In his most recent edition of "Building Science Insights," Joe Lstiburek gives us clear answers to persistent questions about insulating basements and keeping them dry. Should you insulate on the inside or the outside? Is dampproofing needed? What's the difference between dampproofing and waterproofing? Should a vapor barrier be used on a finished basement wall? If so, where should it go? These are the ones we hear most often, and Joe has an answer to all of these. They are all, in a sense, linked, as you might expect, as part of the foundation as a system.
The traditional approach to basement moisture control has been to locate the water control on the outside and then allow drying to the inside. Drainage, water control layers (water-proofing), capillary control layers (damp-proofing) and vapor control layers (damp-proofing) have historically been located on the outside of basement perimeter walls and crushed stone layers and plastic vapor barriers have been located under concrete slabs. The operative principle has been to keep the liquid flow due to groundwater and the liquid flow due to capillarity out of the structure and locate vapor control layers (vapor barriers) on the outside – and allow inward drying to the basement space where moisture can be removed by ventilation or dehumidification.
... Unfortunately, exterior basement foundation insulation can have significant application problems that often make it impractical to employ. The first is the difficulty in protecting the insulation layer during the construction process and subsequently during its useful service life. The second is insect control. Exterior insulation can be an “insect interstate” that provides a direct pathway into the structure.
These factors have resulted in primarily locating insulation layers on the interior. However, locating insulation layers on the interior often conflicts with the traditional approach of foundation water control – namely inward drying. Constructing frame walls, insulating the resulting cavity and covering with an interior plastic vapor barrier is common and often leads to odor, mold, decay and corrosion problems.
