The Economics of Green Building
Research on climate change suggests that small improvements in the "sustainability" of buildings can have large effects on greenhouse gas emissions and on energy efficiency in the economy. This paper analyzes the economics of "green" building. First, we analyze a panel of office buildings "certified" by independent rating agencies, finding that large recent increases in the supply of green buildings and the unprecedented volatility in property markets have not significantly affected the relative returns to green buildings. Second, we analyze a large cross section of office buildings, demonstrating that economic premiums in rent and asset values are substantial. Third, we relate the economic premiums for green buildings to their sustainability, confirming that the attributes rated for both thermal efficiency and sustainability contribute to premiums in rents and asset values. Even among green buildings, increased energy efficiency is fully capitalized into rents and asset values.
|Date of creation:||15 Sep 2010|
|Date of revision:|
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- Siqi Zheng & Rui Wang & Edward L. Glaeser & Matthew E. Kahn, 2009.
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NBER Working Papers
15621, National Bureau of Economic Research, Inc.
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"Green Markets and Private Provision of Public Goods,"
Journal of Political Economy,
University of Chicago Press, vol. 114(4), pages 816-845, August.
- Matthew J. Kotchen, 2003. "Green Markets and Private Provision of Public Goods," Department of Economics Working Papers 2003-05, Department of Economics, Williams College.
- Edward L. Glaeser & Matthew E. Kahn, 2008.
"The Greenness of Cities: Carbon Dioxide Emissions and Urban Development,"
NBER Working Papers
14238, National Bureau of Economic Research, Inc.
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- Black, Dan A. & Smith, J.A.Jeffrey A., 2004.
"How robust is the evidence on the effects of college quality? Evidence from matching,"
Journal of Econometrics,
Elsevier, vol. 121(1-2), pages 99-124.
- Dan A. Black & Jeffrey Smith, 2003. "How Robust is the Evidence on the Effects of College Quality? Evidence From Matching," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20033, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
- Nicholas Stern, 2008. "The Economics of Climate Change," American Economic Review, American Economic Association, vol. 98(2), pages 1-37, May.
- Eichholtz, Piet & Kok, Nils & Quigley, John M., 2009.
"Doing Well by Doing Good? Green Office Buildings,"
Berkeley Program on Housing and Urban Policy, Working Paper Series
qt507394s4, Berkeley Program on Housing and Urban Policy.
- Matthew E. Kahn, 2009. "Urban Growth and Climate Change," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 333-350, 09.
- Franz Fuerst & Patrick McAllister, 2011. "Green Noise or Green Value? Measuring the Effects of Environmental Certification on Office Values," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(1), pages 45-69, 03.
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