There has recently been a growing interest in incorporating nature into design and building, known in the jargon as “biophilic design”. It produces buildings which feel good and in which people feel better. And consequently perform better. In the workplace, for instance, it goes hand in hand with lower sickness absence rates and higher productivity. That’s fine for organisations. But what is the actual benefit in terms of euros? Developing a hard “business case” for green and healthy environments is harder than it might at first seem. Sustainability consultancy Terrapin Bright Green researched this for the United States and wrote a comprehensive report that could also prove a source of inspiration for the situation in the Netherlands.
In recent years, much research has been conducted into the welfare effects of biophilic design. Much less is known, however, about what those effects actually mean in monetary terms, because it is apparently difficult to define appropriate quantifiable indicators. While ever more organisations apply the principles of biophilic design with the aim of branding themselves as a sustainable company or creating a good workplace for their employees, few realise that there could also be a financial gain. A missed opportunity, according to Terrapin Bright Green. Much is to be gained, literally, especially in terms of productivity. Indeed, some 90% of all costs are staff-related expenses. Costs relating to sickness absenteeism or “presenteeism” amount to approx. 4%. As a comparison: energy costs are around 0.8%. The smartest investment economically, therefore, is in the human factor; small improvements in productivity or slight reductions in sickness absenteeism generate much more financial gain than energy savings, for example.
Workplace: sickness absenteeism and presenteeism
Many people spend more than 40 hours a week in their place of work. How productive those hours are is largely determined by how people feel in that workplace. An unpleasant or unhealthy workplace can lead to a lack of focus, a negative mood, health problems and sickness absenteeism. On average, the average sickness absenteeism at work in the US is more than 62 hours per employee per year, which equates to an average cost item of over 2,000 dollars per employee. Sickness absenteeism in the public sector is even higher, averaging 83 hours a year. The annual losses for larger organisations run into millions. Research conducted at the University of Oregon revealed that 10% of all sickness absenteeism is attributable to workplaces that have no direct or indirect relationship with nature. Staff with a window overlooking greenery took far less sick leave than employees without a green view. Other research revealed that a view of living green aided faster recovery from fatigue. An example: at ING head office in Amsterdam, designed with plenty of natural daylight, organic architecture, water, green and art (and completed in 1987), sickness absence rates fell by 15%.
Besides absenteeism, an unpleasant or unhealthy working environment can also lead to presenteeism, where employees are present but lethargic and not focused. They are consequently less productive. The resulting cost item for larger organisations can amount to 100,000 dollars a year. The strategic positioning of the workplaces at a call centre in Sacramento proved to have amazing results. Employees with a large window overlooking greenery dealt with telephone calls 6-7% faster than their colleagues without a view. The initial outlay of the window and the slightly larger floor space requirement was recovered within four months. The long-term productivity increased, as did the profits. For a company with 1000 employees, a 6% rise in productivity could generate a profit of several million a year.
Healthy hospitals, healthy profit
Various studies have shown that patients recover more quickly in rooms with plenty of natural daylight and views of greenery. Shorter hospitalisation means lower costs for both hospitals and health insurers. Giving patients a room with a view of greenery could generate savings of 93 million dollars. Research in 2005 revealed that gall bladder surgery patients who stayed in a room with a lot of daylight took approx. 20% less medication than patients in a darker room. Such differences are relatively easily quantifiable in terms of money, based on the costs of the medication concerned. Healing hospital gardens reduce stress levels among patients as well as doctors and nursing staff. This has a positive effect both on the speed of patient recovery, which may in turn be related to the use of medication and length of hospitalisation, and on staff performance. The positive effect this would have on sickness absenteeism is rarely calculated, despite the significant savings this could generate per hospital, even when for the costs of constructing and maintaining the gardens are taken into account.
Stores sell more
The average American spends around 13,000 dollars in retail stores. Research has shown that people spend more money in shopping centres and retail environments that are light and green. In a consumer survey, participants who were shown pictures of a green shopping environment proved to consider food and clothing prices that were 20%-25% above normal, as acceptable. A survey among 73 stores in California revealed that stores which had skylights installed saw their sales figures increase by 40%. Daylight apparently boosts buying. In addition to which the stores also saved on energy costs. Calculations extrapolating the results to all stores throughout California revealed a potential annual return of over 47.5 million dollars and savings of 2.5 million on energy costs.
Better learning performance
To all intents and purposes, the same principles apply for schools as for any other building: in a pleasant environment, learning performance is higher, absenteeism and drop-out rates are lower. Children in classrooms with a lot of daylight and views of greenery achieved 7-18% better test results and learned 20-26% faster. Data from the NCSET (the US National Center on Secondary Education and Transition) revealed that pupils who drop out of school earn around 9,000 dollars less a year, and that if all the drop-outs of 2007 had actually finished school, this would have benefited the US national economy by an additional 329 billion dollars throughout their further career.
Well-being, house values and neighbourhood crime
Green, nice neighbourhoods are value for money. People are prepared to pay 58% more for a house overlooking water. In Cleveland, houses in neighbourhoods that were well laid out with lots of big trees proved to generate 7% higher rental income and achieve 4-5% higher sale prices. In Washington, houses next to the park are worth 5% more. Properties on the lake in Puget Sound (Washington) are worth 128% more than houses in other neighbourhoods. Sacramento conducted a survey among users of the city parks and reached the conclusion that the accessibility of the parks had generated an annual saving on medical costs of 19.8 million dollars. Parks also appear to boost social cohesion. While it is difficult to quantify “social capital” in monetary terms, in Philadelphia donations to and the value of the hours’ voluntary work carried out in the parks amounted to 8.6 million dollars. In recent years Singapore has applied a consistent greening policy, convinced that a green city will attract more investors and thus boost economic growth. Green neighbourhoods also prove to have significantly less crime. In Chicago, for instance, 52% fewer infringements and crimes were committed in properties situated in green environments; 7-8% could be linked to the better access to nature. Estimates based on these figures show a potential annual saving on crime prevention of over 162 million dollars. Access to greenery, e.g. city parks, also contributes to well-being and health. The medical costs related to obesity, accounting for some 10% of annual medical costs in the US, could be reduced substantially.
An example: Biophilic New York
If New York were to be redeveloped applying biophilic design principles, with large and small greenery in public spaces, lots of daylight and green in buildings, this could result in:
- daylight prevents pupil absenteeism: savings including 27.9 million dollars in terms of parents’ leave.
- green and healthy working environments improve productivity: benefit of 470 million.
- a pleasant, green urban environment cuts crime rates: savings of 1.7 billion on detention costs.
Business case for the Netherlands?
Terrapin’s first steps towards quantifying the economic effects of biophilic design demonstrates that in the US, organisations could save up to 2,000 dollars per employee by investing relatively small amounts in the working environment, and 93 million dollars a year could be saved on healthcare by ensuring patients have a view of greenery. Green and naturally lit retail gain, with increases in returns of 12% and 40% respectively. These are interesting figures.
No coordinated statistics are available on the financial gains to be made through the biophilic design of buildings and environments in the Netherlands. In the context of international research into The Economics of Ecosystems and Biodiversity (TEEB) initiated by the UN, wider research is being conducted into the potential effect for Dutch towns and cities. Several years ago first steps were also taken by the KPMG to determine the social and economic values of urban green on the basis of two case studies in the Bos en Lommer district of Amsterdam. Creating more green spaces in urban areas would appear to generate potential savings of 65 million euros on the public health budget. More green could also reduce absenteeism resulting in potential savings of 328 million euros.
Besides the lack of coordinated for statistics biophilic design in general, there are also no coordinated financial statistics available that relate specifically to the social returns on indoor greenery. That is a shame because many people spend the majority of their time indoors and green would benefit them in so many ways. It could be very interesting for interior landscapers to seriously consider the possibilities of quantifying the social returns on green in buildings, deducting the investment for construction and maintenance. Would it not be easier to approach financial managers of large organisations and institutions with such a business case in hand? Has the time not come for a Dutch Social Cost Benefit Analysis of indoor green?
If you’d like to know more about the social and economic benefits of biophilic design, the calculations Tarrapin applied for this study, and the underlying research read the report and other case studies at www.terrapinbrightgreen.com