Green Building Costs & Financial Benefits

A comprehensive report released in 2003

documents that a minimal increase in upfront costs of about 2% to implement high performance, green designs, will generate, on average, life cycle savings of 20% of total construction costs. The potential savings is more than ten times the initial investment. We provide a brief summary of the report here, as well as links to download the full 134 page document, and the 10 page summary.

 A Financial Perspective:

 A compound interest rate of 7.2% will double an investment every 10 years.
 At that rate, 20 years would yield 4 times the initial investment.
 High performance, high efficiency green building enhancements
 yield energy savings and productivity gains
 of 10 times the initial investment in 20 years.
 Think of the "Green" in Green Buildings
 as the color of money.

Excerpts From the Summary:

"To date there has been a widespread perception that green buildings— though more attractive from an environmental and health perspective—are substantially more costly than conventional design and may not be justified from a cost benefits perspective. This perception has been the single largest obstacle to the more widespread adoption of green design."

How Much Do Green Buildings Cost?

"Green buildings are commonly perceived to be a lot more expensive than conventional buildings and often not worth the extra cost. For example, an early 2003 article in the New York Times was entitled 'Not Building Green Is Called a Matter of Economics.'  In order to determine the cost of building green compared to conventional design, several dozen building representatives and architects were contacted to secure the cost of 33 green buildings from across the United States compared to conventional designs for those same buildings. The average premium for these green buildings is slightly less than 2%, or $3-5/square foot, substantially lower than is commonly perceived.

The majority of this cost is due to the increased architectural and engineering (A&E) design time, modeling costs and time necessary to integrate sustainable building practices into projects.  Generally, the earlier green building features are incorporated into the design process, the lower the cost."

Productivity and Health

"There is growing recognition of the large health and productivity costs resulting from poor indoor environmental quality (IEQ) in commercial buildings—estimated variously at up to hundreds of billions of dollars per year.  This is not surprising as people spend 90% of their time indoors, and the concentration of pollutants indoors is typically higher than outdoors...

Measuring the exact financial impact of healthier, more comfortable and greener buildings is difficult.  The costs of poor indoor environmental and air quality—including higher absenteeism and increased respiratory ailments, allergies and asthma—are hard to measure and have generally been “hidden” in sick days, lower productivity, unemployment insurance and medical costs.

However, four of the attributes associated with green building design—increased ventilation control, increased temperature control, increased lighting control and increased daylighting—have been positively and significantly correlated with increased productivity.  Increases in tenant control over ventilation, temperature and lighting each provide measured benefits from 0.5% up to 34%, with average measured workforce productivity gains of 7.1% with lighting control, 1.8% with ventilation control, and 1.2% with thermal control.  Additionally, significant measured improvements have been found with increased daylighting.

There are also quantifiable green building gains in attracting and retaining a committed workforce—an aspect beyond the scope of the Report."