The True Cost of Real Estate: 3 Investments in your Happy Index.
Here's your Cole's notes for Regenerative Economics and Genuine Progress Indicators in home construction and real estate.
Emma is a good person. She drives a Prius. She totes her pottery mug to the coffee shop. She juices organic carrots from Costco; yoga in Cabo. Emma wants to move to the Okanagan after selling her over-priced house on the coast. To take a break from the mold. To buy something for way less and chop her costs of living.
But Emma is restless. Maybe more time in Cabo, or a new bike, or a better endurance training P.R., …or something… more. What Emma doesn’t realize is that some of the choices in her conscientious life are still being made for her. Made by a culture of convenient consumables.
Although, well-intentioned, she's ready for an audit of the true costs of her lifestyle.
Even Well-intentioned Humans Overlook True Costs.
Well-intentioned Emma hops on a plane to find her Vitamin D racking up environmental costs that add $500 to her flight. She overlooks true costs by driving past the local grocer on her way to Costco.
Emma’s closet is a three-trilliion-dollar industry. Fast Fashion overlooks true costs of fair wages, collapsing factories, cancer in cotton growers. Since 60's the U.S. outsources 87% of all it's clothing manufacture. Headquarters of conscientious brands may be fair, but competitiveness compromises fairness on the foreign front-lines. (3)
Pollution costs of manufacture and disposal: not included. Throw-away fashion underlies a 500% worldwide increase in consumption since the 90's. An average American disposes of 82 lbs/ 37kg yearly into landfills elsewhere. The true cost of a 5 dollar t-shirt is sooo much more. (3)
Well, we've shamed poor Emma enough, and she just feels like a jerk. But, she’s resolved to support a more intelligent economy with the largest purchase in her lifetime: her home. She wants to sleep better at night, plus save money over the long-haul. Emma is about to master True Cost Economics.
True Cost is an "economic model that includes the cost of negative externalities associated with goods and services.”(2)
When items exclude the negative costs we "consume them in large quantities without realizing the social and environment impacts" we've supported.(1) It’s like buying food and ignoring the ingredients. Some ingredients sweeten short-term but then sour future effects of consumption.
Traditional economics values Gains, not the costly consequences of a purchase. Pollution, is a billion dollar habit. Outsourced manufacturing sweetens economic growth, but defers costs to the environment, and to other human beings not so sweetly.
Old-School economics excludes negatives, while assuming “that people's decisions are guided by totally rational thought processes”. Awkward. “Clearly, the destruction of one's habitat is not an entirely rational decision to make".(1)
Old-School economics measures success through
the narrow lens of Gross Domestic Product (GDP).
Other, more realistic measurements of economic success are included in Genuine Progress Indicators (GPI).
Regenerative Economists Acknowledge Genuine Progress
Mindful economists are re-vamping pricing to include factors beyond an item's market value. Gross Domestic Product (GDP) is being transcended.
New wave, rogue economists “will be able to more easily create value, not just in terms of raw profitability, but in terms of overall health and environmental impact.” (1)
Genuine Progress Indicator still measures economic growth. It “takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity. It balances positive and negative results of growth, to see if there is a true - longer-term- benefit to humans. (2)
As a better measure of sustainability, this new measurement “sees the economic market as a place within an ecosystem.”(4)
Genuine Progress Indicators are part of a ecosystem that balances the positives and negatives of economic growth, to see if there is a true, long-term benefit to humans. (4)
If an economic activity takes away from future resources,
it is not contributing to well-being.
Accounting for Genuine Progress Indicators (GPI's)
1.
Pollution is Literally Damage.
Genuine Progress Indicator thinks pollution is damage, and so becomes subtracted as a cost. GPI actually counts resource depletion as a Cost, not as current Income.
Gross Domestic Product counts pollution twice as income: when it is created, then when it's mopped up. Volatile compounds, carbon emissions, and the social effects of global warming are also recognized as damage in Genuine Progress.
2.
Overtime is More Expensive than Family Time.
Old-school Gross Domestic Product ignores the loss of leisure time for families. GDP measures the money people spend to defend well-being, defending quality of life (ie. water filters).
Regenerative Genuine Progress Indicators count these costs as costs, not as income. Work-life balance that allows for leisure is valued upwards by GPI.
3.
House Prices Don't Automatically Reflect Value
Genuine Progress looks at major durable purchases, and balances the cost with value that the goods bring back over their lifespan. (5)
Traditional Gross Domestic Product does not count money lost when what people buy wears out. GDP falsely assumes that the money spent is the value of the product.
A house is one such major durable purchase. We've all heard of the Vancouver moldy tear-downs sold for millions. Ouch!
True Costs of Conventional Home Construction in a City in Interior British Columbia.
Homes go up, fast. Conventional windows and roof replacements aren't factored into true cost. Renovations cost later. So why is it a daydream to buy a villa in Tuscany? Enduring beauty. Built slowly.
Home-building labor can't afford rent and contractors bear high pressures for efficiency. Sometimes costs accrue with hard drug use on and off the jobsite.
Fast homes and fast sells overlook true costs.
Like Fast Fashion, what are the true costs of the waste from conventional home builds and renovations?
Genuine Progress Indicators of Elegant Organic Home
1.
Net Positive Impacts.
Resources for the build were recovered recycled, milled or mixed locally. Clean raw materials required minimal processing and shipping. The landscaping conserves water.
No paints used on walls, no volatile compounds, and few manufacturing pollutants. The property directly improves health and well-being.
The footprint is small compared to sprawling one-levels.
Clean, über insulation drastically reduces heating and cooling, minimizing impact on global warming. The wood stove minimizes impact with its emission converter. The landscape is an appropriate for the region.
Elegant Organic Home scores high for GPI.
2.
Custom Architecture is a Family and Community Investment, Together.
Six years of consistent, skilled building labor meant that work-life balance was a costly up-front investment and is reflected in the price. Genuine Progress values the sweat and tears and callouses of a supportive community.
Realtors wanted the convenience of down-valuing something unique. Sale By Owner preserved the Fair Trade value, thanks to a select niche market that felt the same way.
3.
Genuine Material Equity
The Lifespan of the materials and design aesthetic will not only endure, but will form a regenerative Legacy. The design is minimal with classic touches. Its appearance improves with age, reducing the need for renos.
Locals built the home, on healthy, drug-free jobsite. The home's value includes fair-trade, true-cost materials and wages. The build itself added to the community by educating the public and other builders.
Regardless of popular market values, in Fair Trade,
producers don't lose out for creating a finer product,
just because an item is different.
The value is the value.
Innovative, hardworking Makers don't get thrown under the bus. (6)
The Happiness Index
Emma’s Happiness Index has risen steeply. She used gains from the coastal real estate market that were over-inflated by demand - not by true value or quality - and she invested in a builder who used local, organic materials, and thoughtful architecture. She bought a fair-trade authentic, elegant organic home in the Okanagan.
She spent more on the organic home than she would have for a conventional home, but her health has improved, and she saves on operating costs. She may not have to renovate this classic beauty. Now her family travels to visit her. Her work-life balance is better: she only works a 35 hour week for her monthly bills.
Now, Emma grows her own juicing greens. She wears organic fair-trade cotton. Her home is a peaceful staycation. Her endurance training P.R. has not changed, and quite frankly, who the hell cares? Now she paddle-boards on the lake, and has a Fair Trade coffee on the beach.
She tells the story of her Fair Trade home, and feels better about her true impact. She is now more in control over the choices in her life. Emma is more than a good person. She is a good global citizen. And she feels happier.
Låna Brown is the designer and seller of a genuinely progressive, fair trade ecohome in the happiness-elevating winelands of Okanagan, British Columbia Canada.
www.elegantorganichome.com
This article draws heavily from the following references. Major kudos to the authors & researchers! All else © Låna Brown 2017
(1) http://www.utne.com/community/truecosteconomics
(2) http://economictimes.indiatimes.com/definition/true-cost-economics
(3) https://en.wikipedia.org/wiki/The_True_Cost
(4) http://www.investopedia.com/terms/g/gpl.asp
(5) http://rprogress.org/sustainability_indicators/genuine_progress_indicator.htm
(6) http://fairtrade.ca/en-ca/what-is-fairtrade
