The costs associated with restoring a building damaged by pollution are five times its current value. What does this indicate?

The situation where the costs of restoring a building damaged by pollution are significantly higher than its current value—specifically five times greater—is indicative of incurable physical deterioration. This term refers to damage that cannot be economically remedied or restored to a condition of functional utility.

When the cost to repair outweighs the current value of the property by such a large margin, it suggests that the extent of the damage is severe, leading to a judgment that restoring the building may not be a financially viable option. Incurable physical deterioration is not merely a reflection of wear and tear; it encompasses irreparable damage that renders the property's potential for useful life economically unfeasible.

This contrasts with terms like functional obsolescence, which relates to a decrease in property value due to outdated features rather than physical damage. Curable physical deterioration would imply that repairs could be made at a reasonable cost that adds value. Market failure refers to inefficiencies in the market that prevent optimal resources allocation. In this context, none of these alternatives capture the core implication of the extreme restoration cost relative to the building's value as accurately as the concept of incurable physical deterioration.