Building Heat Resilience: Why Energy Efficiency Retrofits Are Also Health Investments

Energy-efficiency retrofits are usually discussed through a narrow set of outcomes: lower energy use, lower emissions, lower bills, and improved asset performance.

These outcomes matter. Buildings are central to the energy transition, and improving the performance of the existing building stock is one of the most important challenges facing governments, investors, housing associations, and households.

But as renovation programs grow in scale, a second question becomes increasingly important: how do we show their broader impact?

A retrofit is not only a technical intervention in a building. It is also an intervention in the daily living environment of occupants. Better insulation, windows, heating systems, ventilation, and protection from outdoor conditions can change how people experience their homes. These changes can matter for comfort, health, and resilience.

The rising need to measure impact

Across Europe, renovation policy is becoming more ambitious. The energy transition requires large-scale investment in the existing housing stock. At the same time, households are facing higher energy costs, warmer summers, and growing concerns about indoor comfort and health.

This creates a need for better evidence. Policymakers and investors increasingly need to know whether renovation programs deliver benefits beyond energy savings. Housing associations need to understand whether upgrades improve the lives of tenants. Cities need evidence on whether better buildings can reduce vulnerability during extreme weather. And the real estate sector needs tools to communicate the social value of building improvements.

The key challenge is that many of these benefits are not immediately visible in an energy label or a carbon calculation. Health, comfort, and resilience are harder to measure. Yet they are central to the value of a building.

Evidence from one of Europe’s largest renovation waves

A study by Steffen Künn and Juan Palacios, published in the Journal of Health Economics, provides rare population-wide evidence on the health effects of housing retrofits.

The study examines the large renovation wave that followed German reunification. At the time, much of the East German housing stock was in poor condition and lagged behind Western standards. The German government responded with a large-scale modernization program, implemented through KfW, that supported upgrades to insulation, windows, heating systems, and other building components.

The scale of the program was exceptional: around 3.6 million dwellings were renovated, corresponding to roughly half of the existing housing stock in East Germany at the time. The program provides an unusually powerful setting to study whether weatherization upgrades affect occupant health.

What the study finds

The researchers combine two data sources. First, they use the German Socio-Economic Panel, which follows households over time and includes information on housing conditions, renovations, and health-care use. Second, they use administrative hospital records covering the universe of hospital admissions in Germany.

This combination allows the study to examine both individual-level changes after a renovation and broader regional changes in hospital admissions as the program was rolled out across counties.

The results show a consistent pattern: weatherization upgrades reduce health-care demand among older residents.

In the preferred specification, an increase in subsidized loan take-up of €100 per inhabitant reduced hospital admissions for circulatory problems by 2.6% among patients aged 45–64 and by 1.5% among patients aged 65 and older. The study estimates medical cost savings of around €636 million from reduced circulatory hospital admissions during the observation period.

Why outdoor temperature matters

One of the most important pieces of evidence in the study comes from the analysis of outdoor temperature.

The mechanism is intuitive. Poor-quality buildings expose occupants more directly to outdoor conditions. During cold or hot days, the body has to work harder to maintain a stable internal temperature. This can increase cardiovascular stress, especially among older and more vulnerable residents.

If renovations improve the building envelope, windows, and heating systems, then homes should provide better protection against outdoor temperature shocks. The study tests this idea directly by linking daily outdoor temperature data to hospital admissions and interacting temperature bins with the intensity of the KfW renovation program.

This temperature evidence is important because it helps move the discussion from correlation to mechanism. The health benefits are not simply associated with areas that renovated more. They appear precisely when building protection should matter most: after very cold or very hot days.

From energy savings to climate protection for occupants

For the real estate sector, the implication is clear. Energy-efficiency retrofits should not be understood only as a way to reduce heating demand or improve asset ratings. They are also a way to protect occupants from environmental stress.

This is especially relevant as climate risk becomes more visible in Europe. Buildings that were designed mainly for winter performance now also need to protect people during warmer summers and more frequent periods of heat stress.

A good retrofit strategy therefore needs to look at the full year. It should ask whether a home is warm enough in winter, cool enough in summer, affordable to operate, well ventilated, and healthy for the people living inside.

Why this matters for housing associations, investors, and cities

For housing associations, the findings show that renovations can generate social value for tenants and the health system. This is especially important when investment decisions need to balance affordability, decarbonisation, maintenance, and tenant well-being.

For investors, the study highlights that asset quality increasingly includes resilience and occupant protection. Buildings that perform better under temperature stress may be more valuable, more attractive to tenants, and less exposed to future regulatory and reputational risks.

For cities, the evidence suggests that building renovation should be part of public health and climate-adaptation policy. Heat plans, elderly care, urban greening, and housing retrofits are connected. A city that wants to protect residents from extreme temperatures needs both better neighbourhoods and better buildings.

A broader definition of sustainable real estate

The real estate sector often talks about sustainability in terms of carbon. That remains essential. But the evidence from housing retrofits shows that sustainable real estate is also about health, protection, and quality of life.

The next generation of retrofit programs will need to demonstrate impact more broadly. They will need to show not only that buildings consume less energy, but also that they protect people better.

This is the future of renovation policy: energy efficiency, climate adaptation, and occupant well-being should be evaluated together.

As temperatures become more extreme, the buildings that matter most will be those that do more than save energy. They will help people live safely, comfortably, and healthily in a changing climate.

Read the research

Künn, S., & Palacios, J. (2024). Health implications of housing retrofits: Evidence from a population-wide weatherization program. Journal of Health Economics, 98, 102936.

https://doi.org/10.1016/j.jhealeco.2024.102936