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, 20 classrooms and eventually an entire wing of the building were closed. The renovation costs around 60 million euros, more than a new building would have cost.

The district pays for the renovation. Respiratory diseases in the children go to the health insurers. Parents who need to arrange alternative schooling bear the disruption themselves. The developer who designed the building in a way that allowed moisture to enter has long disappeared from the equation.

This is how it almost always works. The developer decides the air quality in a building. When the decision is wrong, someone else pays.

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 53 countries in the European WHO region, these costs exceed 20 percent of GDP. The money goes to treatments and lost workdays. None of it shows up in the construction budget.

Joseph Allen at the Harvard School of Public Health worked through the math on a single 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 (Allen et al., 2016, Environmental Health Perspectives). A ratio of 1 to 163.

The developer pays the 40 dollars. But the productivity gain goes to the employer and the healthcare costs go to the insurer. The developer has no incentive to spend more than the minimum. Allen calls this a split incentive.

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

The Pattern

Economists call this an externality: the one who causes the cost doesn’t bear it.

It’s the same pattern as tobacco. For fifty years the companies shifted health costs to the public until the Master Settlement Agreement of 1998 cost them 206 billion dollars (Ausness, 1998, Southwestern University Law Review).

But the closer parallel to buildings is lead paint, because it sits directly in the wall. Since the early 20th century it was known 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: over 8 trillion dollars in forty years. Every dollar invested returned between 17 and 221 dollars (PMC, Environmental Health Perspectives, 2009).

Why Buildings Are an Exception

For outdoor air the polluter pays principle exists: whoever emits pollutants pays. That’s EU law since the Treaty of Lisbon. For the air inside buildings there is nothing comparable. Outdoor air is a public good. Indoor air is considered private property. It sits within the walls of an apartment or an office. Nobody thinks of it as a shared resource (Environmental Health Perspectives, 2007).

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 and make use of this volume. It wasn’t the individual findings that surprised me. 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. And 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 anyone asking on behalf of 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.”

Buildings are the last major industry where the polluter doesn’t pay. The science has been clear for forty years and the costs are quantified. But as long as indoor air is treated as a private matter, the bill stays with the healthcare system.