Going Green as an Investment Strategy

There are many environmental benefits to a housing model of on-site power generation, energy conservation, and alternative water use.  And it turns out, it’s not such a bad investment!

For the Earthship Biotecture model of green building, the only utilities needed are rainwater and sunshine, provided for free by nature.  These extreme-green buildings are totally off-grid, for energy, water, and wastewater.  The utility bills are essentially $0.  For growing families, retirees, or anyone else on a limited budget, that’s a big plus!  For those considering doing green retrofits, it’s an interesting challenge to incorporate similar “green” elements into an existing house, both for the environmental benefits and the financial ones.

No utilitiy bills for earthship biotecture building in Taos NM

Look Ma, no utility bills! Earthship Biotecture building in Taos, NM

For typical houses, utility costs vary quite a bit, of course, by the house, the residents, the region, and the utility company.  But let’s assume that between water, sewer, gas, and electric utilities for a house, the average cost is more than $165 a month — more than $2000 year.  And let’s assume it’s possible to either completely unplug from all these utilities, or at least reduce the annual bill by $2000 a year through a green retrofit.  While that type of retrofit might be an interesting science project, would it be an extravagant waste of money?  How much could one spend on the retrofit and get a good financial return?

To earn a perpetual annual income of $2,000 from an investment getting 5% return, that requires an investment of $40,000.  But saving money is a better investment than earning money, because you don’t have to pay taxes on money saved! A penny saved is more like a penny-plus-a-third earned — depending on your tax bracket.  To pay that $2,000 a year utility bill from taxable income, you need to earn around $2,500, which at 5% would require a $50,000 investment.  So if you think 5% is a good rate of return for an investment, then you could justify spending up to $50,000.

But wait, it gets better!  There are rebates, tax credits, and tax deductions available for many of these green investments.  That $50,000 investment might only end up costing $40,000.  So that 5% rate of return, just became 6.25%.

And what about utility rate increases?  Most likely, utility rates will increase faster than the rate of monetary inflation. To meet new regulations, catch up on deferred maintenance, accommodate development, and encourage conservation, inflation-adjusted utility rates could easily double just over the next decade.  So 10 years from now, that $40,000 investment would be earning the equivalent of $5000 a year — or a 12.5% return on investment.  Not too bad for a low-risk investment with a high-yield for a sustainable future!

Earthship Biotecture: The Quintessential Green Building

Many different types of “green” buildings have been developed since the dawn of the environmental movement and it seems new design concepts are springing up every day.  But so far Earthship Biotecture continues to win my personal all-around sustainability award.  Invented by Michael Reynolds and evolved over several decades, the earthship form of building gets high marks in just about every category of green. Building materials are recycled, renewable, local, low-energy-use, and non-toxic.  Building energy is renewable, energy use is extrodinarily efficient, and water-use efficiencies are off the chart.

Earthship biotecture

An earthship in Taos, New Mexico at the Earthship Biotecture company’s visitor center

I consider earthships to be the quintessential green building form.  Beyond “net zero”, they are totally off-grid in every way — power and water systems.  The combination of passive solar and heat-storing massive ground-insulated walls solves the problem of space heating simply and inexpensively.  The rainwater collection and grey-water recycling systems provides abundant water in even dry climates.  Wind and solar electric systems easily power the lights and appliances.  Best of all, the technology and building technique for earthships is simple enough for motivated people to build themselves, inexpensive enough for the developing world, yet they can be elegant enough for the most sophisticated tastes.

From what I know about earthships, the main drawback is that they tend to need large building lots, which makes them well-suited for remote, rural, or suburban areas, but not so well-suited for dense urban areas.  And that means being dependant on cars for transportation.  If I wanted to live in an area where the house lots are large, I would definitely consider building an earthship. But I love the convenient walkable lifestyle of the in-city neighborhood, where a car is rarely needed.  I just can’t see an earthship working on a 35-foot-wide urban lot.   And when it comes down to it, I love my craftsman bungalow and the traditional neighborhood setting and would be sad to leave it!

While an earthship may be in my future someday, it won’t be in the near future.  In the meantime, I will have to settle with doing a sustainability refrofit on a stick-built house on a 35-foot lot.