The Financial Benefits of Building Green

A. Siegel

Green planetAmerica has developed a 99-cent shopping obsession that has turned Benjamin Franklin's axiom "a penny saved is a penny earned" on its head. A price of $100 gives us pause, but a price of $99.99 seems like a bargain. Combined with easy access to revolving credit and our disposal culture, our focus on purchase price overshadows the total cost of many of our purchase decisions. We tend to focus on the "cost to buy" rather than the "cost to own." More often than we care to admit, we are— to trot out another axiom that predates Franklin— "penny wise and pound foolish."

If sustainable design is to realize its full potential, we need to focus on the long-term. Reporting on the DC City Council's move to adopt the U.S. Green Building Council's (GBC) Leadership in Energy and Environmental Design (LEED) standards for all major buildings (beginning with District-owned buildings and expanding to include all buildings after 2012), The Washington Post informed its readers that "Opponents say building green can add as much as 11 percent to construction costs. Supporters place the extra costs at 2 to 4 percent but contend it's worthwhile." The Post left unchallenged whether building green actually adds to the cost of construction at all. Completely absent was any analysis of how building green might benefit the city or the buildings' owners and occupants.

Buildings designed to LEED standards do not necessarily cost more. Well-designed sustainable buildings can be heated and cooled with smaller mechanical systems and may require fewer light fixtures that are used less frequently, to name just two possible cost advantages. Smaller mechanical systems, in addition to being less expensive than larger ones, consume less energy and take up less space. Since most commercial buildings are built to the maximum allowable floor area, less space devoted to mechanical systems means more leasable space. The additional revenue can be attributed directly to sustainable design. Mechanical systems are also heavy. Smaller mechanical systems weigh less than larger ones, so structural engineers can design a lighter structure, significantly lowering the cost of construction.

Apart from any savings in the cost to buy, buildings built to LEED standards invariably cost less to own. They consume less energy for heating, cooling, and lighting, and typically use significantly less water by integrating waterless or low-flow toilets, flush-free urinals, and rainwater capture and storage systems for irrigation. They are built of materials and equipment that are more likely to last longer, requiring less maintenance and less frequent replacement. Light-emitting diode (LED) light fixtures, for example, can last decades while using only a fraction of the electricity of incandescent bulbs.

urban green roofSustainable buildings are often healthier buildings. Early studies have shown that workers in LEED buildings have lower absentee levels due to illness and higher productivity. And green roofs can help improve the health of the entire community by reducing the volume of rainwater that enters the sewage system or that runs off into local streams and rivers. As sustainable design becomes more common, the benefits to the broader community continually increase. Entire city blocks of green or reflective roofs would help lower the outdoor air temperature—mitigating the "urban heat island effect"—and further lower the air conditioning load for all buildings in the neighborhood while improving outdoor comfort on hot summer days.

With the rise of real estate investment trusts, commercial buildings have become tradeable commodities. As a result, fewer and fewer building owners are motivated by long-term incentives.

Stricter building code requirements (like those cities adopting LEED and LEED-like standards) will help spur the private sector to adopt an infrastructure investment strategy that is best for building owners and for all of us.

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  • Posted on Aug. 22, 2008. Listed in:

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