Economic feasibility of wood-based structures—Improving urban carbon neutrality strategies

Abstract

Abstract Countries and cities alike have set carbon neutrality goals for the near future. Urban areas are experiencing an increased demand for new housing developments, and buildings are responsible for one third of all greenhouse gas emissions. The relative share of construction emissions is increasing as energy production is de-carbonizing. Wooden structures have showcased potential in substantially decreasing these emissions. However, for the construction industry to utilize environmentally friendly products, the cost efficiency needs to be determined. Prior research does not present conclusive results regarding the construction costs or value of wooden buildings. This study aims to determine the economic feasibility of wood-based structures in housing. We approach this by estimating the effect of wood on Finnish dwelling prices through hedonic regression analyses. Dwelling prices are analysed with transaction data from the Helsinki metropolitan area. It is provided by the Central Federation of Finnish Real Estate Agencies. The data represents occurred transactions between 1999 and 2018. The study discovers that a wooden structure has a positive price effect in the Helsinki metropolitan region suggesting an economically feasible opportunity to create low carbon urban housing. In the city of Helsinki, the effect is statistically significant (+8.85%) whereas no significance is found in either Espoo or Vantaa. The results suggest that in Helsinki, a direct financial benefit exists for both the city and private developers. For other cities, the study encourages the increase of consumption of wood due to its environmental properties. The study implies that wooden construction is an economically feasible solution in mitigating climate change. As this may provoke an increased demand for wood in construction, further research should be conducted to analyse its effects on the economy and the environment.