benefit valuation is therefore a criticalundertaking to better inform public policy initiatives and private developmentdecisions. By considering soft benefits, we obtain a more complete picture of all the

direct and indirect impacts of green roofs on individual buildings, on their

1Green infrastructure includes wetlands, urban forests and parks, green roofs, community gardens, vegetatedswales, rain gardens and other natural or constructed vegetated areas that perform environmental ecologicalservices for surrounding human populations.

2 Costanza (1998) has estimated that the worlds ecosystem services provide a benefit in the range of US$16

54 trillion (10) per year, withanaverageofUS$33trillionperyear.GlobalgrossnationalproducttotalisaroundUS$18trillionperyear.


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surroundings, and on society at large.

The purpose of this report is to provide methodologies and case studies that canoffer guidance in attributing economic value to selected soft benefits of green roofs.Since very few studies to date have focused directly on the economic valuation of

green roof soft benefits, we draw where necessary on studies related to other typesof green infrastructure. It is important to note that our intention here is to offermethodologies that can be easily employed by stakeholders with limitedinformation about the property concerned. In other words, our goal is to putforward heuristic methods that can be used with data that is usually readily at hand.Needless to say, this approach entails a trade-off between ease of use and the levelof detail and precision. Keeping this in mind, the results obtained with the proposedmethods should be applied prudently.


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2 Valuation Methodologies

The soft benefits of green roofs are not directly tradable and therefore do not havedirectly measurable monetary values. To determine their monetary value, non-market or indirect valuation techniques must be employed. Estimating the totaleconomic value of a non-market good or service entails calculating the sum of allvalues associated with that good or service. The two main categories of value areuse and non-use values. Use values can either be direct or indirect. Direct use valuerefers to the value that is derived from actual or planned use of a particularenvironmental service or good. Recreation and food production are two examples ofdirect use values. Indirect use value occurs when people benefit from anenvironmental amenity without consciously using it. Water filtration, climateregulation are examples of the indirect use values of environmental amenities. Non-

use value refers to the value that individuals place on an environmental amenitywithout having any planned use for it. An example of a non-use value is the intrinsicvalue that people attribute to an environmental amenity (like the boreal forest)simply for its existence. The methods used to estimate non-use values areconsiderably more complex and are beyond the scope of this report.

Non-market valuation techniques have been developed in order to estimate the netvalue that the public or individuals attribute to environmental amenities such asgreen infrastructure. Three general categories of nonmarket valuationmethodologies exist. The first category, revealedpreference methods (i.e., travelcost, hedonic pricing, market comparables, and cost avoidance) uses behaviours and

information observed in markets to estimate non-market values. The secondcategory, stated preference methods, which includes the contingent valuationtechnique, attributes economic value by asking people their willingness to pay for aservice or willingness to accept compensation to voluntarily forgo a service. Thethird category is avoided cost analysis, which can be used to determine the value ofgreen infrastructure by quantifying the costs that would be incurred if the servicesprovided by the infrastructure were not available or had to be provided by buildingconventional infrastructure.

Table 1 presents a summary of non-market valuation methods explored in thisreport and the strengths and limitations of each. The methodologies and specific

valuation frameworks applicable to green infrastructure benefit valuation areoutlined in greater detail below.


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Table 1 - Non-market valuation techniques

Methodology DescriptionValue

capturedStrengths Limitations

Hedonic pricing

Assumes that the

environmental characteristics

(e.g., a pleasant view or the

disamenity of a nearby landfillsite), as well as other property

features, are reflected in

property prices. The value of

the environmental component

can therefore be captured by

modeling the impact of all

possible influencing factors on

the price of the property.

Hedonic pricing can measure

direct and indirect use value.

Direct and

Indirect use

Based on market

data and prices

relatively important

figures.

Very data-intensive

approach to economicvaluation (e.g.:

identifying all relevant

attributes for a

particular good).

Choosing the

appropriate variables is

difficult.

Market

comparables

Uses data on the price of

similar goods or services that

are traded in the market as a

proxy for willingness-to-pay.

Direct and

indirect use

Market data readily

available and

robust

Limited to benefits for

which markets exist.

Contingent

Valuation

Typically administered through

a public survey. Consumer or

clients are asked how much

they would be willing to pay

for a good or service, or how

much they would be willing to

accept in compensation for its

loss.

Use and non-

use

Captures use and

non-use ecosystem

functions

Based on individual

responses, people tend

to under-value

amenities.

Avoided Cost

Analysis

Uses cost of replacing

ecosystem services with

conventional infrastructure, or

avoided health costs to

estimate value of ecosystem

services.

Direct and

indirect use

Costs can often be

estimated from

market prices

Avoided costs do not

necessarily reflect the

social value of an

ecosystem service.

Source: Adapted from DEFRA, 2007 p.37

2.1 Revealed Preference MethodologiesRevealed preference methodologies are relevant for estimating the monetarybenefit accrued to occupants and/or owners of a building as a result of the additionof a green roof. These methodologies rely on observed market behaviours - i.e., howmuch people actually pay for existing goods and services available on the market.

Prices of non-market goods are inferred by associating them with consumerspurchase decisions using a defined theoretical framework. Below, three revealedpreference methods are described: hedonic pricing, travel cost, and marketcomparables.

2.1.1 Hedonic Pricing

Hedonic pricing is a methodology that has been extensively used to estimate theeconomic value ascribed to various non-market environmental goods and services


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such as air and water quality, aesthetic views and proximity to green spaces orrecreational sites. It is most commonly used to evaluate the individual contributionof environmental amenities on real estate prices. The technique regards a good as aset of attributes and considers the total economic value of that good as the sum ofvalues of each attribute. First, a good or service must be decomposed into its

constituent attributes. Regression analysis is then used to estimate the individualcontribution of each attribute to the total value of the good. The hedonic pricingmodel is usually expressed using the following function (Hidano, 2002):

value ofa good = (value ofattribute 1) (quantityofattribute 1) +(value ofattribute 2) (quantityofattribute 2) + +(value ofattribute n) (quantityofattribute n)

Variations in real estate value are dependent on a large number of factors. Hedonicpricing models have estimated the variations based in the following attributes: the

square footage of a property, the age of the property, number of bedrooms, numberof bathrooms, number of units, number of storeys, distance from the centralbusiness district (CBD), transportation access and the neighbourhoods socio-economic characteristics.

Hedonic pricing may be used to estimate direct and indirect use values. Oneshortcoming of the hedonic pricing approach is that its a very data intensivemethodology. Identifying every relevant attribute that makes up the total value of agood can be a long and difficult process.

2.1.2 Market Comparables

The market comparables method examines the amount that is charged and paid forby consumers of a good or service traded in the market that is comparable to theone being assessed. When a good or service is provided in the private sector,charges collected by firms offer good proxies for peoples willingness to pay for asimilar good or service that is offered for free or below market price through thepublic sector. Private sector market comparables provide good estimates of thevalue of a non-market good given that they are based on the actual cost of provisionand consumer preferences and demand for this good. When no similar good orservice is provided by the private sector, values can be derived from chargescollected by public sector providers such as municipal, provincial or federal levels ofgovernments (e.g., park entrance fees). In most cases, these institutions will charge

well below market rates or actual willingness to pay for a good or service. For thisreason, the prices charged by public sector providers are usually well belowpeoples willingness to pay and should be considered as the absolute minimumvalue of a good or service.

2.2 Stated Preference MethodologiesStated preference methodologies attribute monetary value to environmental goods


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and services based on peoples stated preferences rather than their observedbehaviour. Surveys are used to collect information about how much an individual iswilling to pay for a particular environmental good or service. The technique can alsobe used for assessing order of preference for a set of goods.

A number of problems have been associated with stated preferences methods. Onecritique is that people are potentially unwilling or unable to express willingness topay truthfully or accurately - i.e., there can be a discrepancy between how muchpeople state they are willing to pay and how much they actually pay for a given goodor service, resulting in inaccurate estimates of that goods or services monetaryvalue. Nevertheless, this valuation method is useful in estimating the value of goodsand services that are not sold on the market. This can include goods and servicesthat are provided by the public sector for free or below cost. It can also includegoods and services that are not widely available and for which revealed preferencestherefore cannot be observed (Champ et al., 2003).

The most common stated preference methodology is contingent valuation. Surveysare used to ask people how much they are willing to pay for a particularenvironmental service or good. Alternately, the public can be asked how much theywould be willing to accept in compensation for the loss of an environmentalamenity. Contingent valuation is the economic valuation technique most commonlyemployed when revealed preferences techniques are not applicable.

Contingent valuation could be applied, for example, to a project to enhance afreshwater wetland, which would improve sport fishing opportunities. The directbeneficiaries are people who fish recreationally. Valuation would be used toestimate the maximum that anglers would pay for this improvement in fishing. Each

anglers expression of his or her maximum willingness to pay represents how muchthe angler is prepared to compensate the rest of society for the increased individualenjoyment gained from the improved recreational fishing. Maximum willingness topay is aggregated for all anglers who benefit to determine whether the benefits ofthe wetland project exceed the costs, which facilitates an assessment of whetherpublic funds should be spent on the project.

2.3 Avoided Cost MethodologiesIn circumstances where an ecological service is difficult to value by any of the abovemethods, analysts advocate using avoided cost methodologies. This approach can be

used to determine the value of green roofs and other green infrastructure byquantifying the costs that would be incurred if the services were to be provided withconventional infrastructure. For example, the presence of a wetland may reduce thecost of municipal water treatment for drinking water because the wetland systemfilters and removes pollutants. We can therefore use the cost of an alternativetreatment method, such as the building and operation of an industrial watertreatment plant, to represent the value of the wetlands natural water treatmentservice (De Groot, 1992).


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It is important to note that this method does not provide a direct estimate of thevalue of the ecological service to the public, but only the cost of replacing thatservice if it were lost. It is a valid approach if the human-made alternatives areequivalent in quantity and magnitude to the natural functions; the alternative is theleast-cost alternative method of performing the function; and individuals in

aggregate would be willing to incur these costs to obtain the services (DEFRA,2007).


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3 Valuation of Benefits

This section presents methodologies for valuating a variety of soft benefits thataccrue to green roofs. While our primary focus is on green roofs, we includeinformation related to other forms of green infrastructure if the information isreadily transferrable to green roofs. The purpose here is to provide readers withnon-technical methods for estimating the soft benefits associated with a green roofproject based on readily available information and without the need for undertakingmajor research.

The benefits that are included here are those for which we could find relativelystraightforward valuation methods that could be applied by non-specialists with

limited resources for data gathering. The proposed methods were gathered fromcurrent practices and the existing literature. The benefits covered are:

y property value increases

y marketing

y sound attenuation

y food production

y stormwater retention

y air quality

y GHG sequestration

For each benefit, we discuss the nature of the benefit, review existing practices andliterature that contributes to an understanding of the monetary value of the benefit,and offer a method that could be used by non-specialists to estimate the value ofthat benefit in a given context.

It is important to note that the methodologies offered here are heuristic in nature;they are rough estimations based on a number of assumptions that are reasonablein most cases but may not be applicable in specific contexts. The assumptions areclearly stated in the description of each methodology below. The user is asked to usetheir own best judgment as to whether the methods provided can be usefullyapplied or adapted to their own unique situation (e.g., length of growing season,

depth of growing medium, or mix of plant types). For most of the benefits includedin this report, values for a reasonable range of situations is provided for readers toconsider when evaluating the benefits of a specific green roof. The ranges providedare benchmarks only and of course do not cover all potential situations.

Although all soft benefits tend to be context-specific to some degree, some benefitsare simply too context-specific to include in an analysis of this type and are excludedfrom the following analysis. Examples of excluded soft benefits are improved


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aesthetics, crime reduction, increased biodiversity, and building a sense ofcommunity.

The different benefits covered in this section accrue to different stakeholders; somego to the owner(s) of the building on which the green roof is found (e.g., property

value increases), others go to the municipality (e.g., stormwater retention), whilesome go to the regional (e.g., air quality improvements) or planetary (e.g.,greenhouse gas mitigation) population. Benefits accrue either on a one-time basis(such as an increase in property value) or an annual basis (such as greenhouse gasmitigation).

It is important to note that the methods presented below are intended to calculatethe gross value of the benefits considered. The methods do not account for the costsinvolved in producing the benefits. In particular, we do not account for the extracosts involved in creating a green roof compared to a conventional roof. In the caseof benefits that consist of an increase in property value, we do not consider the

higher property taxes that could be applied as a result. In the case of foodproduction, we do not account for direct inputs such as the cost of materials andlabour.

All monetary values given below are in US dollars unless stated otherwise. Wherepossible and relevant, we have adjusted the values for inflation to show the value in2008 dollars.

3.1 Property value increaseGreen infrastructure investments have been shown to positively affect the propertyvalue of nearby real estate. In the case of green roofs, this benefit would accrue tothe owner or owners of a building with a green roof and, to a lesser degree, toowners of surrounding properties. As property taxes are in most cases proportionalto property value, a benefit in the form of increased property tax revenues canaccrue to municipalities. Miller (2001), Morancho (2003), Voicu & Been (2008),Edwards (2007) and Wachter (2004) have all used the hedonic pricing methodologyto measure the relationship between the selling price of a residence and its distancefrom an urban greenspace, park, community garden or wetland. Although it is a verydata intensive methodology, the hedonic pricing model is the most common methodused to measure the impact on property values from nearby green infrastructure.

Essentially, the hedonic pricing model estimates the impact of green infrastructureon real estate market value by comparing properties that differ with respect to theirdistance from an amenity such as a park, wetland, open space or community garden.The positive relationship between the relative value of a dwelling and its distancefrom green infrastructure elements is called the proximity principle (Edwards,2007). The proximity principal suggests that the value of parks and other greeninfrastructure is captured in the price of surrounding real estate. The value of theamenity is capitalized in the form of home prices and property taxes collected by


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local governments. Here, we present a few case studies that have estimated therelative impact of green infrastructure investments on property prices using thehedonic pricing model.

y Using data on over 3000 property sales between 1980 and 2003 in the

New Kensington area of Philadelphia, Wachter (2004) quantified theeffect that investing in green infrastructure would have on propertyvalues. Specifically, the author looked at the impact of convertingvacant lots into green spaces on surrounding home prices. A hedonicregression model was developed that integrated variables on salesand structural characteristics of homes (e.g., date of sale, number ofstoreys, home size, lot size, elements of location). The model includeddata on the real estates proximity to green infrastructure as well asits distance from disamenities such as vacant lots. Study resultssuggested that replacing unsightly vacant lots with grass landscapesand trees increased surrounding property values by up to 30 percent.

Houses sold within 50 feet from new tree plantings showed a 9percent increase in property value. In the sample neighbourhoodchosen for this study, property value increased by $12 million due tovacant lot conversion and $4 million due to tree plantings. Based onan effective tax rate of 2.64% accumulated over 20 years, the benefitsgained from lot improvements and new tree plantings wouldrepresent a respective property tax base increase of $6,336,000 and$2,112,000 for the local government (Steve Wise, personalcommunication).

y Also in Philadelphia, the Trust for Public Land (2008 a) used a

hedonic pricing model to estimate the effect of proximity to a park onproperty value. They calculated the total assessed 2007 value of allproperties within 500 feet of a park to $4,387,574,062 (or$13,776,982,555 when corrected for under assessment, calculated to314% around average parks). Assuming conservatively that parkscontribute on average 5% to the assessed value of properties, it wascalculated that the portion of total assessed property value attributedto proximity to parks was $219,378,703 (or $688,849,128 correctedfor under assessment). In terms of tax revenues, proximity to parkswas calculated to yield additional annual property tax revenues of$82.64 per $1,000 of assessed property value.

y Edwards (2007) conducted a similar study in the San Francisco regionby dividing homes into two categories; residences that were 500 feetor less of a park and homes located between 500 and 1000 feet of apark. Results from a hedonic pricing model showed that, all else beingequal, homes in the former category sold for an average of $125,838more than residences in the latter category. The author underlinesthat this is an underestimation of the true premium of urban parks in


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San Francisco because there is a wide range of other possibleeconomic benefits associated with urban parks such as healthbenefits, environmental benefits, and revenue generated from specialevents.

yAn analysis of about 30 studies exploring the relationship betweenreal estate value and proximity to parks confirmed the argument thatparks and open spaces contribute to higher proximate propertyvalues (Crompton, 2005). The reviewed studies show that variationsin size, usage and design of parkland and differences in residentialzones that surround them influence the magnitude of the parkproximity premium. In particular, certain studies, such as Miller(2001), have observed that lot size has a significant impact onmagnitude of the premium. In general, properties with small lots thatpresumably have limited private open space appreciate parks morethan properties on large lots with generous open space. Such

variations notwithstanding, Crompton proposes a 20 percent increasein the value of properties abutting or fronting a park area as a point ofdeparture that decision-makers may use to calculate property valueincreases attributed to urban green spaces.

y Voicu and Been (2008), using a hedonic price model, found that theimplementation of new community gardens had a significant impacton surrounding property values in New York City. They studied theeffect of property values at four different points in time with respectto the completion of the community garden: at the moment ofcompletion, one year, three years, and five years after completion. In

all cases, the effect was calculated for three ranges of distance fromthe community garden: abutting the garden, up to 500 feet from thegarden, and up to 1,000 feet from the garden (see results in Table 2below). The authors observed that value of properties nearcommunity gardens, especially those abutting them, increased overtime after implementation. The authors also found that the effect wassignificantly stronger in low-income areas than in high-income areas.

Table 2 - Impacts ofa typical community garden on residential property valuesDistance to garden site (meters)

0 150 300

Time since completion %* $** % $ % $

Right after completion 3.4 3,207 2.5 2,191 1.5 1,355

1 year 4.1 3,607 2.8 2,450 1.5 1,293

3 years 5.6 4,971 3.6 3,172 1.6 1,373

5 years 7.4 6,551 4.7 4,111 1.9 1,670

*percent change in price within ring versus outside the ring

**change in price applying the percent change in price to the median per unit sale price of propertiessold within the ring


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Source: Voicu and Been, 2008

The hedonic pricing model would be an ideal technique to calculate green roofseffect on property value. Using this method, the value of buildings with green roofscould be compared to that of buildings with conventional roofs while controlling forother variables that are known to have an effect on property value. In the hedonicprice model, green roofs could be represented as a single Boolean value, denotingwhether the building has a green roof or not. This would be the least data intensiveapproach but would also provide the least accurate estimate, failing to account forqualitative differences between green roofs. A more accurate approach would be touse a continuous variable, denoting the percentage of the given roof that is green.Additional Boolean variables could be added to represent qualitative differencesbetween green roofs (e.g., extensive versus intensive, accessible versus inaccessible,etc.).

At present, however, there are no hedonic studies that have measured the potentialof green roofs in increasing the selling price of a condominium or other residentialbuilding. In the absence of hedonic pricing studies looking specifically at the effect ofgreen roofs on property values, we must make an estimate using studies performedon other types of green infrastructure. The selection of the appropriate type ofgreen infrastructure for this purpose would depend on the features of the green roofbeing assessed, i.e., whether the roof is accessible, whether food is grown on it, andwhether it is visible from other locations.

An accessible green roof could be used in two broad ways: as a recreational space oras a food production space. In the former case, it would seem that the bestcomparable would be at-grade public parks; in the latter case, the best comparablewould be at-grade community gardens. The key difference between rooftop greeninfrastructure and at-grade green infrastructure is that the former are likely to beaccessible only to the occupants or users of the building with the rooftop facilitywhereas the latter are likely to be accessible to the community at large. Thus, thebenefits of rooftop infrastructure accrue mostly, if not exclusively, to the propertieson which it is located; the benefits, if any, accruing to neighbouring properties arelikely to be limited.

In the case of a green roof that is visible from surrounding buildings, however,benefits may accrue to neighbouring properties. In this case, an appropriatecomparable would be the value of having a view onto an at-grade park or woodlot.Accessibility to the rooftop would not be a significant consideration in this case.

3.1.1 View onto aGreen Roof

Assuming that having a view onto a green roof has a similar effect to new treeplantings, the value of the benefit accrued to owners of properties is 9% of the valueof the portion of a building that affords a direct view onto a green roof. This isbased on Wachters (2004) finding that tree planting along a street in front of aproperty increases the property's value bys up to 9%. Where neighbours of the


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green rooftop are concerned, we assume that greening a rooftop is equivalent totree planting at-grade . For them, the greening of the rooftop has much the sameeffect as tree planting it adds greenery but does not change the amount ofrecreational green space to which they have access. We do not attribute anyincreased value to a green roof without trees.

Whole building gain in property value

For the purpose of estimating the value of the benefit for a whole building, weassume that only half the neighbouring storeys above the green roof are oriented soas to afford a view onto it. The increase in property value that accrues to a buildingwith a view onto a green roof can therefore be estimated using the followingformula:

!0.091

2hvh

hv

vv

!0.045h

vh

hv

vv

Where:


y vv= value of neighbouring property with a view onto the green roof($)

yh = height of the green roof host building (storeys)

y hv= height of the building with a view onto the green roof (storeys)

Single unit gain in property value

For the purpose of estimating the value of the benefit for a single unit in a buildingthat has a direct view onto a green roof, we propose using the following formula:

!0.09vv

3.1.2 Recreational Rooftop GardenA rooftop garden that is accessible to building dwellers will offer recreationalbenefits that may be reflected in the value placed on the building. To estimate thisvalue, we turn to studies that have assessed the impact on housing values inlocations abutting public parks. Using the hedonic method, Crompton (2005) hassuggested that homes adjacent to public parks have about a 20% higher propertyvalues than similar homes distant from parks.. Given that an abutting park offers


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both recreational and view benefits, we deduct the view benefit (9% of propertyvalue) calculated above to arrive at a recreational benefit of 11%.

We propose the increase in property value yielded by a recreational rooftop gardenbe estimated using the following formula:

b ! 0.11 v

Where:


y v= value of the green roof host property ($)

3.1.3 Productive Rooftop Garden

Assuming that having a productive rooftop garden is tantamount to abutting an at-

grade community garden, we propose that the value of the long-term benefitaccrued to the owner of the property be estimated at 7% of the value of theproperty. This is based on Voicu and Beens (2008) finding that, on average,properties abutting typical community gardens increased in value by 7.4% by fiveyears after the construction of the garden. As we do not know from these findingswhat the effect is in the longer term, we assume the value remains constant at thefive-year level.

We propose the increase in property value yielded by a private, productive rooftopgarden be estimated using the following formula:

b!

0.07

vWhere:


y v= value of green roof host property ($)

If the productive rooftop garden is open to non-occupants of the building then it ismore likely that benefits will accrue to owners of neighbouring properties. In thiscase, we assume that the rooftop garden behaves exactly like an at-gradecommunity garden. In the long-term, the value of the benefit accrued to

neighbouring property owners is 7% for owners in the building with the rooftopcommunity garden and the immediate vicinity of the host building, 5% for those upto 500 feet away, and 2% for those up to 1,000 feet away. Again, the values arebased on Voicu and Been (2008) and assumed to hold at their five-year level.

We propose the increase in property value accrued to a neighbouring property of apublicly accessible productive rooftop garden be estimated using the followingformula:


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b! Fv

Where:



y d= distance from green roof host property (meters)

y F= distance factor (function ofd)

Let:

y F= 0.07 when 0 d 5 m

y F= 0.05 when 5 m < d 150 m

y F= 0.02 when 150 m < d 300 m

y F= 0 when d> 300 m

3.1.4 Area-Wide Benefit

The above stated formulas are intended for calculating the value of proximitybenefits that accrue to individual properties. Municipal decision makers may bemore interested in the total, area-wide increase in property values resulting from agreen roof project. In this case, it is necessary to sum the values of the benefitaccruing to the host property with those accruing to neighbouring properties.

btotal ! bn

Where:

y btotal= total area-wide property value benefit ($)

y bn = property value benefit of an individual property ($)

The property value benefit for each individual property (bn) must be calculatedusing the appropriate formula for the given case i.e., recreational or productive

rooftop garden, nearby property, or property with a view. In cases where more thanone formula applies, both values should be calculated but only the larger of the twoshould be used in the summation.3 For example, if a building affords views onto adirectly adjacent productive rooftop garden, both the productive rooftop garden

3 It is unknown whether these two benefits are additive. In such cases, it is common practice to use the larger ofthe two benefits.


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formula (3.1.3) and the view onto a green roof formula (Error! Reference sourcenot found.) apply. The benefit attributed to proximity to a productive garden willclearly be larger than that attributed to having a view onto it and should thereforebe used in the area wide benefit summation.

3.2 MarketingGreen infrastructure in general and green roofs in particular not only increase themonetary value of a property due to proximity benefits, but may also improve themarketability of real estate. The mass media and the publics interest inenvironmentally friendly products and services is increasing rapidly in Canada.Green roofs and other green infrastructure on or near a building can therefore beconsidered as a marketing amenity that increases a developments exposure andenhances the absorption rate of its units.

Applying the comparable costs methodology, one way of estimating the marketing

benefits of green infrastructure would be to assess the value of the publicity gainedas a direct consequence of green infrastructure investments. The two Canadian casestudies below illustrate green infrastructure and green roofs marketing potential.

y Dockside Green, a 15-acre mixeduse community under developmentin Victoria, British Columbia. The development has focused onmaximizing green space and green infrastructure amenities by takingsteps such as locating 95 percent of all parking spaces underground,reducing the buildings foot print, installing green roofs on residentialand commercial buildings, planting over 1,000 trees on the site,converting an adjacent piece of municipal land into a park and

reducing or eliminating the need for streets on the property. Gardenplots have been installed on the roofs of residential buildings and theconnectivity of at-grade green space has ensured its accessibility toDockside Green residents as well as citizens living outside thecommunity. Dockside green is also integrating green wall elements inthe development (City of Victoria, 2005). The project has garneredextensive amounts of media coverage for its green amenities. Since2005, Dockside Green has benefited from media coverage worthabout $5 million. A developer representative reports that they havehad greater sales compared to other real estate presentation centersin the area. The first phase of the development is already occupied

and 80 percent of units have been sold for the second phase, which isdue to open in February 2009 (Martine Desbois, personalcommunication).

y Urbanspace is a property group that owns and operates two heritagebuildings in downtown Toronto, which have been retrofitted withgreen roofs. Robertson Building tenants have access to a 4,000 squarefeet rooftop garden, which covers approximately half of at the total


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roof area. The 401 Richmond building has a 2,600 square feetextensive green roof and a 6,500 square feet deck that includes acontainer garden. This rooftop garden is accessible to both buildingtenants and the public at large. The roofs were created with theintention of providing common space where people can socialize and

relax while improving the general livability of the buildings.Both of the buildings green roofs have garnered public attentionthrough media exposure. The building owners have used the mediaattention the gardens have attracted as a way to market the buildingsas a whole. Although Urbanspace has never invested in advertizingcampaigns, vacancies in both buildings are rare to non-existent andwaiting lists are extensive. Many of the properties prospectivetenants have heard of the buildings because of the public attentionthey have gained due to their respective green roofs. Tenants havealso expressed that the accessible green roofs are amenities that theyvalue and improves the livability of the buildings.

The marketing benefits of green roofs will depend on a number of factors that areunknown in advance or difficult to quantify, such as the current interest of localmedia in green infrastructure and green buildings. Nonetheless, as the case studiessuggest, the marketing benefits can be estimated based on the value of the publicityreceived due to the presence of the green roof in the project. The value of the freepublicity received can be estimated by comparison to the cost of advertizing in threemedia: radio, television, and print. The cost for each of the three media is brokendown into the production cost plus the cost of running the ad. The former can beassumed to be constant as it is a onetime cost. The latter is the cost of having the adaired on radio and television and printed in newspapers.

The value of free publicity can in principle be estimated according to the followingformula:

b!(pradiorradiotradio)(ptvrtvttv)(ppaperrpaper l)

Where:


y pradio = radio ad production cost ($)

y rradio = radio ad running cost (airtime) ($/30s spot)

y tradio = total radio equivalent airtime (30s spots)*

y ptv= tv ad production cost ($)

y rtv= tv ad running cost (airtime) ($/30s spot)*


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y ttv= total tv equivalent airtime (30s spots)

Soft Benefits Aug 16-10

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Transcript of Soft Benefits Aug 16-10