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There are a few ways to increase the energy efficiency of the building’s envelope at the walls. One is to increase their R-value. Another is to provide an air barrier.
Taking it one step further, consider making the air barrier, vapor retarder and backup waterproofing one component. Introducing this component requires installing the material on the exterior side of the sheathing so it can function as a waterproofing layer.
But because the vapor barrier is now on the wall’s outside surface, the insulation must move to the exterior in cold climates. Introducing rigid insulation on the outboard side of the wall studs will increase the wall thickness, but the resulting drop in occupant complaints and rise in energy savings will make up for lost square footage.