The Costs and Financial Benefits of Green Buildings

A Report to California's Sustainable Building Task Force

Greg Kats, Adam Berman, Jeff Perlman
Capital E

Leon Alevantis
Department of General Services

Evan Mills,
Lawrence Berkeley Laboratory

October 2003

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Abstract

Integrating “sustainable” or “green” building practices into the construction of state buildings is a solid financial investment. In the most comprehensive analysis of the financial costs and benefits of green building conducted to date, this report finds that an upfront investment of less than two percent of construction costs yields life cycle savings of over ten times the initial investment. For example, an initial upfront investment of up to $100,000 to incorporate green building features into a $5 million project would result in a savings of at least $1 million over the life of the building, assumed conservatively to be 20 years.

The financial benefits of green buildings include lower energy, waste disposal, and water costs, lower environmental and emissions costs, lower operations and maintenance costs, and savings from increased productivity and health. These benefits range from being fairly predictable (energy, waste, and water savings) to relatively uncertain (productivity/health benefits). Energy and water savings can be predicted with reasonable precision, measured, and monitored over time. In contrast, productivity and health gains are much less precisely understood and far harder to predict with accuracy.

There is now a very large body of research, reviewed in this report, which demonstrates significant and causal correlation between improvements in building comfort and control measures, and worker health and productivity. However, these studies vary widely in specific measured correlations. Further, there has been relatively little work completed to evaluate specific, measurable benefits from green building design in California. Clearly, the benefits are significant and not zero, but the data supports a broad range of calculated benefits – in contrast to the more precisely measurable energy, water, and waste savings.

The financial benefits conclusions in this report should therefore be understood in this context. Energy, waste, and water savings as well as emissions reductions can be viewed as fairly precise, reasonably conservative estimates of direct benefits that alone significantly exceed the marginal cost of building green. Health and productivity benefits can be viewed as reasonably conservative estimates within a large range of uncertainty. Further research is necessary to better quantify and capture the precise savings associated with these benefits. Additional studies might include such measures as evaluating green building effects on insured and uninsured health effects, employee turnover, worker well being and, where relevant (e.g. in schools), test scores.

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