The energy costs of historic preservation
Academics find that preservation policies preventing historic buildings from being fitted with energy-efficient measures added £5.6 billion to energy bills across an eight-year period
A team of researchers have found that efforts to preserve historic buildings have greatly hampered their ability to be retrofitted with energy-efficient solutions.
Policies to preserve buildings, including privately-owned homes, for historical, cultural or architectural reasons are widespread across Europe and North America.
With an economic rationale centred on the external value of heritage, historic preservation policies typically put limits on the alterations to designated buildings.
The benefits of these policies are well established in academic work. However, the costs of the policies have not received similar attention.
One source of these costs is that the policies prevent the uptake of energy-efficiency measures, such as energy energy-efficient aluminium, uPVC windows or external wall insulations.
These, in turn, increase the private costs of energy consumption to homeowners as well as greenhouse gas emissions, a cost to society as a whole (a ‘social cost’).
Lost energy savings
The team – which included Dr Edward Pinchbeck from City, University of London’s Department of Economics, and two London School of Economics academics, Professor Christian Hilber and Dr Charles Palmer – recently published a paper in which they quantify the foregone energy efficiency savings and the social cost of carbon from historic preservation policies in England between 2006 and 2013 – a period with rising energy prices.
Controlling for income and a number of other factors, such as the age and type of the housing stock and the geographical location of the neighbourhood, the team demonstrated that energy price increases lead to a very significant reduction in energy consumption but that this response was much more muted in neighbourhoods with a high degree of historic preservation.
They estimated that historic preservation policies (for conservation areas and listed buildings) added about £5.6 billion to energy bills between 2006 and 2013 – approximately £350 per year for each preserved home.
These lost energy savings as a consequence of historic preservation policies during the sample period were equivalent to the emission of 20 million tonnes of carbon dioxide.
Using UK government assumptions about abatement costs, this amounts to an additional social cost of £1.2 billion during the period from 2006 to 2013.
The costs are much larger when it is considered that the costs of not undertaking energy efficient upgrades will continue to be incurred year after year beyond 2013.
Indeed, the academics’ best estimates of the full private and greenhouse gas costs are £23.2 billion and £4.8 billion respectively.
Preservation versus energy efficiency
The study points to important – and so far unquantified – internal and external costs of historic preservation policies.
“Policymakers ought to consider these costs when deciding on designations, determining the stringency of preservation rules, or setting energy-efficiency targets,” said Dr Pinchbeck.
“Put differently, solely focusing on the benefits of preservation policies and ignoring the adverse impacts of the policies on energy consumption may lead to undue levels of preservation and energy-efficiency targets that are excessively costly or unfeasible to achieve altogether.”
About Dr Edward Pinchbeck
Dr Pinchbeck is an applied microeconometrician with research interests in health care, urban and spatial economics, and behavioural economics. Prior to joining City in Summer 2018, he was based at the Centre for Economic Performance at the London School of Economics.
Before returning to academia, he spent around five years working as an economist in the UK government, including at the Department of Health, Monitor (now NHS Improvement) and the Department for Business, Innovation and Skills.
He has a PhD in Economic Geography (LSE), an MSc in Real Estate Economics and Finance (LSE), and an MSc in Economics (Warwick).