A landmark international study on the costs and benefits of green buildings finds that energy and water savings alone outweigh the initial cost premium in most green buildings and that green buildings cost roughly 2% more to build than conventional non-green buildings. This stands in contrast to public perception, such as a 2007 survey by the World Business Council for Sustainable Development, which found that business leaders believe green buildings to be on average 17% more expensive than conventionally designed buildings.
The study, Greening Buildings and Communities: Costs and Benefits, also finds that an average size green office creates at least one-third of a permanent job per year, equal to $1/square foot (sf) of value in increased employment, compared to a comparable non-green building, and that the continued rapid growth in green building is creating tens of thousands of new jobs. Additionally, the study found that productivity and health benefits are a major motivating factor for building green.
“This report provides the first large-scale data resource on the cost and benefits of green buildings and sustainable community designs,” said Henry Kelly, President of the Federation of American Scientists. “The careful research and documentation provides powerful evidence that major reductions of energy and water use in buildings can be achieved at costs far lower than new supplies of energy. It will be an invaluable resource for years to come.”
“The deep downturn in real estate has not reduced the rapid growth in demand for and construction of green buildings,” said Greg Kats, the study’s lead author and a Managing Director of Good Energies. “This suggests a flight to quality as buyers express a market preference for buildings that are more energy efficient, more comfortable and healthier.”
With buildings currently consuming 40% of the world’s energy, including two-thirds of its electricity, the marginal cost increase associated with green buildings is typically partially offset by savings elsewhere. For example, a more efficient building envelope can reduce the size of heating or cooling systems needed to provide a comfortable indoor temperature; hi-tech waterless urinals reduce plumbing requirements; and technologically advanced daylighting and window systems can decrease lighting cost while improving light quality.
Additional highlights from the study include important findings regarding the potential for significant cost reductions in the shift from conventional sprawl to a sustainable design approach. The report also evaluates both the financial and spiritual benefits for religious institutions that decide to build green.
This report was supported by Good Energies, a leading global investor in renewable energy and energy efficiency industries. Select findings from the study can be found at: www.goodenergies.com. The complete findings of the study will be published as a book in the summer of 2009.

Key findings in the Greening Buildings and Communities: Costs and Benefits study include:

Conclusion #1 -
Most green buildings cost 0% - 4% more than conventional buildings, with the largest concentration of reported “green premiums” between 0% - 1%. Green premiums increase with the level of greenness but most LEED buildings, up through gold level, can be built for the same cost as conventional buildings. This stands in contrast to a common misperception that green buildings are much more expensive than conventional buildings.
Conclusion #2 -
Energy savings alone make green building cost effective. Energy savings alone outweigh the initial cost premium in most green buildings. The present value of 20 years of energy savings in a typical green office ranges from $7/sf (certified) to $14/sf (platinum), more than the average additional cost of $3 to $8 per square feet for building green.
Conclusion #3 -
Green building design goals are associated with improved health and with enhanced student and worker performance. Health and productivity benefits remain a major motivating factor for green building owners, but are difficult to quantify. Occupant surveys generally demonstrate greater comfort and productivity in green buildings.
Conclusion #4 -
Green buildings create jobs by shifting spending from fossil fuel-based energy to domestic energy efficiency, construction, renewable energy and other green jobs. A typical green office creates at least one-third of a permanent job per year, equal to $1/(sf) of value in increased employment, compared to a similar non-green building.
Conclusion #5 -
Green buildings are seeing increased market value (higher sales/rental rates, increased occupancy and lower turnover) compared to comparable conventional buildings. CoStar, for Page 2
example, reports an average increased sales price from building green of more than $20/sf providing a strong incentive to build green even for speculative builders.
Conclusion #6 -
Roughly 50% of green buildings in the study’s data set see the initial “green premium” paid back by energy and water savings in five years or less. Significant health and productivity benefits mean that over 90% of green buildings pay back an initial investment in five years or less.
Conclusion #7 -
Green community design (e.g., LEED-ND) provides a distinct set of benefits to owners, residents and municipalities, including reduced infrastructure costs, transportation and health savings and increased property value. Green communities and neighborhoods have a greater diversity of uses, housing types, job types and transportation options and appear to better retain value in the market downturn than conventional sprawl.
Conclusion #8 -
Annual gas savings in walkable communities can be as much as $1,000 per household. Annual health savings (from increased physical activity) can be more than $200 per household. CO2 emissions can be reduced by 10% - 25%.
Conclusion #9 -
Upfront infrastructure development costs in conservation developments can be reduced by 25%, approximately $10,000 per home.
Conclusion #10 -
Religious and faith groups build green for ethical and moral reasons. Financial benefits are not the main motivating factor for many places of worship, religious educational institutions and faith-based non-profits. A survey of faith groups building green found that financial cost effectiveness of green building makes it a practical way to enact the ethical/moral imperative to care for the Earth and communities. Building green has also been found to energize and galvanize faith communities.