Sustainability in Affordable Housing

India today faces the enormous challenge of catering to the housing needs of the bottom-of-the-pyramid population. With the rapid rate of urbanisation (projected to cross 50 per cent by 2050), the housing demand emerging from this population (contributing to over 95 per cent of urban housing demand) and growing urban slums (about 17 per cent of the urban population resides in slums), the provisioning of housing stock has been at centrestage for policymakers. However, despite the enhanced focus on affordable housing, the integration of the sustainability aspect into affordable housing seems to have been provided limited focus. Given the scale of affordable housing programmes envisaged under the Pradhan Mantri Awas Yojna (PMAY) with about 11.2 million houses by 2022, the importance and impact of incorporating principles of sustainability in affordable housing are expected to be huge.

Concepts of sustainability and green labels

The Ministry of New and Renewable Energy (MNRE) defines a green building as one that can function using an optimum amount of energy, consume less water, conserve natural resources, generate less waste and create spaces for healthy and comfortable living, compared to conventional buildings. Moreover, the overarching principles of sustainability also cover aspects such as material sourcing during construction, embodied energies of materials, and effectiveness of recycling the materials used for these buildings. 

Globally, several independent organisations have defined green and sustainable buildings on similar lines, and have developed structured methodologies for outlining, assessing, certifying and, hence, mainstreaming adoption of sustainable concepts in the lifecycle of buildings, including residential buildings. While the adoption of these prescribed principles may increase the initial cost of housing projects by 2-12 per cent, the overall lifecycle cost of the housing units typically is significantly lowered owing to savings in electricity consumption (40-60 per cent less), water consumption (40-80 per cent lower), less waste generation, low levels of pollution across construction and operation phase, rental premiums, greater space utilisation and enhanced safety and sanitation (for construction workers and occupants), as well as offering higher marketability of the property. 

Some estimates suggest that adoption of sustainable concepts in the housing supply under PMAY (Urban) till 2022 can save up to 3.2 tera watts hour per year of energy consumed; 1,200 million litres per day of water consumed; and 3.2 metric tonne per year of CO2 emissions. These savings can, in turn, be used to provide lighting to another 1.4 million houses, and water to 2.2 million additional houses. 

Headway and challenges

Over the years, several government-backed missions—including the National Mission for Sustainable Habitat, National Mission for Enhanced Energy Efficiency, National Solar Mission and National Water Mission—have been initiated with the objective of enhancing the sustainability of the residential sector at large. Moreover, the technology sub-mission, initiated under PMAY to facilitate adoption of green technologies and building materials, is also expected to have a significant impact on sustainable implementation of affordable housing projects. 

However, factors such as demand-side issues (availability of formal lending, etc), supply-side issues (complex approval process, lack of economical yet marketable urban land, etc), and profitability concerns (quantitative limitations as well as uncertainties) in these ‘low-margin, high-volume’ projects have typically kept private developers at bay and burdened public agencies with the responsibility of provisioning a majority of the affordable housing stock. Adding to this, the margin-sensitive green housing segment has seen limited traction owing to the upfront cost premium for complying with sustainability requirements. This assumes significant importance in the current housing stock delivery model, wherein the developers hand over the completed units to the beneficiaries and, hence, they share no direct interests in the overall savings accrued (owing to sustainability measures) during the habitation phase. This is despite the slew of incentives offered such as relaxations in building regulations for certified green buildings (by various states) and refinancing schemes focused on green affordable housing by select funding agencies.

Further, the subsidies provided by the Centre or state governments for this segment do not cater to or share this cost premium for green housing or the certification cost and, hence, do not offer any incentive to the public project development agencies to go green.

Measures to mainstream sustainability

In addition to the measures needed to provide impetus to the affordable housing segment on the whole, some of the themes that can guide mainstreaming initiatives in the green segment are as follows:

• Concessional project finance schemes and operationalising green housing funds at the state level
• Rationalising incentive models to provide project-level incentives for green certification costs
• Updating and rationalising building bylaws to mandate select green concepts
• Developing PPP models incentivising uptake of green housing concepts in the affordable segment
• Enhancing demand through stamp duty relaxations, property tax rebates, etc, to the beneficiaries
• Establishing Technical Support Cells, preferably within select state government housing boards and approval granting bodies (development authorities and municipal corporations), manned by green housing professionals funded by the Centre and state governments, and funding agencies
• Institutional capacity-building within the sanctioning authorities as well as other stakeholders
• Incentivising and promoting independent replication of technology pilots by states.

Mainstreaming sustainability in the affordable housing segment could seem to be a challenge initially. However, it is imperative and will eventually yield economic, social, and ecological dividends for future generations!

About the authors:

• P Pranavant is a Partner with Deloitte Touche Tohmatsu India LLP, focussing on infrastructure consulting, including affordable housing. 
• Vishal Gupta is a Director with Deloitte Touche Tohmatsu India LLP, and focuses on exploring sustainable solutions in the affordable housing segment.
• Contributing writers include Raghav Agnihotri and Gurpreet Kaur, Senior Consultants of the firm.