What Buildings Cost 2/3: Who Pays?

The Anna-Lindh primary school in Berlin-Wedding had mold for twelve years. 750 children. Over the years twelve classes had to be sent home and eventually an entire wing of the building had to be closed. The renovation costs around 60 million euros, more than a new building would have cost.

The district pays for the renovation. Respiratory illnesses in the children go to the health insurers. Parents who have to arrange alternative schooling bear the disruption themselves. As for the building owner who planned the building in a way that allowed moisture to enter, probably nobody has heard from them since. I don’t know. I only learned about this through the media.

My impression is this is how it often goes. Building owners are probably not aware of the consequences of air quality to the extent they should be and probably have nothing to do with those consequences. Were it not for the cost factor.

The Bill

The WHO calculated in 2015 what poor indoor air costs Europe: 1.6 trillion US dollars per year (WHO Europe, 2015). In ten of the 53 countries in the European WHO region these costs exceed 20 percent of GDP. The money flows into treatment and lost work days, which of course never shows up in any construction budget.

Joseph Allen at the Harvard School of Public Health worked through the math on one example. Doubling the fresh air rate in an office building costs 10 to 40 dollars per person per year. The productivity gain is 6,500 dollars per person per year (MacNaughton et al., 2015, International Journal of Environmental Research and Public Health).

The building owner pays the 40 dollars. The productivity gain lands with the employer. Allen calls this a split incentive. The healthcare costs land with the insurer on top of that. The building owner has no incentive to spend more than the minimum.

In his book he describes a hospital that had paid millions for a Legionella lawsuit. When someone proposed spending 20,000 dollars on prevention the administration refused. The lawsuit had been paid by liability insurance. The 20,000 dollars would have come from a different budget.

The Pattern

From the economists’ view this is an externality: the one who causes the cost doesn’t bear it.

It’s the same as with tobacco. For fifty years the companies shifted healthcare costs onto the public until the Master Settlement Agreement of 1998 cost them 206 billion dollars (Schroeder, 2004, New England Journal of Medicine).

The closer parallel to buildings is lead paint because it sits directly in the wall. It was known since the early 20th century that lead paint harms children. The ban came in 1978. Seventy years in between during which manufacturers were never required to contribute to removal costs or treatment. The costs fell on families and public budgets. The economic benefit of removal: 181 to 269 billion dollars per birth cohort. Every dollar invested returned between 17 and 221 dollars (Gould, 2009, Environmental Health Perspectives).

Why Buildings Are an Exception

For outdoor air the polluter pays principle exists: whoever emits pollutants pays. That has been EU law since the Treaty of Lisbon. For the air inside buildings there is nothing comparable. Outdoor air counts as a public good, indoor air as a private matter. It sits within the walls of an apartment or an office, nobody thinks of it as a shared resource (Wu et al., 2007, Environmental Health Perspectives).

That’s why there are emission limits for cars but none for the air in classrooms.

What It Costs

The British Building Research Establishment calculated in 2021 what poor buildings cost the National Health Service: 1.4 billion pounds per year. 2.6 million homes in England, eleven percent of the stock, are considered a health hazard. The figure was cited in the British Parliament (BRE, 2021).

France has calculated what poor indoor air costs the country: 19 billion euros per year, one percent of GDP (ANSES/OQAI, Kopp et al., 2016). For Germany there is no comparable calculation. As long as nobody quantifies the costs there is no political pressure to act.

I didn’t come across this pattern because I was looking for it. I started collecting studies for Concrete Human, a photo exhibition about the impact of built spaces on people. Hundreds, then thousands. At some point I developed a system to organize all of this and make it usable. Many findings were predictable. What surprised me were the gaps. France has a national calculation. Britain has one. For Germany I found none. Either the numbers exist and nobody publishes them, or genuinely nobody knows what bad buildings cost the healthcare system. Both would be remarkable. The deeper I dug the more the suspicion hardened that nobody is asking who actually pays for the health consequences of building decisions. Least of all for children who spend most of their time in school buildings and have the smallest lobby.

In 2023 six former US Surgeon Generals wrote an open letter. Politicians had largely ignored the effects of buildings on health even though people spend 90 percent of their time indoors (IWBI / American Public Health Association, 2023).

The journal Health Affairs puts it most directly: this neglect “shifts the costs of poor health from inadequate housing onto the medical profession.”

With tobacco and lead paint it took decades before the polluter was held accountable. With buildings the science has been clear for forty years and the costs are quantified. As long as indoor air is treated as a private matter the bill stays with the healthcare system.