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Costs and Benefits of Implementing Green Building Economic Incentives: Case Study of a Gross Floor Area Concession Scheme in Hong Kong

Author

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  • Ke Fan

    (Department of Urban Planning, South China University of Technology, Guangzhou 51000, China
    Center for Agency Policy Studies, Guangdong Urban and Rural Planning and Design Institute, Guangzhou 51000, China)

  • Edwin H. W. Chan

    (Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China)

  • C. K. Chau

    (Department of Building Services Engineering, The Hong Kong Polytechnic University, Hong Kong, China)

Abstract

Economic incentives are widely used to promote green buildings (GB) and consume social resources. However, few studies evaluate the costs and benefits of implementing economic incentives, including hidden costs and benefits. This paper applies cost–benefits analysis (CBA) and transaction cost (TC) theory to systematically evaluate the costs and benefits of implementing the green building economic incentives, with focused study on the Gross Floor Area (GFA) Concession Scheme in Hong Kong. The data of costs and benefits indicate how the GFA Concession Scheme motivates stakeholders and how much it benefits the built environment, which provides a solid foundation for the improvement of the GFA Concession Scheme. Expert interviews were conducted to verify and compliment the new CBA framework and provide empirical evidence for policy-makers and researchers to better understand the allocation of costs and benefits. The results show that the effectiveness of the GFA Concession Scheme is readily justified even if it has caused a lot of extra transaction costs and actual costs. A 10% GFA concession attracts developers to enter the GB market but discourages them to go for a higher level of GB. It is the right time to differentiate the GFA concession to promote a higher level of GB.

Suggested Citation

  • Ke Fan & Edwin H. W. Chan & C. K. Chau, 2018. "Costs and Benefits of Implementing Green Building Economic Incentives: Case Study of a Gross Floor Area Concession Scheme in Hong Kong," Sustainability, MDPI, vol. 10(8), pages 1-19, August.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2814-:d:162690
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    2. Hongyu Long & Hongyong Liu & Xingwei Li & Longjun Chen, 2020. "An Evolutionary Game Theory Study for Construction and Demolition Waste Recycling Considering Green Development Performance under the Chinese Government’s Reward–Penalty Mechanism," IJERPH, MDPI, vol. 17(17), pages 1-21, August.
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