Costs and Benefits of Accessible Environments: A Case Study

Report of the International Expert Seminar
Building Concept for the Handicapped

Stockholm, Sweden, April 10-12, 1984

Contents

Costs and Benefits of Accessible Environments: A Case Study

By Adolf Ratzka, Ph.D.

In this paper I will first give a very simplified theoretical justification for public subsidization of accessibility measures. I then present the results of a recent study as an illustration both of a methodological approach and of the various costs and benefits involved. I conclude the presentation with a few remarks on the role of economic evaluations in this area.

The built environment that we see around us today is not the result of a series of coincidences, but of a long historic process. This process consists of a multitude of incremental changes, and each change reflects the cultural, social, economic and political values of society at a particular moment in history.

Building and planning decisions are made by both private and public interests. Economists of the last century assumed that if everyone acted in his or her own best economic interest, we would achieve an efficient society with maximized total welfare. Since then economists have realized that there are inherent obstacles towards such an ideal state. These obstacles are often referred to as market imperfections. I will here take up two types that have a bearing on our topic.

One market imperfection arises from the fact that for some goods there is no market where buyers and sellers meet and demand and supply determine the price of the commodity. Take, for example, a small neighborhood park in a central urban area. Assume a private builder wants to build high-rise apartments on the land and offers the city a certain amount for it. How much is the land worth in its present use? People living adjacent to the park will call it invaluable, but how much would they be willing to pay for having access to it? Assume that a citizens’ group starts a campaign for the purpose of collecting money to save the park. But for each user of the park it would be rational to let everybody else contribute to the fund and enjoy using the park for free. How is it possible then that we have parks, police protection, street lighting, etc. in our cities? The answer is, of course, that in the case of such goods private individual decisions had to be supplemented by collective decisions. That is, the citizenry decided through the political process to levy taxes which pay for these public goods.

Another type of market imperfection is called externalities. Externalities are present if the decisions of one economic agent affect somebody else’s consumption or production. A very current example is the emission from industries and automobiles that turns into acid rain and slowly destroys lakes and forests. To install catalytic emission controls is expensive and reduces a vehicle’s mileage. Therefore car owners have no economic incentive to limit their noxious fumes - unless they own forests. This example is intended to show that costs and benefits of a certain action may not necessarily be shared by the same persons.

The contention now is that accessibility in the built environment for disabled and elderly people is a commodity that resembles the two examples I have just given. As with the urban park that everybody is free to enjoy, the use of generally accessible environments is open to everybody, even to future generations, because of the longevity of buildings. But who is willing to pay for it? Why should an owner build an accessible house, if the additional investment does not increase rental income sufficiently? Rental income will not increase unless tenants demand and pay for accessibility. Not many tenants - except for disabled, elderly, or perhaps rich, people - will be willing to pay a higher rent for accessible housing. The possibility that they might need it at some future time might not be a sufficient argument to them today. It is very difficult for many to anticipate their dependence on an elevator some day because of old age, accident or pregnancy - especially if they are male. Thus, as in the case of the fume-producing car owners, they will not support investments in accessibility, since they do not perceive themselves as beneficiaries. And even if they could imagine that accessible housing might come in handy one day, the best economic strategy would be to wait and let other people pay for it. In the case of our dying lakes and forests it has become clear now that it is in the interest of the whole of society to reduce dangerous emissions, and in some countries legislation has been passed or is contemplated to this end. But how is it with an accessibly built environment? Is it in the interest of the whole society to make all housing, shops, schools, public buildings, workplaces, etc., accessible? Would the benefits exceed the costs?

Instead of attempting the impossible - giving a complete catalogue including estimates of all costs and benefits which may be associated with accessibility - I will present an example to illustrate a possible approach. In a recent study I looked into the relationship between the costs of installing elevators in old three-story apartment houses and the resulting monetary benefits as far as they could be estimated. While the costs would be borne by the owners - unless there were some government subsidization - the benefits would mainly accrue to a sample of present and future tenants and to municipal as well as county taxpayers. Obviously, given such a distribution of costs and benefits no landlord would install an elevator without subsidies. The example is summarized below.

Earlier this morning I talked about general accessibility in the built environment as a civil right. In this session you may have the impression that I try to propagate accessibility on the basis of its alleged profitability to society as a whole. It would be very dangerous indeed to attempt to prove that all human and civil rights are profitable to the general taxpayer. Such an argument would imply that we should only support and protect those civil rights which we can "afford" in a strictly monetary sense. It would be an interesting experiment to show how few of our rights would pass this economic criterion. The right to medical care in this country, for example, might have to be reconsidered; each hospital would have to employ economists whose task would be to compare the future expected return on a given operation to its present cost.

The purpose of the type of analysis presented in the case study is not primarily to evaluate whether elevators should be installed or not, but to analyze whether the resources we are spending today and tomorrow are put to their best use. Institutional care is very expensive and the quality of life for the residents is low. Elderly and disabled people want to live in their familiar environments, but need accessible housing to be able to have that choice. To install elevators in old buildings costs money, to build and maintain institutions also costs money. The question then is where do we invest our limited resources in order to get the largest increase in our quality of life?

The costs of disabling environments

About 95% of Stockholm’s housing stock is inaccessible to wheelchair users due to steps and/or lack of elevators. Senior citizens and physically disabled persons are over-represented among the tenants of apartments without access to elevators. Installing an elevator in a three or four story apartment house will increase the break-even rent by approximately 50 to 70 SEK per sq m housing area and year in the absence of any subsidies.

But what are the costs of not installing elevators?

Table: additional costs incurred by absence of elevators.

The estimates are based on the present and future population mix in multi-family tenant housing in Stockholm’s older suburbs, and on the assumption that elevators are installed in each building upon renovation - regardless of whether disabled persons live there or not.

Not included in the estimate is the value of ending discrimination through physical barriers which make many elderly and disabled people unnecessarily dependent on the help of others, cause social isolation, physical hardship and accidents, deprive a part of the population of most housing choices, and force many into institutions.

This value cannot be expressed in monetary terms - it is a human right regardless of whether it "pays" or not.

The above material is based on the monograph Adolf D. Ratzka, "The Costs of Disabling Environments: A Cost-Revenue Analysis of Installing Elevators in Old Apartment Housing". Swedish Council of Building Research, D9:1984 (in English) available from Svensk Byggtjänst, Box 7853, 103 99 Stockholm, Sweden.

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