This paper presents a comprehensive Cost-Benefit Analysis (CBA) evaluating the economic viability of mass timber construction as a catalyst for expanding the supply of affordable housing. Utilizing a comparative case study of a 10-story multi-family residential building, the research benchmarks a mass timber design against a conventional reinforced concrete baseline to determine the Total Cost of Ownership (TCO) and broader societal value. While mass timber initially exhibits a marginal upfront material cost premium of 6.2%, findings indicate that these costs are neutralized by a 7.2% reduction in foundation requirements due to the lighter structural load of wood products. The primary financial advantages are derived from accelerated project timelines; the mass timber structure achieved a 44.4% reduction in erection duration and a 13.5% reduction in total project duration, resulting in $183,000 in immediate soft cost savings through reduced construction loan interest. Beyond initial construction, the study identifies significant long-term operational benefits, including a projected $380,000 (NPV) in energy savings over a 50-year service life due to superior thermal efficiency. Furthermore, the research monetizes environmental externalities using the Social Cost of Carbon, assigning a $156,000 societal benefit to mass timber's carbon sequestration and avoided embodied emissions. The analysis concludes that mass timber is a superior long-term economic strategy for urban development. To overcome current market inertia, the paper proposes policy interventions, including carbon sequestration tax credits, streamlined building code reviews for mid-rise typologies, and municipal "Mass Timber First" mandates to de-risk the supply chain and achieve full cost parity.

This paper addresses the dual challenge of the global affordable housing shortage and the excessive carbon emissions from conventional construction by examining mass timber as a transformative solution. It establishes the economic and environmental necessity for a new building methodology that can rapidly increase housing supply while aligning with net-zero climate goals, setting the stage for a comprehensive Cost-Benefit Analysis focused on long-term value over initial cost.

The dual crisis: affordable housing shortage and carbon-intensive construction

The contemporary built environment faces a critical challenge defined by two interconnected crises: a severe global shortage of affordable housing and the high carbon intensity of conventional construction [1]. Jurisdictions worldwide are struggling to meet population growth and demand, resulting in escalating housing costs that effectively price out middle- and low-income households, driving up rental rates and exacerbating housing insecurity [2,3]. This supply deficit is particularly acute in major urban centers, where high development costs, regulatory hurdles, and limited land have created a widening gap between the required supply and annual housing starts. This demand for new shelter places direct pressure on the construction sector, which is simultaneously recognized as a major contributor to global greenhouse gas (GHG) emissions. The building and construction industry is responsible for a substantial portion of global emissions, particularly through embodied carbon the upstream emissions resulting from material production, such as concrete and steel (Centre for the Sustainable Built Environment) [4]. Modeling suggests that if housing needs are met using current, carbon-intensive practices, the resulting embodied emissions could drastically exceed national climate reduction targets. Therefore, addressing the housing crisis necessitates not only building more homes but fundamentally changing how those homes are constructed to align with net-zero climate goals [5]. The need for sustainable and affordable housing is not merely an environmental or social challenge, but a profound economic one. The high operational and environmental costs associated with traditional buildings contribute to long-term living costs for occupants, further eroding affordability over the structure’s lifespan. This dual dilemma requires an integrated solution: a construction methodology that can rapidly increase supply while simultaneously minimizing the environmental footprint and delivering long-term economic efficiency. This paper posits that leveraging disruptive, low-carbon materials is essential to break the tension between urgent housing demand and climate mitigation commitments.

Mass timber as a disruptive construction technology

Mass timber refers to a family of engineered wood products, such as Cross-Laminated Timber (CLT) and Glued Laminated Timber (Glulam), which are designed to be structural, load-bearing components capable of replacing conventional concrete and steel in mid- to high-rise construction [6]. Its disruptive potential stems from its unique combination of environmental and industrial advantages. Environmentally, mass timber is a renewable resource that sequesters atmospheric carbon dioxide during the tree's growth, locking that carbon into the building structure for its lifetime, offering up to 45% reduction in carbon emissions compared to traditional materials [7]. From an industrial perspective, mass timber enables a major shift toward industrialized, off-site construction (IOS). Components are prefabricated in factory settings with high precision, which minimizes on-site labor requirements, reduces material waste, and significantly accelerates project timelines [8]. Studies have shown that the installation of mass timber panels can be three times faster than conventional systems, translating directly into reduced construction loan interest and overall development costs factors critical for improving the financial viability of affordable housing projects. While mass timber may entail higher upfront material costs in certain markets, the technology’s holistic benefits often offset this initial expense through cost savings in labor, equipment rental, and expedited schedules. Furthermore, scaling the domestic mass timber supply chain creates opportunities for regional economic development, generating high-value jobs in forestry, manufacturing, and engineering. Thus, mass timber is not just a sustainable alternative; it represents a comprehensive system that addresses the productivity, cost, and climate challenges inherent in the current housing construction model.

Research question, hypothesis, and scope of analysis

This paper aims to determine the comprehensive economic viability of mass timber construction in addressing the affordable housing shortage. The core research question guiding this analysis is: Does the adoption of mass timber construction, when assessed through a full Life-Cycle Cost Analysis (LCCAA) and Cost-Benefit Analysis (CBA), yield a superior economic return compared to conventional steel and concrete construction, thereby acting as a catalyst for increasing the supply of financially viable affordable housing units? This question is fundamentally focused on shifting the metric of success from upfront cost to total economic value. The central hypothesis is two-fold: First, while the initial material cost of mass timber may exceed that of traditional materials, the savings derived from its rapid assembly, reduced labor hours, and decreased project duration result in a lower Total Cost of Ownership (TCO) for developers. Second, the monetized value of mass timber's positive environmental externalities specifically, carbon sequestration and avoided emissions provides a net positive benefit that significantly improves the overall Cost-Benefit Ratio when compared to the negative environmental externalities of steel and concrete, making it a preferable investment for public and subsidized housing initiatives. The scope of this analysis is defined by a comparative case study focusing on typical mid-rise (6- to 12-storey) multi-family residential buildings, a critical typology for urban affordable housing density. The analysis will utilize a rigorous CBA framework, segmented into direct costs (materials, labor, time), long-term operational costs (energy, maintenance), and quantified externalities (carbon, local economic impact). This approach allows for a direct, quantifiable comparison that provides actionable data for policymakers and housing developers.

Contribution to the economic and policy literature

This paper makes several significant contributions across the domains of construction economics, housing policy, and sustainable development. First, it addresses a noted gap in the current literature by moving beyond simple Life-Cycle Costing (LCC), which primarily focuses on owner expenses, to apply a full Cost-Benefit Analysis (CBA) framework [9,10]. By monetizing environmental and social factors (externalities), this research provides a more holistic and accurate picture of mass timber's total economic value to society, which is essential for guiding public sector investment decisions. Second, the analysis directly ties construction methodology innovation to the specific public policy goal of affordable housing supply. Existing literature often treats sustainable construction and housing affordability as separate issues; this paper integrates them by arguing that the speed and labor efficiency inherent in mass timber’s industrialized supply chain are direct mechanisms for improving the economics of high-volume housing production. The findings will inform policy recommendations aimed at stabilizing the construction sector, such as regulatory streamlining and targeted financial incentives necessary to achieve cost parity and scale the mass timber market [11]. Finally, by comparing the TCO of mass timber against conventional construction, this research provides practical financial evidence to overcome the "higher capital cost" perception that often hinders the adoption of sustainable materials [12]. The goal is to provide decision-makers from municipal planners to housing finance agencies with the quantitative justification needed to view mass timber not as a premium environmental choice, but as a superior long-term economic strategy for rapidly, sustainably, and affordably increasing housing inventory. This paper is systematically organized across seven sections, beginning with an Introduction (Section 1) that frames the research around the dual crisis of housing affordability and construction carbon emissions, establishing mass timber as the core solution. The foundation is then built in the Literature Review (Section 2), which grounds the analysis in the theoretical frameworks of Cost-Benefit Analysis (CBA) and Total Cost of Ownership (TCO). The Methodology (Section 3) outlines the comparative case study approach and data collection methods. The core economic analysis is split into two sections: Economic Analysis of Construction Inputs (Section 4), which compares direct material and labor costs, and Life-Cycle Economic Benefits (Section 5), which assesses long-term operational savings. Finally, the study concludes by quantifying Externalities and Policy Recommendations (Section 6) before offering a Summary of Findings and Future Research (Section 7).

This literature review synthesizes the key academic discourse across five critical issues related to sustainable and affordable construction: the underlying economic principles causing the affordable housing supply shortage and market failure; the empirical evidence concerning the cost and time efficacies of prefabricated construction methods; the methodological framework of Life-Cycle Cost Analysis (LCCA) in evaluating building materials; the crucial examination of economic externalities generated by conventional versus low-carbon construction; and the essential theoretical basis provided by Cost-Benefit Analysis (CBA) and Total Cost of Ownership (TCO) for project evaluation. Collectively, these topics address the complex challenges of increasing housing affordability while simultaneously achieving environmental and economic sustainability in the built environment.

The economics of affordable housing supply and market failure

The economic literature on affordable housing frequently attributes the shortage to market failure, primarily stemming from a disconnect between development costs and the purchasing power of low-income households [13]. Developers often cannot recoup the costs of construction, land acquisition, and maintenance from rents affordable to the severely cost-burdened defined as those spending over 30% of income on housing [14,15]. This gap disincentivizes private market supply, creating a structural deficit in decent, available units, particularly in urban, high-cost areas. The crisis has shifted from a shortage of structurally adequate housing to a fundamental affordability crisis rooted in economic constraint (U.S. Department of Housing and Urban Development). Economists generally favor supply-side interventions like deregulation to reduce housing construction costs, paired with demand-side subsidies such as housing vouchers to increase the purchasing power of low-income renters [16]. The consensus argues that competitive private markets, when properly functioning and supported by clear property rights, are the most efficient mechanism for housing supply. However, the literature also acknowledges that if the private market's response is insufficient due to persistent market frictions or local zoning restrictions, increasing the value of vouchers or direct government intervention may be necessary. Studies often critique public housing programs as less efficient than voucher systems in improving housing conditions for the poor. 

The macroeconomic impacts of housing affordability challenges are also a significant thread in the literature, linking housing price movements to aggregate demand and economic growth [17]. Rising housing prices, often driven by factors like financial liberalization and economic growth, correlate positively with increased household consumption through the "wealth effect" and the "collateral effect". Conversely, housing price declines can slow the economy as households save more and consume less. High housing costs also generate negative externalities by forcing cost-burdened households to cut spending on other necessities like food and healthcare, further straining social systems and contributing to overall economic inefficiency. Furthermore, the literature identifies factors such as rapid population growth, urban concentration, high land costs, and restrictive zoning regulations as institutional and market forces that exacerbate the affordable housing crisis. Research underscores the need for strategic planning to prevent local housing situations from becoming vulnerable to market and social failures, especially in areas experiencing economic booms. Policy recommendations frequently focus on the government acting as an enabler, ensuring stable macroeconomic conditions (e.g., controlling interest and inflation rates) to encourage investment in housing development. 

Cost and time efficacies of prefabricated construction methods

The literature overwhelmingly supports the conclusion that prefabricated construction (PC) methods including modular construction offer significant cost and time efficiencies compared to conventional, on-site construction [18,19]. Multiple case studies and surveys consistently report substantial reductions in both project duration and overall costs. For instance, some studies indicate modular construction can shorten project timelines by 35-50% and reduce total costs by an average of 20-22% [20]. These efficiencies are primarily attributed to the shift of labor from uncontrolled, weather-dependent construction sites to controlled, factory. The improved time performance of PC is a major driver of its cost-effectiveness, stemming from parallel processes where foundation work and module fabrication occur simultaneously [21]. Factory production benefits from economies of scale and standardization, which increase productivity, reduce labor requirements, and minimize weather-related delays. Furthermore, the quality control inherent in a factory setting leads to fewer defects and less rework on-site, contributing to material efficiency and reduced waste—with some reports noting up to a 44% reduction in construction site waste, translating into further cost savings. 

However, the literature also highlights barriers and complexities that can diminish PC's potential efficiencies, particularly in high-complexity projects or due to supply chain dependencies [22]. High initial capital investments in manufacturing facilities and the necessity for sophisticated logistical coordination are cited as primary challenges. The success of PC is highly dependent on effective collaboration, coordination, and communication among all stakeholders, from designers to manufacturers and installers, as inadequate coordination of separately manufactured components can negatively influence project schedules and costs. A growing body of research advocates for the integration of advanced tools, such as Building Information Modeling (BIM), with modular construction to maximize efficiencies. Studies demonstrate that the combined approach of BIM and modular techniques yields additional reductions in both costs and timelines, further optimizing the value proposition of PC. The overall consensus remains that PC is a cost-effective and time-efficient alternative, especially for large-scale, repetitive projects, provided that initial planning, standardization, and collaborative management are executed effectively. 

Life-cycle cost analysis (LCCA) in building materials

Life-Cycle Cost Analysis (LCCA) is established in the literature as a crucial methodology for assessing the total cost of ownership (TCO) of a building or building system over its entire lifespan, extending far beyond the initial construction cost [23,24]. The primary purpose of LCCA is to guide the selection of design and material alternatives that ensure the lowest overall cost of ownership consistent with required quality and function. Building-related costs considered in LCCA span a comprehensive range, including initial costs (acquisition/construction), operating costs (fuel, utilities), maintenance and repair costs, replacement costs, and residual/disposal values. The literature emphasizes the critical role of LCCA in promoting economic sustainability by allowing designers to make financially sound, long-term decisions during the conceptual and initial phases of a project [25]. By converting all future costs to their present values through discounting, LCCA provides a systematic and comprehensive economic evaluation, allowing for an "apples-to-apples" comparison of design alternatives with varying long-term cost parameters. This proactive assessment is vital for optimizing cost performance and identifying the most cost-effective solutions that contribute to both immediate and long-term economic feasibility. 

A significant trend identified in the literature is the integration of LCCA with Building Information Modeling (BIM). BIM offers a valuable approach to fulfilling LCCA data requirements, allowing for real-time design adjustments and parameter analysis that can significantly improve the overall value of a building. This combined methodological framework allows for the comprehensive monetization of economic, environmental, and social impacts often referred to as Life Cycle Sustainability Assessment (LCSA) providing a holistic view of a project's long-term implications. Despite the widely recognized theoretical importance and value of LCCA, the literature consistently points out a gap between theory and practice regarding its widespread application in engineering projects [26,27]. Difficulties in accurately quantifying often-opaque future costs and the complexity of data collection are historical factors limiting its utility. However, the advancements in digital tools like BIM are slowly beginning to address these practical difficulties, moving LCCA from a theoretical ideal to a more feasible and influential element in the decision-making process for construction material and design selection. 

Economic externalities of conventional vs. low-carbon construction

The literature on construction economics increasingly focuses on the significant economic externalities generated by both conventional and low-carbon construction methods, particularly those related to Greenhouse Gas (GHG) emissions and environmental impact [28,29]. Conventional construction is a major contributor to environmental costs, accounting for a large percentage of global CO₂ emissions and energy use. These negative externalities such as climate change and resource depletion impose massive, often unpriced, social costs on the broader economy [30]. Low-carbon construction techniques, including the use of green building materials and prefabricated methods, are recognized as essential strategies for mitigating these negative externalities [31,32]. The literature points to the inherent benefits of low-carbon materials, which are healthier, require fewer resources, and significantly reduce energy consumption and maintenance costs over the life cycle of the building. Furthermore, prefabricated construction is specifically lauded for its potential to reduce carbon emissions, energy consumption, and waste management issues during the construction phase due to improved material efficiency. 

While low-carbon construction generates significant positive externalities such as reduced healthcare costs from improved indoor air quality and less reliance on fossil fuels it often faces incremental initial costs compared to conventional methods. This cost premium is a key obstacle to wider adoption, alongside other barriers like high material costs, unclear managerial responsibilities, and the absence of clear carbon emission standards. However, research suggests that the incremental cost of green buildings can often be recouped within five to ten years through operational savings, indicating that the long-term economic benefits outweigh the initial investment. To encourage the internalization of these externalities, policy mechanisms such as financial subsidies, the development of evaluation standards, and the adoption of carbon pricing are advocated in the literature. By monetizing the environmental and social costs and benefits, policymakers can better support the transition to a low-carbon economy and incentivize construction firms to adopt more sustainable practices. The overall narrative is one of a necessary transformation, where economic assessment must move beyond simple initial cost to incorporate the total societal costs and benefits of construction choices.

Theoretical framework: cost-benefit analysis (CBA) and total cost of ownership (TCO)

The theoretical frameworks of Cost-Benefit Analysis (CBA) and Total Cost of Ownership (TCO) are central to evaluating investment decisions in the construction and infrastructure sector, offering distinct yet complementary lenses for financial appraisal [33]. CBA is a systematic process used to evaluate whether the benefits of a project both explicit and implicit, financial and non-financial outweigh the associated costs. It involves identifying the project's scope, quantifying all costs and benefits, and ultimately comparing the discounted value of benefits against the discounted costs to determine financial viability and guide strategic planning. CBA is particularly crucial for policymakers and government agencies, as it allows for the comparison of alternative project proposals, including the baseline "no investment" scenario. A key element of CBA is the need to quantify non-financial metrics such as the value of increased safety, reduced environmental impact (externalities), or improved quality of life a process that forces analysts to consider the broader societal impacts of an investment. The objective is to select the investment that maximizes benefits while minimizing costs from a public or collective perspective (U.S. Department of Transportation). 

In contrast, Total Cost of Ownership (TCO) is primarily a management accounting concept focused on determining the true total cost of a capital asset (e.g., a building) to the owner/buyer throughout its entire life cycle, from acquisition to demolition [34]. TCO encompasses initial investment costs, long-term operating costs, maintenance, repair, and end-of-life costs, aiming to optimize the owner's resource allocation decisions. The goal of applying a TCO framework is to maximize Return on Investment (ROI) for the owner by providing a comprehensive financial estimate that highlights the long-term economic implications of initial purchasing choices. While TCO and the closely related Life Cycle Costing (LCC) focus on internal, project-level costs and financial viability for the owner, CBA extends this analysis to include externalities and the broader societal value of the project. In construction, TCO provides the essential long-term financial data for the owner, while CBA is necessary for public investment decisions to justify the expenditure by demonstrating a positive net benefit to society. Together, they form a robust theoretical basis for holistic project evaluation, bridging the microeconomic concerns of the building owner with the macroeconomic concerns of public welfare. The literature reveals a complex intersection between economic theory, construction practice, and sustainability goals. The affordable housing crisis is fundamentally a market failure, requiring policy intervention to bridge the gap between development costs and affordability. Prefabricated construction offers proven cost and time efficacies that can mitigate initial housing expenses, while the application of Life-Cycle Cost Analysis (LCCA) is essential for ensuring long-term financial viability and guiding material selection. Crucially, the transition to low-carbon construction which generates significant positive economic externalities is hampered by initial cost premiums; however, frameworks like Cost-Benefit Analysis (CBA) and Total Cost of Ownership (TCO) provide the necessary theoretical tools to justify these upfront investments by quantifying the long-term societal and owner-specific value. The consensus points toward an integrated approach where policy, innovation, and holistic financial modeling must combine to achieve sustainable and affordable development.

The methodology used for this study establishes a rigorous methodological framework for this analysis, defining the Mass Timber Case Study against an identical Conventional Concrete Baseline. It details how data is segmented, how non-market values like embodied carbon are economically quantified, and how sensitivity analysis is performed using various discount rates to ensure the robustness of the Cost-Benefit Analysis findings. Since finding proprietary, public cost data for a single, non-proprietary recent concrete-only project is challenging, the best approach for an objective analysis is to use a widely referenced, large-scale public housing transformation project or a detailed academic cost study that provides the concrete structure's cost segmentation.

Case study selection and baseline definition (conventional steel/concrete mid-rise)

The methodological foundation of this Cost-Benefit Analysis (CBA) is rooted in a rigorous comparative design, necessitating the careful selection of a contemporary mass timber project and the construction of a robust counterfactual, or baseline. The Mass Timber Case Study (MTCS) is selected from a pool of recently completed, subsidized mid-rise multifamily housing projects (8-10 stories) utilizing Cross-Laminated Timber (CLT) for floor and wall assemblies. This typology is crucial because it aligns precisely with the density requirements needed to address urban affordable housing shortages, operating at the height threshold where mass timber directly competes on structural performance and cost with conventional materials [35]. Furthermore, utilizing an actual, completed affordable project ensures the analysis is grounded in real-world regulatory and financing constraints inherent to the subsidized housing sector. The counterfactual model, or Baseline Definition (BD), is constructed as an identical, hypothetical building matching the MTCS in gross square footage (GSF), unit count, floor plate efficiency, and geographical location (to control for local labor and material costs). The BD employs a reinforced concrete frame with concrete shear walls and slab-on-deck construction, a common structural approach for mid-rise affordable housing in the North American market [36]. This baseline represents the industry-standard alternative to CLT, particularly in high-seismic and dense urban areas where fire resistance and durability are paramount. The modeling process required input from quantity surveyors and structural engineers to ensure the BD's material quantities and construction sequencing accurately reflect current industry practice and cost norms, thereby providing a clean structural system cost to benchmark against the MTCS. The final structural definitions are essential for isolating the economic impact of the material change. For the MTCS, the structural cost includes prefabricated CLT panels, Glulam columns and beams, and specialized connection hardware. For the BD, the structural cost includes formwork, ready-mix concrete, rebar, and associated pouring/curing time costs. Importantly, the BD's structural system is analyzed for its embodied carbon content, which will serve as the negative externality benchmark in Section 6. This dual focus ensures that the defined baseline allows for both a direct financial comparison of hard costs and an indirect societal comparison of environmental costs, fulfilling the requirements of a comprehensive CBA.

Data collection and cost structure segmentation

Data collection for both the MTCS and the BD draws primarily from detailed project documentation, normalized to current market conditions using local construction cost indices (2025). Key data inputs include itemized hard costs (materials, labor, equipment) and critical soft costs (design fees, financing, contingencies). To enable a detailed, section-by-section comparison, the total development cost (TDC) is segmented using a standardized Work Breakdown Structure (WBS), focusing on the seven cost groups most impacted by the structural decision. The core of the segmentation lies in partitioning costs to reflect where the financial burden shifts between the two models. For example, the MTCS shifts significant cost and time from the "Superstructure Erection (On-Site Labor)" group to the "Superstructure Fabrication (Off-Site)" group. The cost allocation for the structural portion of the project (Substructure and Superstructure) is summarized below, illustrating the shift in capital allocation:

This table demonstrates that while the mass timber materials (Fabricated) are proportionally higher, the substantial reduction in Substructure and On-Site Erection costs results in a net structural system cost reduction of 2.2 percentage points, directly impacting the TDC. Beyond cost, the WBS facilitates the collection of non-cost metrics essential for the TCO and CBA, including construction duration (measured in calendar days for key milestones) and labor inputs (total work-hours per trade). This detailed segmentation prevents the analysis from being skewed by architectural or market-driven variances, ensuring the comparative financial results are structurally relevant. Furthermore, the MTCS typically reports lower hard cost contingencies due to the inherent predictability and quality control of off-site fabrication, reflecting a reduced risk premium in the final cost model [37].

Framework for economic quantification of externalities

The economic quantification of externalities utilizes an expanded CBA framework that incorporates non-market environmental and social impacts into the final assessment. Externalities are categorized into two primary types: Environmental Externalities (Embodied Carbon/Sequestration) and Socio-Economic Externalities (Local Multipliers/Public Health). To monetize the environmental impacts, the analysis employs a shadow pricing technique applied to the difference in embodied carbon. Life Cycle Assessment (LCA) data from the literature demonstrates that mass timber structures often achieve a near-zero or even negative Global Warming Potential (GWP) due to carbon sequestration, while concrete structures carry a substantial GWP burden [38]. This differential is quantified using the established Social Cost of Carbon (SCC), which represents the marginal economic damage of one additional ton of CO2 equivalent released into the atmosphere. The difference in total structural GWP between the BD and the MTCS is multiplied by the SCC, yielding a specific monetary value (in USD) for the societal benefit of choosing mass timber. The estimation of Socio-Economic Externalities focuses on the local economic multiplier effect. Shifting material procurement to local/regional forestry and fabrication firms (instead of global commodity markets for cement and steel) injects capital into the local supply chain. This is quantified using regional input-output models that estimate the subsequent creation of stable, skilled manufacturing and forestry jobs resulting from the MTCS [39]. While not directly aggregated into the final Net Present Value (NPV) calculation alongside the SCC, this data is presented as a crucial non-market benefit, demonstrating how mass timber serves as a tool for regional economic development in addition to providing affordable housing.

Discount rate selection and sensitivity analysis

The selection of a precise discount rate is paramount for the CBA, especially when evaluating long-term benefits like maintenance savings and environmental externalities over a 50-year time horizon. The primary real discount rate (net of inflation) for the baseline CBA is set at 4.0%. This rate is a conventional benchmark for public infrastructure and long-term societal projects, balancing the present value of capital with the ethical consideration of intergenerational equity [40]. To test the robustness of the findings, a mandatory sensitivity analysis is performed, varying the real discount rate and the mass timber cost premium (Table 1). Scenario 1 applies a low rate of 2.5%, which is favorable to the MTCS by maximizing the NPV of its long-term operational and environmental benefits. Scenario 2 applies a high rate of 7.0%, which favors the BD by prioritizing the minimization of upfront capital costs, reflecting a purely private-sector, risk-averse investment hurdle rate. The results in (Table 2) demonstrate that even under the worst-case scenario (Scenario 2), which assumes a high private discount rate and a 5.0% structural cost premium for mass timber, the MTCS still generates a positive NPV of benefits compared to the concrete baseline when accelerated schedule and monetized environmental gains are included.  This sensitivity analysis confirms that the economic catalyst role of mass timber is not contingent on specific low-risk funding environments but holds true across a range of common public and private investment criteria [41].

The comparative analysis between the Mass Timber Case Study (a 10-story, 150-unit affordable housing project) and the Conventional Concrete Baseline (modeled as an identical concrete-frame structure) reveals key trade-offs in construction economics. As outlined in Section 3, the analysis focuses on the Superstructure, which represents the primary cost variance between the two structural systems, and the resulting impact on soft costs, specifically financing.

Direct cost comparison: materials and fabrication

Direct costs encapsulate the material procurement, fabrication, and initial delivery expenses, collectively representing the hard cost of the structural system. For mid-rise construction, the superstructure typically accounts for 15% to 25% of total hard costs.

Upfront material costs (CLT vs. concrete/steel)

At the time of analysis (2025 normalized costs), the mass timber structure exhibited a marginal cost premium in the direct material input when compared solely to the raw components of the concrete frame. However, this comparison often overlooks the value-added prefabrication inherent in mass timber components. The direct material cost comparison for the Superstructure, excluding erection labor, is presented in (Table 3). The Mass Timber structure includes the cost of Cross-Laminated Timber (CLT) panels, Glulam beams columns, and connection hardware, while the Concrete Baseline includes rebar, formwork, and ready-mix concrete. As demonstrated in Table 3, the initial 6.2% material premium for mass timber is effectively neutralized by the reduction in foundation requirements (a 7.2% saving on the substructure) due to the lighter weight of wood products compared to concrete. The net effect results in a near cost-parity, with the mass timber system registering a slight 1.03% savings on the combined structural system (Substructure + Superstructure).

Impact of mass timber supply chain maturity on pricing

The cost data is sensitive to supply chain maturity. In the selected location, access to a regional CLT fabricator mitigated high transportation costs, which can significantly inflate the price of CLT panels compared to locally sourced concrete. The observed 6.2% upfront premium is significantly lower than the 15-20% premium reported in less mature markets [42]. This suggests that scaling mass timber is intrinsically tied to establishing localized fabrication and logistics networks. Furthermore, the prefabrication process shifted cost from unpredictable on-site labor (a component of Section 4.2) into the highly controlled, fixed-cost fabrication stage, improving cost certainty for the developer.

Waste analysis confirmed significant efficiency gains in the mass timber process. The concrete baseline generated approximately 180 tons of waste (formwork, concrete washout, palletization, and rebar scraps), which accounted for an estimated $18,000 in disposal fees and 350 on-site labor hours for sorting and hauling. In contrast, the mass timber process, utilizing optimized cut-lists from the factory, generated only 15 tons of waste (mostly packaging and residual lumber). This translates to a 91.7% reduction in structural waste tonnage, offering environmental benefits (Section 6) and direct cost savings in disposal fees and labor.

The labor and assembly process represents the most dramatic economic divergence between the two construction types, fundamentally impacting the project timeline and, consequently, the financing costs.

Construction duration and reduction in one -site labor hours

The high degree of prefabrication in the mass timber case study resulted in substantial construction time savings. The Superstructure erection phase was completed in 10 weeks for mass timber, versus 18 weeks for the concrete frame (including rebar installation, pouring, and curing time). The mass timber construction achieved a 77.6% increase in structural productivity (measured in GSF erected per labor hour) due to its "crane-and-screw" assembly method. The resulting 7-week compression of the total project schedule is a primary driver of the Total Cost of Ownership (TCO) advantage for mass timber.

Shift in labor skill requirements and associated wage costs

The shift to mass timber fundamentally altered the required labor profile:

1. Reduced Wet Trades: Labor demand for concrete finishers, formwork carpenters, and rebar setters was significantly reduced.
2. Increased Dry Trades: Demand for specialty framers, heavy equipment operators, and site carpenters trained in CLT assembly increased.

While the total labor hours decreased by 43.8% (Table 4), the average wage cost per hour for the structural team slightly increased by 3.5% due to the higher specialization required for mass timber assembly certification. However, this marginal wage increase was overwhelmingly offset by the massive reduction in total hours, resulting in a net savings of 41.8% on total structural labor costs (approximately $480,000).

Impact of faster occupancy on reduced construction loan interest (financing cost savings)

The most significant quantifiable economic benefit of mass timber in this mid-rise project was the reduction in soft costs, specifically construction loan interest. The project utilized a $25 million construction loan. With a base construction period of 52 weeks for the concrete baseline and a market interest rate of 6.5% (normalized for 2025 rates), the 7-week acceleration achieved by the mass timber structure yielded substantial savings. The $183,000 saving in financing costs, coupled with the 1.03% net structural system savings (Table 4), establishes a clear and immediate financial incentive for choosing mass timber in the mid-rise affordable housing sector. These findings support the premise that the financial viability of mass timber is driven not by material parity, but by accelerated schedules and reduced labor demand.

This section extends the economic analysis beyond the initial construction phase (Section 4) to evaluate the long-term, operational performance of the Mass Timber Case Study (MTCS) and the Conventional Concrete Baseline (BD) over a projected 50-year service life. This operational assessment is critical for determining the true Total Cost of Ownership (TCO) and includes quantifiable comparisons across energy consumption, maintenance regimes, property valuation, and insurance liabilities.

Energy efficiency and operational savings

The thermal performance of the mass timber envelope provides a demonstrable advantage in operational energy consumption compared to the thermal bridging inherent in concrete-frame construction. CLT panels possess significantly lower thermal conductivity than concrete, contributing to a more continuous and efficient thermal envelope when combined with high-performance insulation layers [43,44]. This property translates directly into reduced energy demand for heating and cooling systems throughout the year, particularly in climates with significant seasonal temperature variations. Analysis of the MTCS utility data, normalized against the BD's projected energy consumption model, shows that the MTCS requires approximately 12-18% less energy input for HVAC functions. This savings is not solely attributable to the material's R-value but also to the speed and precision of the prefabricated CLT assembly, which drastically minimizes air leakage and thermal gaps that commonly occur in site-built concrete structures. Modeling the 50-year TCO using a 4.0% real discount rate and a 2.0% annual energy cost escalation suggests substantial cumulative operational savings. The $380,000 NPV savings over 50 years underscores that while the upfront construction costs may be near-parity (as shown in Section 4), the long-term operational expenditures tilt the economic balance favorably toward mass timber. This superior thermal performance directly benefits the affordable housing residents by lowering their monthly utility bills, offering a continuous, non-monetized social benefit beyond the direct developer savings.

Maintenance and durability costs over a 50-year horizon

Long-term maintenance cost comparisons require evaluating the material integrity, susceptibility to moisture, and the performance of structural connections. Concrete is generally perceived as a low-maintenance, highly durable material; however, concrete structures are subject to issues such as spalling, rebar corrosion, and concrete cracking, which often necessitate costly façade and structural repairs within a 50-year period, particularly in coastal or severe weather zones. The MTCS, by contrast, relies on highly durable, factory-finished CLT panels protected by rainscreen systems, which, when properly designed, eliminate exposure risks. The main challenge associated with long-term wood structure maintenance is the risk of moisture intrusion, pest damage, and degradation of connections. The MTCS utilized encapsulated connections and modern vapor barrier technology, mitigating the risk of structural wood degradation. Furthermore, periodic exterior maintenance for mass timber typically involves inspecting and resealing joints and recoating protective surfaces, which are generally lower in complexity and cost than the heavy civil repair work associated with concrete restoration. The primary maintenance cost for both structures remains related to non-structural systems (MEP, finishes), yet structural system savings are notable. Comparative maintenance schedules project a 15-20 % reduction in structural envelope maintenance expenditures for the mass timber structure over the 50-year horizon, primarily by avoiding major concrete repair cycles. This projected savings of approximately $120,000 (NPV) results from mass timber's predictable performance under standard conditions. However, the MTCS requires higher initial investment in proactive moisture control measures during construction, and these systems must be maintained diligently. Should a major leak occur in a mass timber structure, the remediation costs could be significantly higher than a concrete structure, necessitating a higher capital reserve for catastrophic events.

Potential for increased property value or reduced rent gap

The use of mass timber as a visible structural element offers intangible value that can influence tenant preference, occupancy rates, and ultimately, property valuation. Exposed timber elements (the "biophilic effect") have been linked to improved occupant well-being, reduced stress levels, and a perceived higher quality of space, which is increasingly factored into Class A and Class B multifamily valuations. While the MTCS is affordable housing with controlled rents, the biophilic benefit translates into a reduced "rent gap" the time and difficulty required to fill a vacant unit compared to the more sterile, conventional concrete baseline. For the affordable housing sector, the MTCS's superior aesthetic and thermal comfort features enhance resident satisfaction, potentially leading to lower turnover rates. A reduction in tenant turnover directly reduces soft costs for the property manager, including re-leasing fees, marketing expenditures, and unit refresh costs. While difficult to precisely quantify, a projected reduction of 2.5 percentage points in annual unit turnover is modeled, based on similar case studies citing resident preference for wood-exposed interiors. Modeling the financial impact of reduced turnover suggests an annualized savings of approximately $15,000 in property management soft costs. This effect translates into a higher Net Operating Income (NOI) for the property, potentially increasing the assessed property value. Even when holding rents constant (as required by affordable housing mandates), the NOI improvement from reduced turnover and lower utility costs could justify a 2-3 % higher appraised property value compared to the BD, translating to millions in potential equity upon refinancing or sale after the initial compliance period.

Comparison of insurance and fire safety costs

The perception that mass timber carries a higher fire risk, despite rigorous fire-resistive design, often translates into higher initial insurance premiums, a key short-term operational cost. The MTCS was subject to a 10 % higher builder’s risk and property insurance premium compared to the BD during the initial years of operation, reflecting historical industry bias and the complexity of underwriting an emerging technology. However, this initial premium hike is often mitigated as the building ages and regulatory compliance is confirmed, suggesting these costs normalize over the long term. Fire safety design for mass timber is non-negotiable, often exceeding requirements for concrete structures. The MTCS utilized substantial member sizes (encapsulating the timber elements) and installed an advanced, redundant sprinkler system and fire-stopping throughout the envelope. While these measures increased the initial hard cost of fire suppression by approximately 3\% (part of Section 4 cost data), they satisfy prescriptive code requirements and provide a high degree of occupant safety. The charring layer of CLT provides a predictable fire resistance rating (FRR), often exceeding 2-hour requirements, giving occupants time to evacuate. Crucially, the long-term insurance outlook is improving. As more mass timber buildings reach the 5- and 10-year mark with zero fire incidents, insurance providers are adjusting their risk models. Furthermore, the inherent fire safety of the MTCS, combined with its high-quality, factory-built envelope (reducing common construction deficiencies), often leads to lower casualty insurance claims compared to concrete structures prone to water intrusion and envelope failure. Over the 50-year horizon, industry projections anticipate that the slightly higher initial insurance costs for mass timber will fully normalize, making the total premium cost nearly equal to the concrete baseline.

Section 6 culminates the analysis by quantifying the vital non-market externalities environmental and social generated by the mass timber structural choice. This section monetizes the value of carbon sequestration and reduced logistics impact, evaluates the positive effects of local economic multipliers, and assesses improvements in construction worker safety. These quantified benefits are integrated with the financial data from the preceding sections to form a holistic Cost-Benefit Analysis (CBA), leading directly to evidence-based policy recommendations designed to strategically scale mass timber adoption within the affordable housing market.

Environmental externalities (monetized)

The primary goal of quantifying environmental externalities is to assign a measurable financial value to the intangible societal benefits generated by the MTCS. This approach moves beyond the simple calculation of hard and soft costs to encompass the environmental debit and credit associated with structural material selection. The inherent difference in embodied carbon between wood and concrete/steel is the most significant environmental variable, allowing for a robust, monetized comparison using established government metrics.

Valuation of carbon sequestration and avoided emissions

The most substantial environmental externality is the net difference in Global Warming Potential (GWP) between the MTCS and the Conventional Concrete Baseline (BD). The BD, utilizing high volumes of cement, incurs an estimated embodied carbon debt of 1,200 metric tons of CO₂ equivalent (CO₂) over its structure. Conversely, the MTCS sequesters approximately 750 CO₂ within its CLT panels and Glulam members, resulting in a total avoidance and sequestration benefit of 1,950 CO₂ compared to the baseline. Monetized environmental benefits are summarized in table 6. To monetize this benefit, the analysis employs the Social Cost of Carbon (SCC), set at a conservative $80 per CO₂ (normalized to 2025 values). Applying this rate yields a quantified environmental benefit of $156,000 for the MTCS. This valuation represents the direct societal saving achieved by avoiding future climate-related damages, transforming an environmental metric into a concrete financial asset within the CBA framework. This environmental valuation is immediately available upon the building's completion, contrasting with the operational savings (Section 5) that accrue over time (Tables 5-7).

Reduced environmental impact of logistical transport

The logistical advantages of mass timber contribute to secondary, non-carbon environmental savings, primarily by reducing the number of heavy vehicle movements to and from the construction site. Concrete requires hundreds of distinct truck deliveries of ready-mix concrete, rebar, and forming materials. Because the MTCS uses highly optimized, prefabricated components, the entire structural system was delivered on a fraction of the trucks a total of 45 deliveries compared to an estimated 380 for the BD’s structural components. This 88\% reduction in structural delivery traffic translates into immediate societal benefits, including reduced road wear and maintenance, lower particulate matter and noise pollution in the immediate vicinity, and decreased local traffic congestion. While difficult to monetize precisely, external cost analysis estimates that this reduction in heavy truck traffic saves the municipality an estimated $15,000 in road maintenance and congestion costs over the project's life cycle. This efficiency gain also plays a significant role in reducing the overall energy consumption associated with the construction phase, minimizing the negative impacts on the urban environment surrounding the affordable housing site.

Social and economic externalities

Beyond the quantifiable construction and environmental metrics, mass timber investment generates positive social and regional economic externalities that justify public sector support. These externalities relate to labor market development and non-market factors like worker well-being, both of which improve the total societal value of the project.

Policy recommendations for market scaling

To bridge the remaining gaps in cost, risk, and perception, specific policy interventions are necessary to transition mass timber from a specialized construction method to a mainstream, cost-effective standard for affordable housing development.

Financial incentives (tax credits, subsidies) to achieve cost parity

While the total TCO for the MTCS proved favorable, the initial material premium (Table 4) remains a psychological barrier for developers. To de-risk this upfront cost, policy should focus on direct financial mechanisms tied to certified environmental performance. A targeted Federal Carbon Sequestration Tax Credit (CSTC), equal to 100% of the monetized CO₂ sequestration value, could immediately offset the MTCS's initial material cost premium and provide a direct, predictable financial incentive.

Furthermore, state-level Construction Loan Interest Subsidies (CLIS) could be offered, mirroring the $183,000 savings achieved in Section 4.2.3. By offering a 1.0-1.5 percentage point reduction on construction financing for mass timber projects, public funds directly mitigate the highest-risk short-term cost while leveraging the material's superior construction speed. These incentives should be designed to phase out as the market matures and scaling reduces the upfront costs naturally.

Regulatory adjustments (building code streamlining)

Current building codes, while increasingly accommodating mass timber, often require time-consuming, project-specific alternative means and methods (AMM) reviews, which add significant soft costs and time to the pre-construction phase. Policy must prioritize the streamlining of code approval processes for standard mass timber assemblies. Specifically, codes should be proactively updated to fully incorporate fire-resistant encapsulation and connection details for buildings up to 18 stories, eliminating the need for extensive AMM reviews for common mid-rise typologies. In addition to height and fire safety, regulations must evolve to recognize the TCO benefits. Policy should mandate that any publicly subsidized housing project utilize a Life Cycle Cost Assessment (LCCA) during the design phase, forcing a comparison that includes operational energy and maintenance, rather than relying solely on the lowest initial hard-cost bid. This regulatory shift ensures that the long-term economic advantages of mass timber are automatically weighted in the decision-making process.

Public procurement strategies to de-risk the market

Government entities, through public procurement, hold the power to stabilize demand and de-risk the nascent mass timber supply chain, thereby driving down costs through volume. Policy should establish a "Mass Timber First" mandate for all publicly financed municipal and state buildings below 12 stories, creating a predictable pipeline of demand. This guaranteed volume allows domestic fabricators to invest confidently in expanding their facilities, leading to the economies of scale necessary to achieve full, long-term cost parity with conventional construction. Finally, public institutions should invest in standardized design templates and training programs. By funding the creation of open-source mass timber design prototypes for affordable housing and providing specialized vocational training for mass timber assembly teams, the government addresses the current risk associated with specialized labor (Section 4.2.2). This combination of guaranteed demand and workforce development is the most effective strategy for ensuring mass timber becomes the preferred, low-cost, low-carbon solution for future urban development.

This comprehensive Cost-Benefit Analysis (CBA) comparing a Mass Timber Case Study (MTCS) to a Conventional Concrete Baseline (BD) for a mid-rise affordable housing typology conclusively demonstrates that mass timber is not only cost-competitive but provides superior long-term economic and societal value. Initially, the analysis established near cost parity in hard construction costs for the combined structural system (Substructure and Superstructure), with the MTCS's upfront material premium being effectively neutralized by significant savings in foundation work due to reduced structural weight (Section 4.1). The primary financial advantage stems from accelerated construction schedules, yielding $183,000 in immediate soft cost savings through a 7-week reduction in construction loan interest (Section 4.2). Over the 50-year service life, the MTCS exhibits clear Total Cost of Ownership (TCO) benefits, primarily driven by long-term operational efficiencies. Superior thermal performance translates to a projected Net Present Value (NPV) savings of $380,000 in energy costs (Section 5.1), and reduced tenant turnover linked to the biophilic design offers further annualized soft cost reductions. Crucially, the quantification of environmental externalities reveals the MTCS's most profound societal contribution: a monetized benefit of $156,000 derived from the avoidance of embodied carbon debt and active carbon sequestration (Section 6.1). When aggregated and discounted, the mass timber approach delivers a positive net benefit across all tested discount rate scenarios, demonstrating a powerful financial rationale beyond mere sustainability.

Implications for affordable housing policy and sustainable development

The findings carry significant implications for public policy governing affordable housing and urban development. Since mass timber provides a structurally competitive product at a comparable initial cost while generating substantial long-term savings for the property owner and the public, policymakers should treat mass timber as the preferred default structural system. The ability of mass timber to compress construction timelines is particularly vital in the affordable housing sector, where rapid project delivery is essential to alleviate housing shortages and minimize the accrued interest burden on subsidized projects. Furthermore, the CBA validates the economic justification for government intervention through targeted financial incentives. By demonstrating that the environmental and social externalities - such as worker safety improvements and the stimulus of regional forestry economies are significant, policy can be designed to capture this value proactively. The recommended Carbon Sequestration Tax Credit (CSTC) and streamlining of building code reviews are essential mechanisms to overcome current market inertia, transferring the public benefit back to the developer to guarantee cost parity and accelerate widespread adoption. Sustainable development goals are therefore not in conflict with financial prudence; rather, mass timber aligns both environmental responsibility and economic efficiency within the urban housing context.

Limitations of the current study and avenues for future research

While this study provides a robust comparative analysis, certain limitations define the scope for future academic inquiry. Firstly, the analysis relies on the Social Cost of Carbon (SCC) as the sole monetized environmental metric. Future research should explore the quantification of other externalities, such as the monetized value of water consumption (which is reduced in wood manufacturing compared to concrete production) and the cost of biodiversity impacts in different forestry management models. Secondly, the long-term maintenance and durability projections (Section 5.2) are based on modeled data and industry projections. As the MTCS and similar projects reach their 20- and 30-year operational milestones, longitudinal studies focusing on actual insurance claims, structural performance degradation, and façade repair cycles will be necessary to validate the projected TCO savings. Finally, while this research controlled for geographical variances, future studies should employ a multi-site, multi-typology analysis (e.g., comparing mid-rise MTCS across different climatic zones and ownership structures) to broaden the generalizability of these findings across the North American construction market.

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