Monday, December 01, 2008

The public benefit of healthy homes

An obvious counterargument to attempts to get the government to invest in healthy, energy efficient homes is that it is a private rather than a public benefit. It's the homeowner or tenant who saves on their electricity bill, doesn't get sick, and has a more comfortable life, so surely they should pay for it. But while there's a very definite private benefit there, there are also significant benefits to the public.

Firstly, sick people means hospital admissions, and these cost money. According to research from the University of Otago Medical School, healthier homes would mean 18,000 fewer hospital admissions a year after ten years. That would save the government $54 million a year - a fairly significant public benefit. In addition, it would also mean fewer days taken off work due to illness, which means higher production. the government's share of that through taxation amounts to about $5 million.

Secondly, there is climate change. Investing in healthy homes would save 2.5 billion kWh (or 9 PetaJoules) a year after 10 years. Most of those savings will happen in winter, when the marginal generator is coal or gas. Depending on the future balance of NZ's generating capacity, that will mean a reduction of 0.5 - 0.8 million tonnes of CO2 a year. At today's carbon prices (NZ$30 / tonne), that works out to between $15 and $24 million a year; in ten years time the price (and therefore the benefit) is likely to be significantly higher.

Together, these suggest a public benefit after ten years of at least $75 - 80 million a year, and more if carbon prices increase. That's a fairly significant public benefit, and one that's well worth capturing.