Monetizing environmental impacts can compensate for higher upfront costs of wood construction

The transition toward low-carbon construction has renewed interest in engineered wood products (EWPs) as alternatives to traditional materials such as steel and concrete. While EWPs offer clear environmental advantages, their higher upfront costs often discourage adoption. This study investigates whether incorporating the monetary value of environmental externalities, or indirect costs not reflected in market prices, can influence the cost-effectiveness of material choices in construction. A life cycle assessment (LCA) is applied to compare the upfront emissions of two structural design alternatives of a Finnish public building, one based on EWPs and the other on steel-reinforced concrete elements. Monetary valuation was used to translate environmental impacts from four key categories (global warming potential, acidification potential, stratospheric ozone depletion, and tropospheric ozone formation) into indirect costs. Results show that, although the wood scenario had slightly higher direct costs (∼4.4 %), it delivered substantial environmental benefits, particularly in the global warming potential category. Wood elements indicated net environmental gains and showed negative indirect costs, which reduced the total cost of the elements by approximately 33 %. By integrating both direct and indirect costs, this research demonstrates a more complete method for evaluating construction materials. This approach offers new insight for aligning financial decision-making with climate goals in the built environment.