Wealth Creation (Part 2)

Wealth is the stock of assets that can contribute to people’s well-being, in the aggregate and in distributed wealth.  In our last blog posting, we explored the creation of wealth through investing in physical real estate, as well as opportunities to enhance natural capital.   Today, we explore wealth creation directly related to people  - human, collective intellectual, political and social capital.   

Individual human capital refers to the increase in education, skills, and health to help people help themselves.  I’ve always enjoyed the approach taken by Interfaith Power & Light, whose efforts to “green” their congregations help train energy leaders , and then leverage this by helping the less able.  Other groups, such as the Bike Kitchen, not only helps distribute bicycles but also the knowledge of bike mechanics.  The point is that skills and knowledge can originate from many sources,  in addition to formal education.  The greater the depth and breadth of skills in your community, the stronger the self-reliance, and the faster it can move up the wealth ladder.  Both of the previous examples also demonstrate the benefit of knowledge gained within a community, which becomes collective “institutional knowledge “ that outlasts any one individual.   How does this affect the builder or developer? It could be the repurposing of a building that might otherwise be torn down, or connecting with a civic group to offer training or share knowledge in weatherization, or gardening.  Or the information might flow the other way, for example, finding old craftsmen who can pass on their tacit knowledge and craft skills.

Cultural capital refers to people’s relationship to society and their role in it.  It is “who we are,” as a collective entity.  The built environment can support the growth of this capital.  For example, in an area with a heritage of blue-grass music , the architecture needs gathering spots – front porches, small town parks with benches in a circle, some shelter from the rain – for the jam sessions and impromptu lessons.  I’ve seen this first hand in Floyd, VA, which has gained a reputation that draws fellow music enthusiasts.  It can also be seen in the restoration of old-time theaters, or the preservation of the old schools with auditoriums available for community use.  I believe this might also be expressed by encouraging the awareness and pride in local vernacular architecture, helping people establish a sense of place, a uniqueness.  Strip malls strip away cultural heritage.   Even within the house design itself, the cultural heritage can inform space planning.  Does the local culture enjoy large family gatherings? They may need a floorplan that has a larger combined dining/ living area, but could decrease the master bedroom size.  Do they enjoy communal activities like canning? Back in Utah, houses used to have “canning” kitchens in the basements, where it would be cooler and dedicated to the activity.  

Political capital.  As a community becomes a more cohesive unit, it also gains the ability to influence the distribution of resources within a social unit.  Political capital is not just the large voice heard in rallies in D.C., but the many other voices advocating for local and regional change.  Possibly the best opportunity to support this political capital in the construction industry is the adoption of a transparent process for a building design, or a development.  Reaching out to host an open house or a design charrette may add time initially during design, but can gain invaluable community support and even generate ideas that help tie the project into the fabric of the community.

The key premise of creating wealth is that it is not administered with a heavy hand, but rather grows organically from the existing needs, interests, and organizations.  In order for any effort to be sustainable, the locals must have “ownership” of the project - physically, fiscally, and emotionally.   Local leadership will command the most respect and will be able to cast the widest net, ensuring that no group be left behind.  They will know better what is needed than could any outsider, and can generally arrange to get things done faster.  Oftentimes, all they need is that first helping hand, through a micro-loan or connections to other types of resources. 

It is a lot to think about when building a new neighborhood, or fixing one up.  But the days of just quickly putting together a house and then walking away crashed in ’08.  Other industries are already realizing that there is a need to rethink the value proposition, recognize broader societal and environmental impacts, and partner collaboratively with their value chains.  Even the code has increased the scope beyond the minimum requirement of life-safety. As of the 2003, it now also safeguards health and general welfare through affordability, stability, light and ventilation, and energy conservation.   Now, in 2013, isn’t it time we started to invest some of our time and talent into creating wealth for our well-being, for our current enjoyment and the promise of future dividends?

Creating Wealth : Buildings and living in harmony

Last night, in my dreams, I visited a neighborhood with renovated homes for affordable housing.  They were decorated in anticipation of a big press event - perfectly poised in their cleaned up landscape, framed by recently laid turf.  Yet something was tugging at my subconscious level,  pointing me to the missing obvious.   What was it? There was a sense of separation of the act of living and the object of the building and landscape.  A “keep of the grass” element.  These thoughts were no doubt triggered by my recent readings about “Wealth Creation”  - through the object (physical, financial); the environment (natural capital) and from people (human, intellectual, political and social capital).  

Physical capital - Most discussions in the construction industry are object based. So, starting from the point of current knowledge, we know that these buildings were designed to shelter people.  That is the first minimum requirement of the code, to provide “life-safety. While the sheer existence of the building creates physical capital, shelter is just the bottom rung of Maslow’s hierarchy. How well can the spaces be adapted to specific homeowner uses? Can the house flex with family sizes?  Does it help blend indoor with outdoor space? What about providing for human activies beyond the "being sheltered?"

Financial wealth creation – Real estate wealth is created through investment in tangible assets that increase in value over time.  This investment outlay is a function of first construction costs, interest rates and time.  However, another chunk of change is spent monthly on utility bills and repairs - none of which contributes to financial wealth creation.  A colleague relayed to me the story of an older couple, who had chosen to forego the brick siding on their original home construction in 1960, in order to save $500. Over the last 50 years, this “savings”  resulted in expenses of over  $10,000 dollars in repainting and replacing the siding.  The $500 would have been wealth creation, while the repairs was money thrown to the wind.   Are the materials durable? Is the mechanical equipment easily accessed for repairs or upgrades?  Will the net value of this investment grow over time? 

Indoor waterscreen - "scrubbing" air, white noise, decorative

Natural capital -  Sustainability has been interpreted as a strategy of reducing harm, but there is an opportunity  through regenerative design to improve soil, air, and water.  For example, many states will allow graywater for garden irrigation, or rainwater capture for retention and regeneration of ground water.   Urban developments has traditionally capped and buried streams into culverts or into concrete canals. This lack of riparian zone deprives wildlife and removes the natural  overflow capacity for extreme water events.   What about waste food composting, and soil renovation?   A great job for a budding young entrepreneur would be to develop a small vermiculture composting farm for the neighborhood food scraps and yard waste.  This could also include the composting of the fall leaves, saving the city the cost of removal, and providing soil amendments for the neighborhood gardens.  For air cleansing - think of waterscreen scrubbers,  dense foliage landscaping, windbreaks.  Is the landscape just a backdrop, or an extension of living?  Is there a connection with the food stream?  Does it provide space for recreation, reading a book, playing in the dirt?  Is it a closed loop cycle, or is purchased compost brought in, only to have compostable materials thrown into the garbage?

The third major area of wealth creation is perhaps less explored relative to construction and neighborhood development, but almost more important for immediate improvement to the well being of people – their value as human capital, cultural/ social and political.    (to be continued on Friday)

 

Meet MAX – the home-built 100 mpg diesel car

MAX

I first met MAX in 2009, perusing through my Mother Earth News magazine.  MAX  was developed in response to a competition by Progressive Insurance Automotive to create cars capable of 100 miles per gallon.   While the competition was to generating prototypes for mass-production, Mack McCornack took the 100 mpg challenge and added the goal of affordability –$10,000 for a DIY car.  The original MAX was based on a Kubota diesel engine, and could reliably deliver 70 mpg.   With a bit of additional body reshaping into a sleek Lotus shape, MAX hit a 100 mpg city driving and up to 127 open-road mpg.  MAX has logged in over 100,000 miles on the original engine.   McCornack figured that if he could build this car with off-the shelf technology, major auto makers should be able to do even better.  Indeed, the original MAX has inspired other MAXES, and MAXines  ( gasoline engine version).  But the most important role of such pioneers is pushing past limiting mindsets and doubting Thomases.   100 miles per gallon – who would have even dreamed this to be possible even a few years ago? 

So it is great that several cars now claim to have over 100 mpg combined miles per gallon equivalents - but there are a few caveats to this news.  These are all electric vehicles, and thus benefit from the conversion factor set out by the EPA for equivalent “fuel” costs of electricity.  This is the “black box” number.   Aside from the immediate pocketbook concerns, there is an underlying concern with fuel consumption and the related reduction in C02 output.  So there is no way to average electric power, since regional sources will greatly affect this C02 count – from hydroelectric to coal, for example.   There is also an issue of the batteries, which not only are costly, but represent related CO2 costs in production.    I’m not against electric cars, but would like to see true comparisons – for example, life cycle costs for the vehicle over 100,000 miles.

The other factor is a problem of mathematical representation.  In the US, we present miles per gallon (distance per fuel quantity) – whereas in Europe, the variables are reversed and are presented as liters per 1,000 kilometers (i.e. fuel per a set distance). Why does this matter?   Because the gallons savings are a diminishing curve to the increase in miles per gallon.  For example, say you have a 20 mpg car, which takes 50 gallons per 1,000 miles and you want to upgrade.  Increasing mpg by 10 to 30 mpg car brings you down to 33 gallons – a 34% improvement. Another 10 to 40 mpg is 25 gallons, but only a 24% improvement, and another 10 to 20 gallons, a 20% improvement.  It is a diminishing return.   Of course, all  reductions in fuel consumption are good, but this type of accounting is increasing less relevant as we get into higher fuel efficiency vehicles.

Instead, a more transparent metric is the net quantity of fuel per a stated distance of miles.  In the previous example, the choice would be a 33, 25, or 20.  This is much more straightforward and easier to understand the relative improvement in fuel consumption.  The chart of diminishing return also makes it clear that the “Cash for Clunkers” program was a very effective way of reducing CO2 output related to vehicles miles.  Even if this program moved people from 10 mpg to 30 mpg, it saved 2/3 of the fuel costs for that vehicle, or 65 gallons per 1000 miles.   It is a better measure of what we really are concerned with right now – which is fossil fuel related CO2 output.  

So MAX was able to cover 1000 miles with 10 gallons of fuel.  McCornack chose to use a diesel engine, both for the fuel efficiency and the versatility of fuel types, including biodiesel from fast-food cooking oil. And this is the real gem.  It changes the economic dynamics of small scale biofuel production. The average miles driven by a car in the US is 15,000 (Federal standard) – of 150 gallons, or 10 – 15 gallons per month.  Hmm… there is this Chinese place down the street that uses Soy Oil that they throw away every few days…..  

ICFs - Standing up to Sandy

There is a tendency in news media, this blog included, to promote the ‘new’ and innovative in deference to the tried and true.  And I will admit to succumbing to the ‘grass is greener’ syndrome and look across the oceans for better technologies.   But sometimes the best solutions are the ones right here in North America, materials that have proven time and time again that they can withstood the rigourous tests that Mother Nature throws at us.  This particular solution is Insulated Concrete Forms – ICFs.


Video from inside ICF house during Sandy

In the ICF world, we tended to be storm chasers, sorting through the aftermath  - looking for the house that was still standing.  There are dozens of these examples – the solitary house in a fire ravaged neighborhood in California, one lone survivor after the Katrina tidal wave scoured out the town, houses surviving tornado paths in Kansas, and now  - the Sandy survivor.   This latest story is of an ICF house in Union Beach, New Jersey, and the story line is typical:  Owner had to pushthrough obstacles of the current regulatory and builder infrastructure to build with ICFs and now has the only house left standing on the lot.  If you want to see something wild – watch the video taken from inside the house as the waves of the hurricane pound the side of the house.  

Logix ICF

A decade ago, the potential of a severe storm was still perceived to be relatively limited, and thus not a convincing argument for building an ‘alternative’ structure.   But that has changed.   Just how many storms, fires, hurricanes, tornados, deep freezes, heat waves, earthquakes, and volcano eruptions will it take to rattle people into action?  How many survival stories does it take to be convincing. Many of the obstacles are already gone – ICFs are approved within the ICC and Canadian Code, and there is a growing number of experienced builders.  Manufacturers have established QC practices, and distribution is fairly comprehensive in North America.  Indeed, some communities and market sectors have made the mental shift to ICF construction, such as Greensburg, KS – whose post-tornado rebuilding plan lays out more stringent building requirements that favors ICFs.   Or market sectors like school construction in Kentucky, where ICFs have become a preferred building material, resulting in a cadre of experienced builders available to work on other projects. 

The survivor stories can provide not only motive, but also lessons for best practices.   For example, the Achilles heel on the Katrina house was the wood framing about the patio door.  It just couldn’t withstand the force of the tidal surge, and this breach was the access point to the interior flooding. The lesson learned – continuous protection is better.  Or the house in Kansas that withstood a Force 4 hurricane, except for the roof, which had only code-minimum clips.  What nominal cost it would have been to have strapped down the roof trusses?   

While there are many options for structural building materials, in my book, there is still none that provides the same combination of functions as an ICF:   strength, durability, sound-proofing, fire/water/insect resistance, impervious to mold/mildew.  And – until such time that the material proves its mettle against disaster, it pays dividends in the form of energy savings.  What better insurance policy is there?    We can’t predict the future, but we can protect ourselves as best we can.  My vote is for ICFs - home-grown technology, time-tested, and reliable.

US/ German working together on Solar

The shift from fossil fuels to renewable energy sources is a challenging goal on several levels.  There are issues of grid infrastructure and management, hard costs of manufacturing and the politics of the distribution systems.   I won’t venture to offer a mega-analytical perspective on this complex issue, but will like to share some information on two projects of US and German collaboration.

Solar Installers - help with Survey 

While the manufacturing of PV panels is still predominantly based in China and Taiwan, Germany is the undisputed world leader in solar panel installation. Spurred by a strong commitment to goal of 100% renewable energy sourcing by 2050, Germany’s installed capacity has soared in the past 6 years to reach 32.3 gigawatts (GW) at year end 2012, and is expected to reach 48 GW by 2020.  Unquestionably, there is much that can be learned, on several fronts.

Rocky Mountain Institute (RMI) and Georgia Tech Research (GTRI) have set out to explore the difference soft costs. These costs, including customer acquisition, install labor, and permitting /connection costs now account for more than 60% of the price of the US rooftop PV panel. In Germany, these costs are 75% less. One might imagine that the labor costs in Germany are comparable, so the goal is to identify the key differences in the installation, and develop best practices. Solar rooftop installers are encourages to participate in the survey , by clicking on the link on Rocky Mountain Institute site.

Rocky Mountain Institute

 

Another initiative is the Transatlantic Climate Bridge program, which is aimed at connecting governing bodies – at a local, state and federal level – to support platforms and partnerships that help Americans and Germans exchange know-how and foster joint solutions.  How well does this work?   Take the example of Curt Bramble, a representative in the Utah State Senate, who has been very vocal  about environmentalists, referring to the acronym of the environmental group, Healthy Environmental Alliance of Utah (HEAL), as really meaning “Help Educate Anal Environmentalists.”  Sen. Bramble was sponsored on a Transatlantic Climate Bridge program by the ALEC group, who, ironically, is a very pro-business organization funded by the oil industry.    Mr. Bramble was impressed by his tour of solar and wind installations, and surprised at the “willingness of the public to accept the inconveniences of moving to alternative energy because the goal of clean energy is so important.”  He recognized that the biggest challenge in Utah was achieving the same cultural acceptance that helped drive innovation in Germany (Rolly, SLTribune, Feb.2, Green community may have a convert).   It is interesting that Mr. Bramble perceived solar as an inconvenience, and clearly represents the group who “is still not convinced about global warming,” but the visit may help him to start considering options for a low carbon society.

Switching to renewable energy is not going to be easy, and it may well end up that other technologies become more dominant that PV.  But the road has to move away from CO2 emitting fuel. Working together with other countries can help leverage knowledge and move quicker down that path.

 

Innovations in Building Materials: Veggie Burger or Veggie Chips

There are considerable advantages to codes and product standards. A consistency of materials in manufacturing allows the product performance to be tested and certified for predictability.  It means we can standardize engineering standards and improve the life-safety of our buildings. All of this is good.


CalStar Brick

 On the other hand, always adhering to the best of performance standardization has some drawbacks.  It can put a severe damper on innovation.  Material testing is expensive, making it hard for start-ups and dis-incentivizing material changes in products. This is also true of using recycled material, for which the source cannot be certified, and thus the properties are unpredictable.   Fortunately, code allows for a range of materials properties per type of use.  And this may be the “back-door” for a product to get into production, into the market, and then start the testing. 

A good example for this is brick – such as a hard-fired, clay material – an architectural facing brick.   These were the qualities that CalStar was chasing with its Fly-Ash Brick, which has a “greener” footprint with 40% recycled materials and a manufacturing process that eliminates the need for firing.   This addresses the need for commercial grade durable building material while reducing the CO2 by 85%.  The goal is to maintain the existing materials properties, but with a lower carbon footprint.

Another route to innovation was taken by scientists in Spain and India, both seeking to incorporate paper waste into a brick.  A Spanish research team at the University of Jaen is working with waste paper from paper mills, mixing it with clay, extruding this mixture into long logs, and then cutting it into blocks prior to baking.  The cellulose is a good use of industrial waste, but  it reduces the strength of the brick.  These scientists are seeking replacements to meet all the quality of clay brick, and thus are “continuing to find a balance between sustainability and strength.”   The goal is to reduce the use of the existing resource, clay, by extending it with waste.

On the other hand, the Indian researchers were motivated by a shortage of building materials, cost, and the availability of waste material from the Recycle Paper Mills. Professors Mandavgane and Ralegaonkar (of VNIT)  mixed 9 parts of this sludge material with 1 part concrete as a binder for a mixture that is then processed in traditional brick molds and sun cured.  The resulting bricks are half the cost and can be used for the interior demising walls, which were traditionally brick (not frame), but are non-load bearing and not exposed to the weather.    The team continues to experiment with other industrial by-products: rice husk ash, waste tea, blast furnace slag and fly ash, and the improvement of the weather resistance of the brick.  This goal here seems to be to innovate something new out of a waste stream.

Think of it this way.  There are “vegetarian” diets which are based on all sorts of replacement products and recipes that try to replicate the SAD (Standard American Diet) -  vegeburgers, meatless lasagna, tofurkey.   Other vegetarian diets that simply celebrate the vegetable, and the many non-meat foods: grains, seeds, fruits.    These two approaches typically have different followers with distinctly different goals and produce different innovations. There is room for both, and much to be gained in cross-referencing the two.  And so it is with bricks, and other building materials.