TBL-CBA for Planners Using GIS

by | Jun 22, 2020 | Buildings, Economics, Infrastructure

GeoDesigning with Nature using Economics

GIS creates maps and tools to that make designing at scale easy by putting the infrastructure and building decisions in context on a map to answer the question “what’s the best location”. TBL-CBA has taken the same starting point and created tools to measure the value of green and answer the project stakeholder’s question “what’s in it for me”.

GeoDesign “is a set of concepts and methods to get all stakeholders and different professions involved in order to collaboratively design and realize the optimal solution for spatial challenges in the built and natural environments.” (Wikipedia)

“Triple Bottom Line Cost Benefit Analysis (TBL-CBA) is an evidenced-based economic method that combines cost benefit analysis (CBA) and life cycle cost analysis (LCCA) across the triple bottom line (TBL) to weigh costs and benefits to project stakeholders. …Because it calculates both financial results and monetary values for social and environmental design impacts (valuing what have traditionally been considered intangible benefits such as reduced air pollution or enhanced property values), it provides a common basis for evaluating the entire impact of a project across all three bottom lines (social, environmental or ecological, and financial).” (Wikipedia)

“In his book Design with Nature, Ian McHarg showed us how we could use soils, geology, vegetation, and other data to make more rational and responsible designs… Design with Nature inspired me to create Environmental Systems Research Institute (ESRI), where we build the technology to implement McHarg’s vision. I believe that ‘designing with nature’, or GeoDesign, is our next evolutionary step. GeoDesign is both an old idea and a new idea. It reopens our minds and hearts; it puts in our hands the means to achieve what the Japanese masters did so many years ago—designing with geographic knowledge, thus living harmoniously with nature.” – Jack Dangermond CEO of ESRI.

GIS and TBL-CBA have been democratizing the ability of planners, architects, engineers, and designers to understand the context of their decisions and to measure the impact of designs so that the best decision can be made for the quality of life, the environment, and the financial bottom line.

Designing with nature has led GIS to account for nature spatially and TBL-CBA to account for it in dollars. Designing with geographic and economic knowledge has the potential to lead to decisions as to the best location that satisfy most stakeholders.

From GIS to GeoDesign and CBA to TBL-CBA

Some ten years ago, both geographers and economists saw the benefits of combining the context-rich information of maps with the metrics-driven power of triple bottom line. It took these ten years for several things to bring them back together. First, both GeoDesign and geoaccounting needed to incubate and be developed in academia. Second, computing and networking needed to evolve to reduce the cost and complexity of the dissemination of these methods.

The GeoDesign methodology has been standardized and applied to big problems at multiple scales. And economic externalities have been quantified and used in decisions to ensure projects are in the public good and create no environmental harm. Finally, cloud computing combined with distributed and open data means that Geographical Information Systems (GIS) and Cost Benefit Analysis (CBA) can be performed by non-specialists. Science and technology mean that the time is now right for the automation of the geospatial and cost benefit standards.

GeoDesign has evolved tremendously from McHarg’s concepts. What is still needed is what has been termed “geoaccounting”. Society needs to account for what people care about such as infrastructure, social services, and environmental quality – systematically – and really recognize the cost of human actions.

Triple Bottom Line Cost Benefit Analysis (TBL-CBA) has helped owners of over $100 billion worth of projects justify a higher standard of building and infrastructure design and move beyond simple “feels right” motivations alone. But what is sometimes missing is the geospatial context for these decisions.

GeoDesign needed an impact measurement. TBL-CBA needed a spatial context. TBL-CBA can provide the values, the geoaccounting, for GeoDesign. Finally, we can put an objective value, the full costs and benefits, on human actions and the value of the natural environment in an established and rigorous accounting system.

The Intersection Between Geography and Economics

The GeoDesign process involves stakeholders collaboratively iterating through designs towards a solution for the spatial challenges in the built and natural environments using impact simulations. The stakeholder engagement and accounting for impacts are where economics can be most useful. CBA provides the metrics for impact simulations, the dollars for the geoaccounting. GIS provides the context and local precision needed to make CBA a stakeholder rather than a societal tool.

Economics

Optimal design must quantify and put a dollar value on the co-benefits of the alternative – the positive and negative spillover effects – that are not captured by market prices. It is important to know who or what is harmed and who benefits so the best decisions can be made. Or, from another perspective, ignoring spillovers will leave the design alternative open to push back from those affected. Taking a broad perspective on costs and benefits in a triple bottom line framework means that designers are being considerate of others and future generations in their decisions.

Initially economists thinking about nature were focused on natural resource economics that emphasized getting the most out of the natural environment as efficiently as possible. Environmental economics was a pendulum swing that resulted in economics focusing its tools on putting a price on nature through willingness to pay surveys, travel time methods, and hedonic pricing. Ecological economics is a newer initiative and rather than having the natural environment be at our disposal, even at a cost, it puts the economy as a sub-system of the ecosystem. Economists have come to McHarg’s view that nature should not be exploited for economic ends but rather work within a natural system. The explosion in studies putting a price on ecosystem goods and services means that prices can be placed on sustainability and resiliency and science can be used determine how much green is enough.

Economists are begrudgingly realizing that geography can help in CBA. Many of the estimates of the value economists put on ecosystems have geospatial elements built in. For example, the US Army Corps of Engineers methodology and estimates of recreational value for parks asks how many other similar facilities are close by. The hedonic house price model estimates used to value the property value uplift of green infrastructure also vary with distance. Ecosystems values vary with distance, availability, and distance to complements and substitutes, as well as the demographics and incomes of people affected which are also distributed geographically. GIS provides the spatial distribution and characteristics of these users, non-users, and the features of the competing or complementary facilities that allow economists to better predict the value of natural systems.

Incorporating the triple bottom line into infrastructure design is thinking about how transit can increase the health, food, and job opportunities to low income neighborhoods or help when deciding whether to build larger pipes to handle stormwater or green infrastructure that, like grey infrastructure reduces flooding but also reduces the urban heat island, cleans the water and the air, and increases community property values. And taking the big picture into account will mean that benefits including enhanced health and productivity as well as reduced absenteeism will come from sustainable design of the buildings people work in. It is this multi-dimensional accounting of impacts that is required when tackling the big problems of GeoDesign.

A TBL-CBA analysis answers the question, “What’s in it for me?” TBL-CBA gives the ability to add an objective, defensive, transparent suitability scale to GIS that can reduce stakeholder push-back and delays.

Geography

Infrastructure owners, city planners, architects, and engineers are tasked, and often required by their professional codes of ethics, with creating sustainable infrastructure that enhances our quality of life. Structures that are resilient to climate change and make us healthier and more productive requires making better decisions about how to build in the context of both the natural and existing built environment. Most cities are using GIS to address the challenges of what to build where.

McHarg’s advocated for overlays of factors to reveal spatial patterns of “intrinsic suitabilities” for land uses. These may be aquifer, ecological, and agricultural “value” to determine suitability for development. GIS has done this by putting weights on these features. While experts may be convened to determine how much weight to give clean air, clean water, carbon, house values, urban heat island, and revenue, project stakeholders may disagree. And even experts may favor their own discipline as being just slightly more important than others. A GIS suitability model answers the question, “Where is the best location?” GIS suitability analysis needs a suitability scale. All questions of “where is best?” confront the problem of how you combine data layers for the multiple decision criteria into a single ranked map.

Most suitability analyses done in GIS and GeoDesign use multi-criteria analysis that put weights on various criteria such as: elevation, slope, access to sunlight, access and availability of recreation, environment, number of households/population/jobs, etc. While some of these physical categories may be uncontroversial or easily left to engineers or other professionals to asses feasibility, there is a set of social and environmental factors about which project stakeholders will have diverse opinions. A parent with an asthmatic child may value air quality above all. An environmentalist may have more global pollution concerns and value carbon emissions most.  One can easily see a (geo)planner’s well thought out weights turning into an extremely contentious debate at a public meeting. The key parameters of the geoaccounting system – the suitability weights – need a reason beyond “that’s what I believe”. And to make matters worse, in a public forum giving more weight to a vocal stakeholder’s input into suitability will mean sacrificing some weight to another.

Geoaccounting – Eclectic Economics and Geography

Economics helps add evidence as to how much to weight often competing objectives of people, profit and planet. Economics has an alternative to the weights in a suitability analysis. CBA puts a value on the contributors to overall project value. Some of these values will be for goods that have a market – such as carbon through a trading system. Some may be revealed through market prices – such as house price values that vary with distance to a transit stop. Some can be uncovered by observing actions – how far are people willing to travel for access to a pristine forest environment. Others may only be found by surveys – in hypothetical case, how much as people willing to pay for clean water. These weights are objective and backed by research.

CBA also puts the impacts of alternate locations and different impacts in a common metric – dollars.

CBA avoids the arbitrariness of, and potentially controversial, multi-criteria methods by using economic (shadow) prices as the weights for suitability analysis.

Decision makers need Triple Bottom Line (TBL) analysis to satisfy the financial, social and environmental concerns of diverse stakeholders. Combining TBL with CBA means that infrastructure sites initiatives can be prioritized based on: carbon savings, reduced flooding, better air and water quality, and reduced urban heat island that allows for comparison, ranking, and trade-offs.

Using social costs for clean air, water, and carbon that include the health, property, and environmental damage costs and values will result in an optimal use – the highest and best use for land after correcting appropriately for externalities, non-priced amenities, public goods, and the effort of making such corrections. The power of spatial data will enhance TBL-CBA by making it more local and relevant. And adding TBL-CBA to GIS will deliver an answer to the stakeholder’s question of “Why here?”

 

An Example of TBL-CBA Geoaccounting for GeoDesign

When GeoDesigning a city, neighborhood, or site to be resilient to climate change you may be including trees or other green or grey infrastructure and how they contribute to, or mitigate, rising temperatures. But how do you account for the value of a tree in the urban context?

Studies have measured the change in temperature resulting from different land cover. The graph above shows the land cover types supported in Autocase and the average temperature effect caused by changing a hypothetical city of all asphalt to that land cover instead. But TBL-CBA does not stop at measuring along one dimension – temperature change, it measures across multiple dimensions providing a complete geoaccounting system. For example, there are well established peer-reviewed academic papers and meta-analyses that provide a geoaccounting across these dimensions:

 

Carbon Air Quality[1]
Water quality Property value
Recreational value Educational value
Flood risk reduction Public health
Avoided grey infrastructure Social value of jobs

 

TBL-CBA puts all of these values in a common metric – dollars. It collapses the 11 dimensions to one. The impact models are all comparable, additive, and are transparent in their calculation. The ten metrics in the table are in addition to the value of lives lost due to extreme heat events caused by climate change and the urban heat island. Thus, by measuring the benefit of a humble street tree in an urban setting across these 11 dimensions, using a common metric, TBL-CBA provides the complete geoaccounting system required for GeoDesign.

McHarg’s Design with Nature pioneered the concept of ecological planning. What is the obstacle of bringing ecological planning together with ecological economics? Currently there is no geoaccounting system to decide how much of what to put where. Since economics has the methodology to do this, the ability to easily do GIS and CBA may be the only stumbling points.

Democratizing and Disseminating

So, if GeoDesign tools are becoming widely available to non-GIS experts, what of the geoaccounting tool of TBL-CBA? Is this available to non-economists? Three innovations in the economic analysis have led to the ability to automate TBL-CBA and make it widely available. First, CBA’s methodology, input data, and outputs are being standardized. The methodology of CBA is over 100 years old. Governments, for over half a century, since the US Flood Control Act, have been standardizing its inputs and use. Second, the growth in ecological economics studies of the value of nature and the summarization of this knowledge in meta-analyses mean that uncertain or controversial inputs can be used. Finally, multiple account CBA allows for an understanding of all stakeholders’ benefits.

Adding TBL-CBA as the geoaccounting for GeoDesign’s use in planning and designing sustainable and resilient projects will mean that the value of infrastructure, its sustainability, and its impact across different groups can now be estimated and incorporated into the planning and design process. Armed with this information, decisions that are good for the environment, society’s cities and neighborhoods can be made. GeoDesign addresses large problems and must involve stakeholders to be effective. It will take a multi-disciplinary approach set of tools. The use the economic tool of TBL-CBA and the geographic tool of GIS will pay great dividends.  These tools, in combination address the most basic and pressing stakeholder concerns – where will the impacts of these changes be and what do they mean for me?

[1]      Nitrogen Dioxide (NO2), Ozone (O3), Sulfur Dioxide (SO2), and particulate matter of aerodynamic diameter of two-point-five micrometers or fewer (PM2.5)

 

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