Lisø PhD Dissertation Manuscript - NTNU
Lisø PhD Dissertation Manuscript - NTNU
Lisø PhD Dissertation Manuscript - NTNU
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<strong>Lisø</strong>, K.R./ Building envelope performance in harsh climates: Methods for geographically dependent design<br />
The building economics of climate change (Paper III)<br />
A way of analysing the building economics of climate change is proposed based on<br />
two approaches. Firstly it is the putty-clay approach to the theory of investment and<br />
production. The starting-point for this approach is that the scope for choosing<br />
different designs of a building is far broader before than after the building is erected.<br />
I.e. a building consists of elements that are costly to change once the building is<br />
erected, and of elements that are more easily maintained. The other pillar is the real<br />
options approach. This approach highlights the fact that information relevant for<br />
decision makers arrives over time. Immediate decisions should take into account that<br />
they affect possible future actions and their profitability. I.e. immediate decisions<br />
affect the value of real options.<br />
The potential benefits or adverse implications of climate change on the building<br />
stock can be addressed at different levels:<br />
How will the performance and cost of operating of existing buildings be<br />
affected, if the buildings characteristics are kept unaltered?<br />
How should existing buildings be adapted to changes in climatic impact? At<br />
what costs can this be done, and when should it be done?<br />
How will the technical and economic lifetime of buildings be influenced?<br />
How will the choice of technology, materials and design in new construction<br />
be affected?<br />
How will the time path of the level of new construction be affected?<br />
The analytical framework developed in Paper III is intended to be applicable at all<br />
these levels. The existing building stock will be less suitable than new buildings,<br />
under a new climate regime. Nevertheless, for the larger part of the building stock it<br />
will be profitable to continue the use. The economic lifetime of existing buildings<br />
will in part depend on their adaptability to changed climate conditions. Given the<br />
long lifetime of the building stock, the time before the whole building stock is<br />
optimally adapted to a new climate regime can amount to a hundred years or more.<br />
The building stock some time into the future consists of the building stock of today<br />
and of future new construction. Parts of the present building stock will in the future<br />
be adapted to externally imposed changes in the environment, while parts are kept as<br />
is. Analysis of how the building stock is affected by climate change should handle<br />
this diversity. This diversity should be treated within the framework of some kind of<br />
vintage model. Formulation of such a vintage model involves complex problems of<br />
aggregation. A central tool in this aggregation will be considerations of how the use<br />
value of different parts (or classes or vintages) of the existing building stock are<br />
expected to evolve over time as more reliable climate models are developed.<br />
The model describes important aspects of the building economics of climate change,<br />
and identifies stakeholders. It is a model of the decisions of a building owner facing<br />
an uncertain evolvement of the climate. The model shows that the decisions are<br />
affected by both the expected profitability of the different actions, and on the effects<br />
the actions have on the profitability of future choices. Hence, using a real option<br />
approach enhances the understanding of actions taken by owners of buildings. Some<br />
simple results are derived. Climate change can reduce both conversion activities (e.g.<br />
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