Infection Resilient Environments Social Cost Benefit Analysis

The Situation

The COVID-19 pandemic has shown us how easily indoor spaces can spread diseases like the flu. These illnesses come with hefty price tags—in health, social, and economic terms. To tackle this problem, policymakers need to understand which interventions work and should be prioritised. In order to make evidence-based decisions, we need a comprehensive approach that considers the wider costs and benefits of interventions that will make our buildings and transport systems more resilient against infection in the future.

NERA's Role

NERA was commissioned by the Royal Academy of Engineering (RAEng) to develop a social cost benefit analysis (SCBA) tool to evaluate the net impact of interventions to improve infection resilience across building environments in the UK. Our approach (see Figure 1) involved defining a suitable baseline (i.e., what the world would look like without interventions), collecting evidence on the effectiveness and costs of interventions to improve infection resilience, and building a model which incorporates these two aspects to estimate the expected net present value of the interventions. The analysis also incorporates a wide degree of uncertainty to capture the inherent uncertainty of future infection outcomes.

The NERA team included Director Daniel Hanson, Consultants Dr. Francis Ostermeijer and Dr. Tuba Toru Delibasi, and Economic Analyst Khalil Sabourian. 

Figure 1: Approach Overview

Source: NERA illustration

Figure 2: Potential benefits that can be unlocked from improved ventilation through an infection resilience lens at various cost levels

Notes: Annual lifetime discounted benefits and costs in £ 2020. Lifetime benefits are the sum of annual infection resilient benefits over 60 years. Benefits do not include wider benefits of ventilation such as though improved productivity. Costs include installation, operation, and maintenance. Green indicates a benefit-cost ratio (BCR) of at least 1.5, indicating benefits are at least 1.5 times higher than costs (BCR > 1.5) while red indicates the BCR is below 1.5. Mechanical combined with natural ventilation has similar results as the lower costing scenario. The NPV (net present value) column is for the lowest cost option 3.

The Result

This is the first study, to our knowledge, to perform a comprehensive evaluation of health, social, and economic costs of pandemic and seasonal influenza and perform a rigorous social cost benefit analysis of ventilation. The NERA report highlights the following key findings:

  • The total societal costs of influenza-type infection (health, social, and economic) are large and wide reaching (approximately £23 billion per year or 1% of GDP).
  • The total potential benefits that could be unlocked by ensuring buildings are fully infection resilient is £1.3 trillion (£ 2020) over a 60-year period.
  • The focus of the cost benefit analysis is on ventilation because the intervention can be clearly defined (10 l/s/p from 2 l/s/p), has credible estimates of effectiveness (reduces long-range aerosol transmission by about 50%), and requires major long-term investment in buildings to implement.
  • The average annual lifetime discounted benefits per square meter of floor space by building type is: £2.3 (commercial), £0.3 (industrial), £10.2 (local), and £0.3 (residential).
  • To unlock the potential benefits from ventilation, with benefits 1.5 times as high as costs, the cost profile per square meter would need to be less than: £1.5 (commercial), £0.2 (industrial), £6.8 (local), and £0.2 (residential).
  • Three main cost options to unlock these benefits are considered (mechanical ventilation, improved operation of existing mechanical ventilation, and mechanical ventilation with lower costs).
  • Figure 2 illustrates our key finding that from an infection perspective, improving ventilation (i) has high cost-benefit ratios in local buildings under all cost scenarios, (ii) has mixed cost-benefit ratios in commercial and industrial buildings, and (iii) is not cost effective to implement in residential buildings.

When applying these results, it is important to consider that the adopted approach focuses on average effects of improving ventilation in all buildings of a certain type. This masks considerable heterogeneity in impacts and risk factors within aggregate building types. The results do not imply that ventilation should not be installed in any residential buildings (and in all areas for that matter), but rather that a case-by-case approach should be adopted to determine the risk factors (e.g., how densely packed the areas are) and to determine whether ventilation should be improved in these areas.