Early recovery: collected data can yield insight into the potential of the deconstruction market.

This article looks at potential factors affecting deconstruction and building materials reuse industry development at the state level. In order to facilitate data collection and overcome differing micro-conditions at the city level, information sources included data from the U.S. Economic Census, 1997, the U.S. Census, 2000, surveys by the author and other sources of state-level data in the U.S.

In 2000 the National Association of Home Builders Research Center's (NAHBRC) released the "Feasibility of Deconstruction" study, which proposed broad community conditions to facilitate deconstruction and building materials reuse industry development. Four conditions were proposed:

1) sources of used materials, based upon public housing, large quantities of dilapidated structures, etc.;

2) deconstruction business structure, based upon existing demolition and deconstruction companies, building contractors, etc.;

3) labor source(s), based upon union membership, temporary labor sources, job-training programs, etc.; and

4) used building materials markets, based upon businesses dealing in used building materials, etc.

A principal conclusion of the study was that building materials recovery for reuse is less viable as a stand-alone activity. It is most feasible as a component of demolition, construction and renovation businesses. Building materials reuse also is nor necessarily dependent upon building deconstruction and salvage, as sources of materials for reuse and recycling include building materials distributors and retailers, the do-it-yourself marker and demolition and construction companies (NAHBRC, 2000).

In light of this study, an attempt was made to verify some of these market Factors and investigate other factors that might also be relevant to understanding the potential and the limitations for building materials recovery and reuse business development at the state level and from a market perspective.

IN THE NUMBERS

Many trends indicate that building demolition and renovation will continually increase as a portion of the overall U.S. construction industry, with simultaneous pressure to reduce C&D debris disposal.

This is significant because in 1996 the U.S. Environmental Protection Agency (EPA) estimated that U.S. companies generated 136 million tons of building-related C&D debris, of which 92 percent came from renovation and demolition.

This study used figures from 1993. At that time, the American Housing Survey estimated that there were 96.7 million housing units in the U.S. There are an estimated 110 million housing units as of 2003, an increase of 14 percent in 10 years. The average replacement rate of U.S. housing units is less than 1 percent per year. At this rate, about 41 million housing units will be demolished from 2000 to 2050, resulting in the creation of 3.3 billion tons of debris. This does not consider commercial building demolition.

Residential remodeling expenditures in the U.S. have also grown, from about $47 billion in 1980 to $132 billion in 2000, an increase of more than 280 percent.

In spite of this growth, the recovery, reuse and recycling of building materials will be increasingly difficult from a technical and economic standpoint, while there will be increased social and environmental pressures to increase landfill diversion.

An example of a technical issue is the increasing use of sophisticated mechanical and electrical systems that increase "entanglement" of building materials and systems and the continuing shift from solid wood to engineered wood products, which cannot he reused and recycled within some established markets.

Examples of increasing regulatory pressures at the state level range from California's Integrated Waste Management Act (AB939), passed in 1989, which set a goal of 50 percent landfill diversion of municipal solid waste (including C&D) by 2000, to Massachusetts' looming C&D disposal ban policy.

From an environmental perspective, even minor reductions in materials consumption and waste creation by the construction industry will have large benefits. The U.S. Geological Survey estimates that construction activities consume 60 percent of all non-food/fuel raw materials used in the U.S. economy.

Of all the materials used in the U.S. in the 20th century, more than 50 percent were consumed in the final 25 years. Additionally, only 5 percent of the 3.4 billion tons of new materials entering the U.S economy in 2000 came from what were classified as renewable sources.

The U.S. EPA estimates that building activities produce 40 percent of all non-industrial waste. In 1999, the United Nations estimated that the construction industry on average accounts for 37 percent of global CO2 emissions through: building operation (10.2 percent); business operations (9.2 percent); materials production (10.9 percent); transport (5 percent); and construction work (1.5 percent). The single greatest proportion of CO2 emissions from the construction industry itself is from new materials production, at approximately 11 percent of global CO2 emissions.

DEMOLITION AND REUSE GROWTH

The 1997 U.S. Economic Census indicates that there was a total of 656,000 construction contractors in the U.S. (excluding heavy construction), with a work value of $858 billion, annual payroll of $174 billion and 5.7 million employees.

The 1997 U.S. Economic Census indicated that there are 1,540 wrecking and demolition contractors in the U.S., with a combined value of work of $2.3 billion, an annual payroll of $592 million and 18,820 employees.

The difference in growth rates between demolition businesses and new construction businesses is profound. Between 1992 and 1997, the number of Wrecking and Demolition Contractors establishments increased 59.6 percent; the value of work increased 107 percent; payroll increased 100 percent, and the number of employees increased 43.5 percent.

In those same years, the building construction industry as a whole (excluding heavy construction) grew in number of establishments by 9.6 percent; value of work by 66 percent; payroll by 47 percent, and the number of employees by 15.7 percent.

Determining the number of companies involved in re-use of materials was also attempted. The rank order of the 25 most populated states was compiled and then the number of used building materials establishments (UBMs) in each state, gleaned from a survey by the author, were compared to demographic and economic data that were hypothesized to be relevant factors in used building materials business development. These factors included: high tipping fees, "environmental awareness" as measured by the League of Conservation Voters Environmental Scorecard for each state's U.S. Congressional representatives; percentage population growth from 1950 to 2000; percentage of population in poverty; low median income; and population rank in 1900 as a measure of more older buildings.

The number of UBMs in each state were ranked on both a per-person basis and a per-square-kilometer basis. This was done to normalize the information because a densely populated state would have both a high number of UBMs per person and per square kilometer, and only be comparable to a less populated state on the basis of UBMs per capita. Each state was then also ranked for the factors that are listed above.

The rank order of the factors that were most highly correlated with the number of UBMs in each state were:

1) high tipping fees;

2) high environmental awareness;

3) low median income;

4) high rates of poverty;

5) high percentage change in population 1950-2000; and

6) high population in 1900.

Of all the states, Florida ranked highly in both UBMs per capita and per square kilometer in spite of low tipping fees and low environmental awareness. The significant supporting factor was low median income. Connecticut, with the most UBMs per square kilometer and Oregon, with the most UBMs per person, share high tipping fees and high environmental awareness. Oregon has a relatively high poverty rate, whereas Connecticut has the highest median income of the states examined. A higher population in 1900, i.e. states with potentially greater older building stock, was not a significant factor, reinforcing the NAHBRC conclusion that UBMs are not heavily dependent upon materials salvaged from existing buildings.

THE LANDFILL AS COMPETITOR

Reuse of building materials is driven by the economic necessity of avoiding high landfill costs, and the need for low-cost building materials by those who cannot afford new materials. At the other end of the economic spectrum, environmental awareness has some relevance where income levels are high, but still carries more weight where tipping fees are also high. High tipping fees are the single most relevant Factor related to the number of UBMs at the state level.

In considering how to grow the deconstruction and used materials industry, high tipping fees will force the issue, but another consideration here is how to create market "pull." Based upon this study, the demand for reuse of building materials could be said to reside in both the altruism of environmental awareness (supported by high income levels), and in the necessity of those with lower incomes seeking low-cost building materials.

Rather than encourage poverty as a means to support a market for reused materials, it is suggested that good opportunities exist in the "environmental" market, including the "green" building marker supported by various certifications. Examples include the USGBC LEED[TM] Green Building Rating System and the SmartWood Rediscovered Wood Certification that credits for C&D material recycling and the use of reused and recycled-content materials, including for wood reclaimed from existing buildings.

The other direction for the market, whereby environmental awareness and targeting higher income groups come together, is in value-adding reuse through refurbishing and remanufacturing.

It is worth noting that an industry based on very low value-adding, i.e. direct reuse, will not support well-paid jobs as noted by the Northeast Recycling Council 2000 study of the reuse and recycling industry in 10 Northeastern states. A market based upon demand by low income groups will also be a dependent upon a poor economy, which is never a desirable condition. A market based upon value-adding will provide better paying jobs and, if marketing to the environmentally aware consumer, will have more potential for growth among higher income groups and be supportable by good local economic conditions.

WHO'S DOING THE DECONSTRUCTIG?

In a spring 2003 telephone survey of more than 1,400 companies involved in demolition and construction markets, questions were asked related to demolition, deconstruction, used building materials and value-adding activities using reclaimed materials. The percentages noted are the percentages of respondents who gave the response listed.

The most common association memberships: National Association of Demolition Contractors (22 percent); Used Building Materials Association (6.1%); the National Association of Homebuilders or a Local Chapter (7.6 percent); the National Wood Flooring Association (7.6 percent).

What do you think is the biggest obstacle for the deconstruction and reuse/recycling building materials industry? Education (19.4 percent); markets (matching supply and demand; 13.9 percent); costs of labor (11.1 percent); environmental regulations (11.1 percent); perceptions of low quality (8.3 percent); storage needs (8.3 percent); damage to wood and contamination by nails, etc. (5.6 percent); disreputable business and unregulated activities (5.6 percent); insurance and workman's compensation for demolition/recycling businesses (5.6 percent).

What steps has your company taken to overcome these obstacles? Networking/education/ outreach (30.3 percent); selection of projects and types of materials salvage (11.9 percent); increased skills and safety training including OSHA regulations (10,9 percent); advertising (10.9 percent); costs and scheduling management practices (10.9 percent).

These responses point to a number of generalizations regarding used building materials business development:

* Used building materials sales is a low-margin business limited by supply variability.

* The limits of a market that is correlated with high poverty and low median income would suggest that the expansion of the market will require a broadening of the demand through other markets such as the "green" building market.

* The most relevant "subsidy" for the used building materials industry is high disposal fees.

* Training for skills and safety are an integral part of the industry.

* The industry understands and also puts most effort into education and outreach as the greatest challenge and opportunity.

The author is Director of Operations at the Hamer Center for Community Design Assistance at The Pennsylvania State University. He can be reached at guy_brad @yahoo.com.