Study: Wood is a more cost-effective building material than concrete when emissions are monetized

A new study from Aalto University shows that when the greenhouse gas emissions and other environmental impacts caused by construction materials are converted into euros, a wood-based school becomes significantly cheaper for society than the concrete option. The study examined how the monetary valuation of construction materials’ environmental impacts reshapes the understanding of cost-effectiveness in building projects.

Wood construction turned out to be highly advantageous — and even considerably more affordable than concrete and steel construction — when, in addition to direct costs, the indirect environmental costs borne by society were taken into account. Wood is a far more environmentally friendly building material than concrete, but higher upfront costs have slowed its wider adoption, says Professor of Real Estate Economics Seppo Junnila from Aalto University.

“Our study shows that it is possible to monetize the environmental impacts of construction materials — and that doing so substantially changes our perception of the true cost of building projects,” Junnila continues.

Emissions cause hidden costs

The study examined the actual construction costs of the timber school and sports hall completed in 2021 in Myrskylä, Finland, and calculated what the construction would have cost using reinforced-concrete structures.

In addition to direct construction costs, the researchers analyzed the environmental impacts of the materials, arising for example from raw-material production, manufacturing, transport, and construction. The calculations also accounted for the fact that wood materials store carbon and act as temporary carbon storage during the early stages of a building’s life cycle.

Environmental impacts were converted into euros using internationally recognized valuation coefficients. These are based on scientific estimates of the harm various emissions cause to human health, ecosystems, and the economy — and what this damage costs society.

The Myrskylä wood-based school and sports hall would have cost about 4.4% less if they had been made of concrete instead of wood. However, the embodied emissions of the reinforced-concrete structure would have been roughly 40% higher. As a result, when the average valuation coefficients were applied, the total (direct and environmental) cost of the concrete structure turned out to be around 30% higher than that of the wood-based solution, says the study’s lead author, doctoral researcher Oana Iliescu from Aalto University.

“Wood construction is a competitive choice under all valuation coefficients,” Iliescu notes.

Regulation should accelerate the use of low-carbon materials

According to the researchers, regulation of the real-estate and construction sector currently focuses largely on improving buildings’ energy efficiency, while the environmental impacts of construction materials receive too little attention. Society nevertheless has a clear opportunity to steer construction toward more sustainable material choices, Iliescu says.

“Developers often assess material options only in terms of immediate costs. However, the environmental impacts of construction materials could be incorporated, for example, into the criteria for public financing,” Iliescu suggests.

She argues that monetizing environmental impacts is essential for assessing the true cost of construction — not only for the developers and their clients, but also for society and the environment more broadly.

“If public procurement were to make visible the costs that are currently borne by society due to environmental impacts, the use of wood products as construction materials would appear as a far more attractive option,” Iliescu concludes.

Read the full study:
Oana Iliescu, Ali Amiri, Seppo Junnila: 
Monetizing environmental impacts can compensate for higher upfront costs of wood construction