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Comparison Between Conventional and Green Buildings

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Definition of the Topic

Explanation of the Theme

The world was all in turmoil in its early days; it was ripped apart by high weather, powerful winds, giant waves, landslides, and volcanic eruptions. Nevertheless, as time progressed, the world got even calmer, and that finally gave rise to live on earth. In the initial days when human beings were yet to roam on land, Mother Nature was still subject to significant changes. The ice age signified such a difference when all the previously existing life species on the planet became extinct. However, the mother species plant kept on living mostly unchanged. As human beings were created on earth as the prime form of living species, their actions towards their survival started to affect the earth’s environment. The stories of the human species are collectively known as anthropocentric movements. In its initial days of survival, human beings’ actions were environment benign, as they opted to live by initially through hunting, then through grazing, and after that through cultivating. Though all these, especially cultivation, did put pressure on the environment mainly by cutting trees to extract more cultivable lands to support the ever-growing population. Still, it was nothing in comparison to what did happen after the industrial revolution. The industrial revolution initiated an unprecedented level of deforestation towards the clearing of areas for industrial setups and providing more and more wood as fuel to the industries and raw material for industrial, commercial, and residential design. After the Industrial Revolution’s initiation, miles after miles of land were cleared of through cutting of trees, and buildings either for industries, office, or residence were set up. Unlike the rural buildings that were mostly made up of materials taken from the environment, these buildings were made out of concrete. Other man-made materials are far more durable but tended to heat the surrounding environment and initiate other environmental maladies.

The industrial revolution also started migration from villages to towns and cities in search of jobs in industries. Urbanization led to congestion in the cities through increased numbers of un-zoned buildings, too high of a person to room ratio, and biomass that was far from the permissible level on a given piece of land. Commercialization of agriculture; lead to shifting technology from conventional environment friendly to energy-intensive and chemical prone farming. Apart from deforestation and its associated environmental impact, the other notion that brought attention was the increasing need for energy to support the growing level of industries, commercialized agriculture, and a high tertiary operation level. To meet that need of life, the extensive use of fossil fuels that eventually leaves carbon waste in the environment and cause a significant level of pollution were considered. 

Soon these factors will threaten the environment like never before. Since the economy and the environment are so highly dependent upon one another unless quick and efficient measures are taken to restore and foster the ground, the global economy will suffer the brunt of this neglect. Furthermore, if the environment depletes even further, future generations will not sustain their economy and fall prey to a ground unable to sustain life.  

Based upon these facts above, following the Brandt commission’s recommendations in 1980, the first comprehensive policy framework for sustainable development came into origin. Here the term sustainable refers to benefiting the present without sacrificing the future. Courting these problems and facing this question, it was realized that efficient use of energy, finding alternative fuel for the future, and opting for environment-friendly buildings for any sort of purpose would be necessary to sustain the environment and thereby the economy in a healthy way. It was also realized that since anthropological movements are responsible for the present condition of the ground; hence unless they recognize their responsibilities towards the environment, the future course of the environment would not change to any positive extent.  

At this juncture, sustainable top real estate agent development came into the origin as it was understood that conventional buildings leave negative environmental impact owing to their building technique and materials used. Moreover, the standard facilities are far more energy-consuming to support its inhabitants’ daily activities than the green buildings; hence, they are not compatible with the concept of energy-saving and sustainability. The term sustainable associated with real estate is used here to depict its role in saving energy, thereby posing less threat to the environment.

Another point that might not be directly associated with the environment and energy but equally important is health. In an ordinary building, people are subject to several adverse health exposures such as less light and fresh air that eventually reflects itself in the poor health of the inhabitants of the building and occasional congestion or dampness related diseases. Artificial substitutes of natural light and winds are incredibly energy consuming and even often unhealthy. In real estate growth, the idea of sustainability also touches on this point and seeks to solve the same by natural steps in a green house. According to expert opinions, green buildings are more costly to build than standard constructions. Still, it would be interesting to witness the long-run positive impact of green building on the environment and economy and judging the same against the initial higher cost incurred.


Green buildings are costlier to build than the traditional buildings but come with a low operating cost, are healthier to live in, and environmentally friendly owing to green materials and technology used as well as for lower consumption of energy, which in the long run would turn the world into a better living place for all.

Agenda / Procedure

The purpose of the present research is to show what benefits, namely economic and environmental, can be generated by sustainable real estate development and how this can reduce long term costs and impart satisfaction of living in a healthy environment. This paper uses rigorous literature considering both secondary and primary nature to categorically discuss the environmental effects, human values, economic and investment aspects associated with sustainable real estate or energy-efficient buildings. Some scholarly journal databases, books, and government resources, and web resources are used to build a perfect understanding of the concerned issue and illustrate the same. A logical approach is undertaken in this case, along with the ethical backdrop to the research question. Research begins with an introduction that focuses on the environment and economy-related problems that haunt the world at present. Different emission regulations have been considered along with energy prices and construction cost development within the introduction. After the introduction, an effort was made to compare standard and energy-efficient houses regarding their construction process and building material. After that, the human value, environmental, economic, and investment aspects of energy efficient building have been considered. Finally, the paper concludes by assimilating the information from the findings and proving the hypothesis. While addressing the different sub-parts of the headings, specific, thoughtful questions are raised. A mix of evidence collected from the searched literature and logical analysis of the same is used to answer them.

Economic and Environmental Advantage through Sustainable Real Estate Development

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 General problems with conventional forms of energy are; exhaustible reserves, high carbon dioxide emissions, and greenhouse gas problems. All these three problems are associated with the anthropocentric use of fossil fuels.

Exhaustible Reserves of Fossil Fuel

Modern-day civilization is dependent upon fossil fuels. The three types of fossil fuels used in daily activities are coal, oil, and natural gas. Whether it is an industry, agriculture, or the service sector directly or indirectly, it is dependent on these three types of fossil fuel. The problem is that the availability of fossil fuel on earth is constant, And due to the rising degree of use by human beings, it is depleting at a rapid rate. Furthermore, since the world population is increasing and the energy consumption is directly proportional to population growth and the level of development, fossil fuel depletion would face a double blow. It has been estimated that 98 years’ worth of petroleum is left in the world, and the number is 166 years for natural gas and 230 years for coal. Even with all the discoveries and improvements in technologies, there is every reason to believe that the entire reserves of fossil fuels would deplete shortly due to population growth coupled with development. It is worth noting that two-thirds of world fossil fuels extracted from earth are used to produce electricity, perhaps the most essential ingredient after food, shelter, and cloth for the daily survival of humans. A large portion of that electricity is used in home and office dwellings. Natural gas, another fossil fuel, is increasingly used in cooking all over the world and so as coal and Kerosene, mostly in developing and less developed countries; the most prominent hub of the world’s population. At this juncture, it can be clearly understood that depending upon fossil fuel for the long run would not be possible in any respect, and optimum management regarding fossil fuel along with searching for viable alternative energy would only rescue the human civilization out of this future risk of running out of fossil fuels. A KPMG report has stated that “In 2005, the International Energy Agency estimated that buildings account for 20 to 40 percent of the world’s energy use, a number that varies greatly depending on a country’s climate and economy. In Europe, for example, buildings use about 40 to 45 percent of the total energy consumed. A recent estimate for North America is 46 percent, from which 8 percent can be attributed to the embedded power of the materials used in construction. Canada’s commercial building sector is estimated to account for 13 percent of Canada’s carbon emissions and 14 percent of end-use energy consumption.”

Carbon Dioxide Emission 

A significant problem associated with fossil fuel combustion is its high level of carbon dioxide gas emission. Animals and trees cannot breathe carbon dioxide are the prime consumer of carbon di oxide. It is a well accepted fact that, during photosynthesis, plants suck out carbon dioxide gas from the atmosphere and release oxygen inhaled by animals. It has been previously mentioned that deforestation is a burning problem in the world nowadays. Hence, on the one hand, the number of the natural purifier of carbon dioxide gas as well as the prime source of oxygen to the environment is lessening, and on the other, owing to the rise in population and development, the volume of the addition of carbon dioxide gas to the environment is increasing (through the burning of fossil fuel, exhaling of carbon dioxide by all the animals and use of chemical fertilizers in agriculture). It has been estimated that the atmosphere can hold 700 billion tons of carbon but now is overburdened with 800 tons of carbon. Following the carbon foot print method and after matching the carbon isotopes of fossil fuel with that found in the atmosphere, fossil fuels are the most prolific contributor of carbon to the atmosphere via carbon dioxide gas emissions the environment.

Greenhouse Gas Emission 

Greenhouse gas emission and their associated threat to the environment are among the biggest concerns of the modern world. A combination of gases such as carbon dioxide, water vapour, and many others; greenhouse gas covers the earth’s atmosphere like an umbrella that does not prevent the sunlight from coming in but prevents it from reflecting after hitting the earth’s surface. This way, it traps the sunlight and turns the world warmer. Electricity production is by far the largest contributor to greenhouse gas, followed by transport and industry. Burning fossil fuel for electricity production and transport is mostly responsible for greenhouse gas emissions. However, following specific estimates, it would be shocking to acknowledge that the real estate sector has left both electricity production and transportation behind in terms of greenhouse gas emissions. According to some estimates, commercial and residential buildings contribute to around 18 percent and 21 percent of total greenhouse gas emissions in the USA, i.e., 39 percent of greenhouse gas altogether. Looking at this aspect creation and up gradation of American Schools as green schools have been sought of. It has been estimated that a green school can reduce the emission of twelve hundred pounds of nitrogen oxides, one of the significant ingredients of smog, thirteen hundred pounds of sulfur oxides, One of the largest acid rain elements, 585000 pounds of carbon dioxide an important ingredient of greenhouse gas and one hundred and fifty pounds of coarse particulate matter that is infamous for its contribution to respiratory illness. 

Other development related environmental hazards: Economic growth and development leading to per capita GDP growth have welcomed some of the amenities into daily life, such as refrigerator and air-conditioned. Both of these tools are responsible for emitting chlorofluorocarbon, which is infamous for making the ozone layer porous. The ozone layer protects the world from damage to the sun’s ultraviolet rays. A porous ozone layer cannot prevent the world entirely from getting exposed to the ultraviolet ray. Extremely harmful for living species, ultraviolet rays can cause cancer and skin diseases. Moreover, it also adds to the temperature of the earth.

All these disorders together have posed an immense threat to the environment as well as the sustainability of human civilization and compelled the policymakers to devote their special attention to curb such nuisance; not only through opting for green technologies and alternative energies but also through framing mandatory limits on some of these evils such as greenhouse gas emission. The next section of the paper considers the greenhouse gas emission and consideration for the real estate sector as this paper considers issues related to sustainable real estate development. 

Emission Regulations and Considerations 

Germany is one of the first proponents of energy regulations in commercial and residential buildings. The first energy ordinance was adopted in Germany back in 1978, and the energy transition for the concerned country started in 1990. Once the Green Party joined the government in 1998, energy savings as well as replacing non-renewable energy with renewable and alternative energy became part and parcel of German energy doctrine. The Renewable Energy Heating Act of Germany aims to increase the share of renewable energy used in total energy use to fourteen percent by 2020. The owners of a new building have to comply with the rule that they obtain a portion of their total energy used from renewable energy. The owners of an old building would receive financial support while renovating their heat associated appliances. The Renewable Energy Heating Act came into existence in 2009 and compelled every new building owner to use a certain portion of renewable energy in their total energy used. Even if the building were to be rented, the law remains the same. It is up to the owners to meet this requirement; it might be through “solar collectors, a heat pump, or a wood-fired boiler”. If someone is unwilling to opt for renewables, he might choose more insulation or collect heat from the “district heating networks or cogeneration units”. It is obvious that a renewable energy-based heating system needs to be installed with the construction of the new buildings; hence the concerned law is applicable only for the new buildings but not for existing construction. For existing German construction, the government intervened to encourage installing renewable energy-based heating systems through its market incentive program (MAP). MAP is an incentive system that the owners of the old building can enjoy by opting for renewable energy-based heating system-oriented renovations. An example of MAP “90 euros is granted per square meter of solar collector, 2,400 euros for small water/water heat pumps, and 2,000 euros for small wood boilers”. In a more detailed way, the concerned law applies to all the buildings in Germany exceeding 50m2 in size and plan submitted for sanction after 1st January 2009. The government has also provided a detailed compulsion requirement regarding the distribution of the heat generated from various renewable energy resources in total renewable energy used. Following this compulsion, at least 15% of the total renewable energy used should come from solar energy. Furthermore, residential buildings with two apartments need to install the thermophotovoltaic device with an aperture of at least 0.02m2/m2 floor space. If the building is with more than two apartments, then the same requirement rises in terms of aperture size to 0.03 m2/m2. At least 30% of the heating energy of the total heating energy generated from renewable energy should be generated from gaseous biomass. The percentage stands at 50 for solid biomass, liquid biomass, and geothermal energy. In case the building owners are reluctant to use renewable energy to generate a specific percentage of heat of their total heat demand, they have to opt for alternative energy sources to meet the same. Consideration of alternative energy should be in tune as fifty percent from those plants that use waste to generate energy, fifty percent from those producing heat using extremely efficient cogeneration plant, should save energy through strict adherence to standardized energy saving norms or “Coverage of the heating energy demand through a local or block heating supply network (heat mainly coming from renewable energies or by at least 50 % from plants using waste heat or by at least 50 % from cogeneration units or by at least 50 % from a combination of renewable energies, waste heat and cogeneration heat)”. The concerned law also permits the use of renewable and alternative energy to meet the total need of heat that should be generated from other than the conventional form of energy. It is worth noting that apart from some specific types of building, exemption given by the responsible authority, and exemption under non-feasible technology, the concerned law is applicable for all the buildings in Germany. The German government is backing the law and looking forward to generating heat using renewable and alternative energy at a higher percentage of the total heat-generating energy needed. In this regard, the government has announced 500 million euros to support renewable and alternative energy use for heat generation per year. One problem associated with government’s financial help for the program’s sustainability is; this fund would be allotted from the budgetary funds and, therefore, might be stopped courting any dire situation such as financial crisis. From 1st October 2013, greenhouse gas emission reporting has been made mandatory for all the London stock exchange companies. Such reporting should consider emission from the company’s industrial activities and encompass any emission from their day-to-day activities such as electricity consumption and emission from office buildings belonging to those companies. Though non-compliance with reporting would not immediately bring any penalty into action, it would be initiating an inquiry from a neutral body. If applicable, a fresh report resubmission can be advised. In the USA, the environmental protection agency or EPA looks after the greenhouse gas emission from stationary sources. In recent times the organization attempted to include even the minimal stationary sources of greenhouse gas emission under their supervision. However, the USA Supreme court rejected its appeal for the same, calling it over ambitious, impossible to monitor with justice, and a potential source for monopoly power that might do more harm than good. Though gradually, more sources of greenhouse gas would be included, and eventually, the USA would be opting for an all-out attempt to combat greenhouse gas from stationary sources and choose more energy from renewable and alternative sources of energy. 

Energy Price Evolution

Owing to the high growth of energy demand the global energy prices are on the rise. This section considers the development of energy prices from the year 2007 to 2013. Prices of crude oil, coal, uranium, natural gas, and electricity have been considered. It is essential to mention here that energy prices vary as per global territory and, therefore, hard to compare. Hence an honest effort was made in this section to grasp the international movement of energy prices. The international crude oil price is extremely volatile, and hard to assign water-tight remarks such as rise or fall. However, considering the graph of global crude oil price given by the European Union, it is evident that from 2007 to 2013, the crude oil experienced a price increase. Since the graph’s associated table is not given, an approximation is the best possible tool available. The same trend is apparent regarding global crude oil, whose price increased from more than 55 USD per barrel in 2007 to over 100 USD per barrel in 2013. Again since the crude oil import price varies depending upon region, this is a mere average estimation. During the same timeframe, the coal price increased from 40 euro per ton to around 50 euro per ton; however, the same timeframe witnessed coal prices reach as high as 115-130 euro per ton in mid-2008. The cost of uranium, however, experienced a sharp decline from 2007 to 2013. The cost of natural gas, on the other hand, acted differently in different markets; for some needs, it raised; for some others, it remained relatively stable, and for the rest, it declined. Electricity wholesale prices in Europe remained stable from 2011 to 2013 due to the increased use of renewable and alternative forms of energy to generate electricity in place of fossil fuels such as crude oil, coal, or natural gas.

Evolution of the Construction Cost 

The cost of construction is a significant determinant of the building’s eventual price; therefore, it is of foremost importance to the builders and consumers. The National Association of home builders or NAHB has segregated the cost components of constructing a building into eight subheads and have given the approximate share of the cost per subhead as follows –

“Interior finishes account for 29.3% of construction costs

  • Framing: 19.1%
  • Exterior finishes: 14.4%
  • Major system rough-ins: 13.4%
  • Foundations: 9.5%
  • Site work: 6.8%
  • Final steps: 6.6%

Other Costs 0.9%”

Owing to the rise in the cost of construction materials such as iron and steel, cement and lumber; total construction costs have risen significantly over the past few years. From 2011 to 2013 the price of soft wood lumber witnessed a price rise of about forty percent. This resulted in a rise in the average cost of construction of a building to “$246,453 in 2013 versus $184,125 in 2011”. Builders generally predict building prices three years in advance; but with soring construction costs, forecasting accurately becomes very difficult to do. According to an Egyptian source, the price of construction material has gone up by 30% and that has made life tough for the developers. The rise in the price of steel is quite clear as “In 2008 there was a significant increase in raw building materials prices. Builders had contracted to implement projects at EGP 2,800 per tonne of steel at the time, but the price per tonne jumped to EGP 8,000, leading to major losses for contractors. The state intervened through a parliamentary decision to compensate contractors for resuming their work.” An Indian source has mentioned that apart from the rise in steel prices there has been an almost 25 percent hike in cement prices during 2014; another part and parcel of construction. Hence after considering construction cost related information from various parts of the world, it could be concluded that over the years the construction cost of the conventional house has increased. Since green building is usually perceived as being at a premium; the question then arises as to what the rise in conventional construction costs would mean to the green building industry. Owing to a lack of appropriate financial data, an absolute answer for this question is hard to provide. However, based on studies, it has been determined that “The average premium for the green buildings analyzed was slightly less than 2% (or $3-5/ ft2 in California), substantially lower than is commonly perceived, with some buildings reporting no added cost; and that this increase in upfront costs On average, 20 percent of overall construction costs will result in life cycle benefits, more than ten times the original budget… Much of the extra costs are attributed to the added architecture and engineering planning time taken to incorporate sustainable development methods into projects. Much of the added costs was attributed to the additional time taken for architecture and engineering planning to incorporate sustainable construction techniques into programmes. However, such cost difference varies depending upon; the locality, environment, design and architectural complexities, and materials used. Gregory Kats’s study reveals that the cost difference between conventional and green buildings varies from zero extra cost to 10% of the additional cost over the construction of the traditional building. However, owing to the rise in the price of construction of the conventional building and reduction in charge of “insulation, reflective glass, alternative heating and cooling systems” that are present in green building; the cost difference between these two types of the building has narrowed over the years. The construction cost difference between conventional and green building differs depending upon the level of green building; an example regarding the same considering the flagship USA green building certification program the Leadership in Energy and Environmental Design (LEED) might help to understand the same “The eight LEED Bronze buildings had an average cost premium of less than 1 percent. The eighteen Silver buildings averaged a 2.1-percent cost premium, while the six Gold buildings had an average premium of 1.8 percent. The single Platinum building was at 6.5 percent.” Rohan Bush estimates that constructing green buildings seeks 0.4% lower to 12.5% higher cost than the conventional facilities, and on average, the cost premium comes at around 4%. Bush also argues that as the greenhouse industry would mature, the cost would come down with the development of green building technology. Bush’s main emphasis was on the low level of energy requirement by the green building. Due to this low level of energy requirements, green buildings are far more environment friendly and directly provide an intangible benefit while indirectly providing tangible. Furthermore, fewer energy requirements mean cost saving in terms of lower energy prices. This would result in a low level of operational cost. 

Though a life cycle estimation of this benefit is yet to be accomplished, it is evident that this would outweigh the initial cost premium paid. 

Some anecdotal evidence would help to understand the actual scenario in this situation. Kaplow has cited much primary research work and has highlighted the higher cost myth and additional green building benefits. A green building in Maryland costs 154 USD per square foot to build, which is one dollar less per square foot than planned as a non-green building. A previously non-green building updated to a green building takes one-third of the conventional structure’s energy and thereby saves a whopping 500000 USD per year now. One of the USA’s prime green developers has mentioned that it costs 1% more to build a green building. Still, after the facility becomes operational, it saves around 30% of energy. A cost study to find the cost divergence between green and non-green projects, which examined 107 building projects, found that the cost difference per square foot between green and non-green projects was 4 USD; thus, the difference is not statistically significant.

The same study depicted that regarding interiors, green buildings cost less per square foot than non-green buildings. Another study conducted over 227 facilities (83 among them were pursuing green building construction); it was concluded that there is no difference in the average cost of the building between green and conventional buildings. There are also higher occupancy rates and better rental value for green buildings. A study led on 1300 green buildings showed that the occupancy rate for green buildings is 4.1% higher than that of the non-green buildings, and they draw a rental value of 11.33 USD more per square feet than the non-green facilities. Moreover, the same study showed that the sale value for green-buildings is 171 USD/square foot higher than the non-green buildings. Apart from a no-significant cost disadvantage, lower operational cost, high value for investment, better occupancy rate and rental value; green buildings “consume 26% less potable water, account for 33% fewer greenhouse gas emission, require 13% lower maintenance costs, yield 27% higher occupant satisfaction”. It has been observed that the higher cost associated with green building construction comes from the fact that developers seek to build green buildings without any pre-determinedpre-determined plan for the same. They often do not understand the difference between a green building and a conventional building plan and submit the green building schedule similar to a traditional building. If the difference can be grasped initially, then the construction cost difference would be reduced to nominal between green and conventional structure. Another factor contributing to a significant cost difference is the consideration of green building construction at parts rather than all at a go. Economics speaks of economies of scale, i.e., the marginal cost of production declines with the volume of production. The economies of scale effect are quite prevalent in green building construction as far as construction cost is considered. Another cost-benefit in the long run from green building comes indirectly. Owing to the availability of plenty of natural light, fresh air, people living in green buildings are less prone to seek medical attention, reflecting in their medical bills.

Similarly, owners and green building residents can opt for a lower premium for their life insurance policy; this is another cost-saving aspect of green building. The money freed in this way might be invested in other productive pockets with higher interest return or earning prospect. This would eventually be associated with green buildings as an associated financial benefit from the same and absent in conventional buildings.

The paper in the next section now compares the green and conventional building regarding the construction methods and materials used.

A Comparison Between Green Building and Conventional Building Considering Construction Method and Materials Used

Before moving into the comparison between conventional and green building, it would be wise to shed light on the definition of a house and its evolution from a place that offers shelter to a functional structure capable of meeting modern-day needs and desires. After food, protection is the most important thing to a human. The primary purpose of a house is to offer shelter to human beings against the torment of environmental factors such as sunlight, wind, cold, etc. When the human population was much smaller than today, the land was plentiful, and building a house using significant land volume was not an issue. Compared to the building site, the construction area used to be much smaller. Because the worldly need of those human beings was way too smaller than the present-day people; they were bereft of the lack of a more significant constructed place to live in. No big flat-screen television, refrigerator, or any other electronic gizmos to accommodate; people of that era were much happy living in small houses and enjoying the bliss of nature in their sprawling yard. (Note: Don’t forget that the sizes of these early structures were small because the demands were much more straightforward than they are today. No big screen tv’s in those cavemen huts…Oh…and mention the difference between low population and affluent populations’ demands for housing. Just a statement as to why housing went upward for unhappy people???? ) (Here I am explaining why we need functional houses; hence what you have mentioned here is not relevant; don’t you think so? But even though I have written something but I do not understand what you mean by why housing went upward for a low population?) But as the human population grew more massive and technological advances rose, land remained stagnant.

At this juncture, the concept of the functional house crept in. A bouncy house is a residential or commercial property built in a small area yet offers substantial space due to better space management. It is not only a visual illusion but a groundbreaking achievement in real estate development. Better use of vertical space by using wall height, creating storage, and using utility furniture are either used individually or collectively to turn an existing house into a functional house. However, if the construction of the available house is pre-determinedpre-determined, then the process starts from preparing the site and the building plan. It has been observed that green buildings are far more functional than conventional structures, even though they leave a larger part of the site empty than traditional buildings. Because the world population is rising and lands are becoming dearer, the future of real estate seems to be more dependent on the sustained development of functional building forms and their eventual acceptance by the people. 

However, the concept of the functional building is still awaiting mass acceptance. If the necessity and will for setting up available houses merged with green, their numbers would soar much higher than the present. Single homes and green buildings are near associated; the optimization of functional houses’ space concept helps the green buildings be sleek and efficient[40]. Conventional and green buildings differ a lot depending on various methods and material related parameters. (Note: Clarify what the previous sentence means. It kind of contradicts itself). (Which sentence contradicts? If you are saying differences between conventional and green building considering their material and technology, then Yes, it is true that differences do exist between green and traditional buildings considering technology and construction materials, and I have shown that in the next table if you are mentioning the close association between functional and green buildings, then it is true as well regarding optimum space management, lower energy consumption, etc.) In the real sense, building technology and materials based superiority has turned the green building into a more lucrative option than the conventional structure. These features have also helped green buildings to emerge as the ultimate future option as far as real estate is concerned. The materials and technology-related unique features of the green building highlight its sustainability, environment friendliness, and superiority over the conventional structure. A comparison of the traditional and green buildings has been provided on selected parameters related to either method or material of real estate construction in the table below.

Note: I’m okay with a table in the paper because it contains very important comparisons to the research. I formatted to what I would do with it. I would also make the text under Conventional/Green flow together a bit better to look like bullet points and more like sentences.


Comparison Between Conventional and Green Buildings Regarding Construction Method and Materials of Construction Related parameters.

Parameters Conventional building Green building
Walls A conventional building might come with nine inch thick brick wall (two hundred and thirty mm) or eight inch (two hundred mm) thick concrete block wall six inch (one hundred and fifty mm) thick forest stewardship council certified wood wall. A green building might opt for autoclaved aerated concrete blocks or cellular concrete blocks or fly ash bricks might be used to create rigidly insulated porous or cavity walls. Since these aforementioned blocks are of low density and carry much less weight than the conventional building materials that are used to create walls in conventional buildings; green building walls are far light weight than the conventional building yet equally or more effective. Moreover owing to the use of porous bricks they are bad conductor of heat and keep the interior of the building much cooler than the conventional buildings.
Roofing Roofs in conventional buildings are either build with ten inch (two hundred and fifty mm) thick flat slab without any beam or five inch (one hundred and twenty five mm) thick reinforced cement concrete slab based roof with beams. Roofs in green buildings are of three inch (seventy five mm) minimum thickness with over the top strict insulation. Strict insulation helps to keep the heat away from entering the room and thereby maintains a lower temperature in the building than the conventional building.
Roof protection Conventional water proofing is used in conventional form of building roofs as roof protection. In green buildings special type of membranes under china mosaic tiles preferably of light colour or under light reflective paints (high albedo roof finish) to lessen the urban heat is used as roof protection.
Flooring Floor tiles are generally used in conventional form of buildings in flooring. In green buildings flooring is done with a range of materials namely local stone or bamboo or recycled tiles or earthen floorings.
Facade Glazing Good quality of painted glass glazing is used in conventional buildings in façade glazing. Double glazed units with selective coatings with low heat transfer and high light transmittance[1]
Interior lighting In conventional buildings for interior lightings generally tube lights and CFL lights are used. Usually these lights are not attached with any dimmer or day light sensors. In green buildings T-5 or T-8 tube lights are used for interior lightings[2]. Again they are fitted with dimmer to adjust the brightness according to the need of the inhabitants. Moreover they are attached with day light sensors to optimize the energy use.
HVAC (Heating, Ventilation and Air conditioning) The heating, ventilation and air conditioning system in a conventional building comprises of water chiller plant, air conditioning plant in the lower floor of the building, AC plant in lower floors and each floor fixed with air handling unit/units. In green building the air handling unit is with a much larger face area than what is used in conventional building that helps in higher air intake. Air economizer is set up outside the building to optimize efficiency of the entire system. Moreover carbon di oxide sensor is attached with the system to ensure fresh and better quality air within the building.
Water efficiency In conventional building same type of water is used for almost every purpose. Recycling of water is often done but is not a compulsory feature. In green building type of water used is determined as per the nature of work. Such as water that cannot be stored is used for landscaping activities. Cloudy and grey water is used to flush the toilet. Significant care is taken to store water that is usually gets wasted in conventional building; as an example emphasis has been placed on rain water harvesting. Water efficient fixtures are abundant in green building. Above all hundred percent on site water treatment is done to improve the efficiency of water usage.
Chiller In conventional building dust control and automation are generally not associated with the chillers installed. In green buildings chillers are of variable frequency drive types and they are with high co-efficient of performance. These optimize the chillers operation in terms of efficient usage of energy and provide a much better performance than regular chillers.
Fire suppression In conventional buildings to combat any fire related accidents only water sprinklers are used. In green buildings no halogen or any other chlorofluorocarbon is used to combat fire related accidents. This helps in lower emission of CFC from a green building.
BMS (Building Management System) The building management system used in conventional building is of typical basic nature. In green building the building management system used is automated to ensure accuracy and ease. Again the BMS in green building is backed by meter controls as per different end users choice and need.
Building orientation In conventional building orientation of the building seldom gets any notice from the developer regarding sunlight and ventilation; hence the building ends up with poor orientation. In green building orientation is perhaps the first thing that the developer notices. Since the east and west side are directly exposed to the sun; hence less surface area is provided in these two sides. Moreover proper creation of shades and façade glazing are taken up with utmost importance, along with the over hangs that on one hand provides diversity in designing and on the other create light and shade balance as per need, taste and choice.
Ratio of voids to build area In conventional buildings empty space to the build area ratio is maintained as per the standard design parameters and often geared towards maximizing the built area. In green building empty area to build area is maximised to ensure maximum possible sunlight and ventilation to provide natural lights and air into the building.

Electrical and lighting


In conventional buildings electrical lighting is done according to the traditional design standards.


In green building no more than 8 watt per cubic meter light is used to optimise energy use.

External lighting In conventional building for external lighting regular external lighting methods are used. In green building low power lighting is used for external lighting. Lights are never placed upward facing in order to reduce the night light pollution from building light sources.
Super structure In conventional buildings for the super structure usual concrete and bricks are used. In green buildings fly ash bricks with concrete blocks and concrete structures are used for the super structure.
Building Area to Site area ratio The building area to site plan ratio in conventional building is done according to the design requirement. In green building the building area is emphasized on the vertical side and the horizontal side is left as much as empty; to provide optimized site used, more light and air into the site area. In same tune one floor development is avoid and multi floor development is encouraged.
Redevelopment For conventional building; sites with difficult construction features are not considered generally owing to higher cost of construction and difficulties associated with initiation of construction. Green buildings are renowned for using once sites with difficult features for construction. These sites are developed under brown field development and then considered for construction. Owing to this advantage sites affected with environmental contamination can only be restored under green building construction. This eventually reduces pressure and concentration on other lands that are usually considered for construction.
Use of recycled material Conventional buildings seldom consider using recycled materials in the process of construction. Green buildings are renowned for using recycled materials for construction. This feature of green building reduces solid/liquid waste and makes world a better living place.


As per the above comparison between conventional and green buildings regarding methods and materials, it is apparent that greenhouses are far more advantageous regarding energy efficiency and environmental friendliness than traditional buildings “A green home uses less energy, produces less waste, and uses earth-friendly materials in its construction. From utilizing reclaimed timber to recycling rainwater to using less water and energy to making less construction waste, a green home leaves a far smaller footprint on the Environment than a traditionally built home.” Not only the exterior of the building; green building developers can be innovative regarding the interior of the building as well. “Greenhouse owners also have many earth-friendly options when talking about the inside of their home, including options like carpeting made of recycled rubber tires and recycled bottles and other materials. New selections in viable materials abound, including the usage of simply replenish-able wood and plant products like hemp and bamboo”. In recent times another striking feature of green building that has come to the academicians’ notice is that green building owners are taking recycling to the next level. “Many greenhouse owners are selecting to use materials from demolished buildings and houses. One homeowner in Boston used pieces of a demolished interstate highway project to build his home, making support beams from pieces of the old road and a roof from an overpass.”

This paragraph raises some ethical concerns as well as other problems that might be associated with green buildings. Although most of the comparison between conventional and green building has shown to favor green building, some aspects may be somewhat ambiguous. For example, if bamboo is used in flooring instead of traditional floor tiles, bamboo may not be as durable and require replacement quicker than traditional flooring. The ratio of void area to build area is more in the green building than in the conventional form of construction. The void area in a building or a building site refers to the left space to provide better light and air into the building. The presence of void area at a greater volume facilitates more air and light into the green buildings than the conventional structures. However, the question that arises is whether, with a rising world population that continually seeks more space to live, entertaining such a high volume of space in or outside construction is ethically justified?. Many of the green buildings’ accessories are automated and provide accuracy in operation as it gets rid of human error and gives the user ease of use. However, historically it has been witnessed that too much dependence on automation often leads to sudden debacle owing to machinery failure at times. The green building developers and users would be better off if they keep a second manual alternative used in mechanical and automation failure times.  

The next part of the paper considers the human value aspects of green buildings.

Human Value Aspect of the Green Building

The last part of this research has explained the concept and definition of a functional house and its close association with green buildings. Apart from the financial benefits, a bouncy house offers a robust ethical argument to consider. Day by day, the space in the world to build houses is shrinking due to the constant nature of land availability and a high rate of population growth. A home offers shelter. It is the essential thing after food for the survival of human beings; considering this demand for housing is ever-increasing, and the price of real estate has sored due to consumers’ demand. Apart from necessity, real estate is now considered an investment. Real estate has become dearer over the years, and considering the rise in construction cost and the constant nature of land availability, in the near future, further price appreciation should follow. Again it might not be possible for everyone to afford real estate of his own, both due to price and limited availability. With this in mind, one of the prime responsibilities of human beings is to consider the optimum use of land for home construction. If each occupant opted for a functional house, then more land would be available to others to construct their abodes at a reasonable price, and this is ethically justified. Since the functional house and green buildings, as explained earlier, are closely associated; hence, if the positive aspects of available homes are superimposed on green buildings, undoubtedly, that would unleash a new horizon to sustainable real estate development that is also ethically desirable. 

Apart from being functional, green buildings opt for environmentally friendly materials for construction purposes. These materials are biodegradable and leave a smaller carbon footprint on the Environment. The emission level of greenhouse gases and halogens (chlorofluorocarbon etc.) from the green buildings is far less than the conventional facilities; due to green buildings’ consideration of improved air conditioners, heating equipment, and other associated features. This eventually positively impacts the immediate survival of the present generation and the sustainability of the future generation. Hence this is another human value aspect of green buildings. (Note: Previous sentence is not exactly given where it’s at.) The required lighting for the building is far less owing to better use of natural lights. Again the lights installed in the building are of lower wattage. These features enable green buildings to use far less energy to be operational. It is the noble onus of all human beings to make this world a better living place through minimum left off carbon footprint and better energy management. This is in the tune of the much sought after sustainable development. In other words, the present generation is liable to future generations when considering carbon footprint and energy management.

Another point that must be mentioned while discussing the ethical benefits of green buildings is the motto of recycling that is associated with green buildings; whether it is the water used in a green building or the use of recycled material in the construction of a green building, in the end, it is the minimization of the solid and liquid waste left offs. This helps keep the world clean for the present generation and sees that a cleaner world is handed over to future generations. Hence it is clear after the above discussion that opting for green building helps meet a series of ethical values. If embedded in each human being, these values would guide them to opt for green building over conventional construction. This would turn the world into a better living place with sustainable growth and development and a prosperous future generation in all respects.  

Indeed, the aforementioned ethical motives would eventually compel many human beings to consider the green building as their choice of green building; however, some other factors might highlight green building as the preferred building by many aspiring real estate owners. It has been a widely accepted fact that conventional buildings may incorporate toxic materials. Apart from that, many materials might encourage molds, bacteria, and fungi. As an example, “adhesives, carpeting, upholstery, and manufactured wood products” are capable of emitting volatile organic compounds (VOCs) such as formaldehyde that is considered as a likely human carcinogen. These materials used in conventional building mainly lead to the low quality of indoor air that eventually causes “cancer, and reproductive and development effects, and are manifested in There are thousands of deaths from tumors and hundreds of thousands of problems with lung treatment. Another harmful material that is usually used in the conventional building is polyvinylchloride (PVC). The concerned material emits extremely toxic hydrogen chloride gases courting any accidental combustion of the same. Again Furthermore, exposure to PVC can lead to exposure to the host of harmful compounds found in PVC products as additives. The off-gassing of endocrine damaging phthalate plasticizers used in many flexible PVC products and the leakage of stabilizers of poisonous heavy metals such as lead, cadmium, and organotins used in rigid PVC products are especially noteworthy. As moisture is trapped behind PVC wall coverings, PVC has also been found to promote toxic mold formation. On the other hand, green buildings previously use environment-friendly, bio-degradable, non-toxic materials in construction and are mostly free of these health hazards. Compared to conventional buildings, green buildings emphasize natural light and air that provide a far more favorable environment to live in. Hence it is apparent that green buildings are a natural, intelligent, and healthy option for prospective real estate buyers, and the health component works as an essential benefit for opting for green building to an individual.

Ethical drive, prospective health benefit, environmental benefits are non-tangible and non-market products are more difficult to value than any marketable commodity. Whether or not a premium can be paid for the green building will depend on how effective these features would be appreciated by the selected developer. This question is not answered explicitly, but Green Building Council Australia has opted for a survey-based appraisal of the same question. The result indicates that the customers value green building at a higher price than conventional buildings. All the respondents who participated in the concerned survey noted that green building offers a better investment perspective than the traditional establishment. Tenant demand for green buildings also favors the higher price aspect. Respondents also reciprocated that even though they might incur a short run loss, the long-run benefit of green building investment compels them to invest in green building.

Moreover, all the respondents said that they are ready to pay a higher price for green building. According to the concerned agency, among all the available property valuation methods; discounted cash flow might be the best possible method available for green building valuation, and considering the theoretical proposition of the concerned model; the parameters used in the model usually reflects a better value for green building than the traditional structure. For example; net rent would be higher in green buildings as operating cost is low and so is maintenance cost; green building comes with longer lease term than the conventional structure; the emergence of new types of lease provisions named as a green lease that shares the responsibility of operation and maintenance between the owner and the tenant and thereby positively influences the rent; with the go green motto of the world the growth potential for green buildings is higher than the conventional buildings; retention rate by the tenant would be higher providing a constant flow of increasing rate; depreciation in the green building would be lower; the discount rate would be lower, and all these would result in a higher valuation of green buildings. So these are the factors that might result in a higher price for the green buildings. The previously mentioned ethical consideration might also come into play while enticing the customer’s willingness to pay; a person might feel a proud owner of a green building or might think that he is abiding by his ethics to opt for a green building at a price premium. However, even after favorable theoretical consideration, the lack of hard data makes it impossible for the time being to give any definite number for the price premium for the green building. The contingent valuation method is used to value environmental amenities. The same might be used to determine the price premium to derive the price or the willingness to pay by green building consumers. A carefully framed questionnaire might be considered with a tight end or open end quantitative options. Consumers should be approached to determine the price premium or their willingness to pay for green building. (Note: The previous sentence may be too similar to the one prior….two of the same in a row). (no, the last sentence depicts the method of survey and valuation of responses, and the latter sentence describes the nature of questions in the questionnaire) Questions should be on ethical responsibility, feel factor, health benefit, environmental and economic benefit, and investment opportunities, and all should be connected with green building. It might be necessary to brief the respondents regarding the added use of green buildings and their advantages over conventional construction.

There are measures to incorporate the mentioned factors while charging a premium price for the green buildings. Still, at the present level of availability of data, it is not possible from a practical standpoint. (?? The phrase used to start this sentence isn’t entirely clear. Do you mean to say Fact driven estimators?) (according to the dictionary, estimator also refers to a person who estimates) Enthusiast estimator has to resort to non-market suitable valuation method such as contingent valuation method before reaching an estimated price premium that might be charged to determine the willingness to pay the customer for a green building. To come with better marketability and awareness programs related to ethical consideration, health benefit, energy savings, lower operational and maintenance costs arising out of the green building would increase the customer’s willingness to pay for a green building.

Environmental Impact of Green Building

It has been estimated that conventional buildings use 40 percent of the total energy used in the world. This happens to owe to less emphasis on natural light and air, hence life is used for added light and air; ordinary cooling and heating system; consideration of usual light that is energy-intensive for the interior lighting and so many energy prone activities. Green building, on the other hand, emphasizes natural light and natural ventilation; keeps the site area as much as possible free so that congestion never blocks any natural light and air; use a specialized air conditioner that comes with an inbuilt sensor and filter often inverter airconditioner to minimize the energy use.  

Note: I feel like the text which follows from here up to the beginning of 6 is a repetition of what’s always been saying. However, some excellent points could be pulled out of the following writings and plugged into previous points/research. My Reviews begin again at 6. I have highlighted all this in yellow to show what I think is somewhat redundant.  

Considering that the world is facing an energy crisis green building holds an edge over the conventional buildings regarding saving energy. Again most of the world’s energy comes from fossil fuels that are constant in reserve and exhaustible. 

Conventional building mostly uses energy generated from fossil fuel. In contrast, green buildings consider alternative and renewable forms of life such as biofuel and solar power, etc., as a source of their required energy. Because the conventional buildings mostly use fossil fuel as their source of energy and fossil fuels while burning emits a high level of carbon dioxide gas into the atmosphere; the gas which is mostly responsible for the greenhouse gas effect and turns the Environment unbreathable; the conventional buildings contribute thirty-five percent of total carbon dioxide gas emission of the world. The green buildings use mostly renewable or alternative forms of energy; these forms of energy are shallow and have a shallow level of carbon dioxide gas emissions; hence, green buildings are much more environmentally friendly than conventional structures. There is a significant difference between traditional house installed boilers and greenhouse installed boilers. Conventional building installed boilers use much more wood to produce the same amount of heat than the green building installed boilers. Greenhouse installed boilers are again specially made with a low emission rate and therefore emits significantly less carbon dioxide in comparison to conventional structures installed boilers. Real estate is a material and resource-intensive sector; this, on the one hand, drains the world of its resources and leaves a significant volume of debris during and after construction. It has been estimated the conventional buildings use fifty percent of the world’s total materials and resources used. In sharp contrast, green buildings are relatively restrained regarding their resource use. Unlike the traditional structure that used human-made construction materials that are often harmful and toxic, green buildings use Environment-friendly natural biodegradable materials for construction that leaves minimum pressure on the ground. Again, conventional structures usually do not consider using recycled material, but a significant portion of building material for green buildings is recycled in nature. This phenomenon helps the green buildings to contribute towards cleaner earth. Overall green buildings use materials for construction after thorough consideration of their life cycle impact on the Environment and minimize the use of mine extracted rare materials. Again, their emphasis on using recycled material as construction material reduces the solid waste generation and the environmental cost generation that might be involved in producing the new construction material. Deforestation and real estate are directly correlated; it has been estimated that only in North America traditional buildings account for fifty percent of the total wood used in the continent. Green buildings owing to their commitment to forestation and greenery accounts for far less wood use. To build a 1700 square foot home’s wooden frame, an acre equivalent first needs to be cleared off; even if the same is true for green buildings, it enjoys an edge regarding far less frequent use of wood owing to its less demanding wooden boilers. The apparent water abundant earth is like a desert when it comes to freshwater. “While 70 per cent of the surface of the planet is made up of water, only 3 percent is freshwater. In turn, only 1 percent of that is available for human use because the remaining 2 percent is severely polluted or trapped in polar ice caps”. 

Many parts of the globe are not getting even enough drinking water. It has been estimated that conventional buildings use 80% of the total potable water used globally and twenty-five percent of total freshwater withdrawal of the world. On the other hand, green buildings emphasize recycling water, purpose-based water use, water quality allotment according to the priority of action, rainwater harvesting, and water storin. Hence considering water management, green buildings are far ahead of the conventional structure and thus a boon to the Environment. As mentioned previously, traditional buildings are a prime source of solid waste; as estimated, they account for around twenty-five percent of solid waste. Since green buildings opt for recycling waste and use it for their construction purpose, they greatly reduce the substantial waste burden on mother earth. Waste management is essential for several reasons; first, the storage of a growing volume of solid waste is a significant problem. Second, waste at an unprecedented level might lead to several waste related diseases and encourage the breeding of many social menaces. However, perhaps the most dangerous aspect of the conventional building is its emission of chlorofluorocarbon and other halogens. Traditional buildings account for around fifty percent of chlorofluorocarbon emissions of the total emission of the world. Chlorofluorocarbon is the prime ozone depleters factor; it creates a porous ozone layer that fails to prevent the incoming of extremely harmful ultraviolet rays from the sun to the earth. Exposure to ultraviolet rays is exceptionally detrimental as it heartens up the earth’s atmosphere and increases the planet’s average temperature, thus risking biodiversity. Again direct contact with ultraviolet rays leads to many skin diseases and, above all, skin cancer.

The green buildings are extremely careful regarding the emission of chlorofluorocarbon or any other halogens. They follow a zero-emission policy regarding them and ensure that they do not pose any threat to the ozone layer and thereby to the earth’s living species. Some data-based examples of environmental benefits associated with green buildings would help cement the services related to green buildings. The flagship green building certification program of USA LEED has depicted that due to the green buildings’ strategic locations, no less than 400 million vehicle miles have been avoided so far. At this rate, by 2020, 4 billion vehicle miles would be avoided. The associated environmental impact in terms of reduced emission of gases should be highly applauded. By 2020 the commercial green buildings would account for seven percent savings of all nonresidential water use. Green buildings use twenty-five percent less energy than the conventional structure. This saves 1.3 million tons of coal, similar to saving 78 million tons of carbon dioxide gas emissions. Considering these aspects, the green buildings hold an apparent age over the conventional structures regarding upholding of mother nature. From a commercial point of view, though, still, if specific action provides immense environmental benefit, it might not be economically viable and should be left non-ventured. In the next section of the paper, the economic impact of green buildings is discussed in detail.

The Economic Impact of Green Buildings

The economy cannot be separated from the Environment; since regarding resources of production, the economy depends upon the ground. Since green buildings save production, such as land, fossil fuel, water, trees, etc., they are indirectly boosting the economy and helping in sustainable economic development. However, apart from these indirect benefits, the green building does provide many direct services to the economy. It has been mentioned previously that green building comes with a cost premium of four USD per square foot of similar construction, i.e., two percent of cost premium on the total cost. But green building saves around thirty-three percent of energy, and that alone helps to get back the initial cost premium in less than nine years of the occupancy of the green building. Studies conducted to determine green buildings’ gain have concluded that over twenty years of occupancy, a green building can provide a per square foot profit of $48.87 to $67.31. This difference depends on the level of green fiction ( do you mean the degree to which the building is green?) (Yes); the higher the green, the more elevated the long run cost savings. So it is apparent that if the initial cost premium is incurred, one can experience ten times the cost savings of that cost premium after twenty years. The following distribution of the source of this profit would further help to grasp this point.

Financial Benefits of Green Buildings: Summary of Findings (per square foot)

Category                                                                     20-Year Net Present  Value
Energy Savings                                                                                   $5.80
Emissions Savings                                                                              $1.20
Water Savings                                                                                     $.50
Operations and Maintenance Savings                                                $8.50
Productivity and Health Benefits                                                       $36.90 to 55.30
Subtotal                                                                                               $52.90 to 71.30
Average Extra Cost of Building Green                                              (-$3.00 to -$5.00)
Total 20-Year Net Benefit                                                                  $50 to $65

A close consideration of the above table on potential cost savings sources reveals essential facts associated with green building’s potential long-run cost savings. Interestingly, instead of much-highlighted energy savings, that is one of the prime reasons for developing the green building; productivity enhancement of the people living in green buildings and associated health benefits is the largest source of long-run cost savings out of green buildings. Energy savings comes in third place as a source of cost savings from green buildings after maintenance and operations savings. Considering the immense benefit to the occupants’ productivity and its eventual manifestation through long run prime source of green building per square foot profit; it is important to consider the relation between occupants’ productivity and green building through statistical findings.

Occupant’s productivity Enhancement and Green Building

 Previously, it has been analyzed that how green building through more significant consideration of sunlight, better ventilation, avoiding congestion and with a feel-good factor; helps to harness a healthy environment in a green building and thereby promotes health through natural means. However, here health is wealth in a real sense, as reflected through two studies discussed here. Heschong Mahone Group led two studies in California’s Sacramento. One of them analyzed test scores of twenty-one thousand students and noticed that classes that received more sunlight performed significantly better than other courses regarding mathematics and reading test scores. Scores are higher by 20 percent in mathematics and 26 percent in reading tests among those students belonging to classes with more sunlight than those having their lessons in lower light. Another study considered 108 retail stores; some of them with installed skylights and others empty. It was noticed that sales in retail stores with skylights increased by around forty percent. The claim regarding occupants efficiency enhancement and green building association gets highlighted from the fact that “A research by the U.S. Department of Energy and the Rocky Mountain Institute records eight case studies in which optimal lighting, heating, and ventilation dramatically increased the efficiency of staff, reduced absenteeism, and/or the quality of the job undertaken has changed.. A highly energy-efficient plant was built for Lockheed Building 157 in Sunnyvale, California. Green concept components contributed $2 million to the $50 million, 600,000-square-foot project in design and building costs. The utilisation of daylighting, with projected gains of $500,000 annually, resulted in a 75 percent reduction in energy prices. Furthermore, Lockheed records a 15% growth in production and a 15% reduction in absenteeism. In its 150,000-square-foot office complex, the West Bend Mutual Insurance Corporation in West Bend, Wisconsin, integrated day lighting and intimate, localised controls for lighting and temperature. It took just 18 months for the expenditures to rebound, and the firm saw a 16 percent rise in staff productivity.” It is apparent that there exist close association between occupants’ efficiency enhancement and green building. U.S. Environmental Protection Agency has estimated that the health care cost of USD 30 billion is directly associated with poor quality buildings. Again another USD 100 billion gets wasted owing to sick leave, working day loss, and inefficient workers due to health reasons. This entire cost can be saved by opting for green building instead of conventional building. In another study it has been claimed that “Companies with employees working in LEED buildings realized annual productivity gains exceeding $170 million resulting from an improved indoor environmental quality, a number that will grow to nearly $2 billion of yearly productivity improvements by 2020.”

 Furthermore, since the demand for green building material is increasing, it might soon give birth to an entirely different sector. This sector is worth USD 10 billion, and by 2020 it might be worth USD 100 billion. A new industry is associated with the healthy supply and demand principle. It helps in employment creation, thus boosting sufficient demand, which again fuels Gross Domestic Product (GDP). A tremendous economic gain is the beneficial effect of green buildings on the productivity of tenants and developing a new market. After the thorough consideration of the economic and environmental effects of green buildings, it is apparent that substituting conventional structures with green buildings would eventually benefit human civilization and facilitate sustainable growth and development. However, apart from the economic and environmental positive impacts, green buildings’ investment benefit is another crucial aspect for considering green buildings. In the next section of the report, an overview of the possible investment advantages of green buildings was discussed.

Benefits of Green Building Investment

An obvious question that might pop up after considering all the above facts about green building is whether green building investment would be regarded as a profitable investment by the developers? In theory, a property is considered to invest worthy if its value or expected value appreciates better than other options shortly. Again this value is weighted against the cost incurred to build that property. Though ambiguous, it is believed that green buildings come at a cost premium of 4% over the conventional bulding. The value of property generates from revenue, occupancy, operating expense, and risk. If this value oversets the initial cost premium, then the green building investment would be viable. Because the green building is a relatively new concept, actual data on these four categories are not available. However, some logical reasoning can be done quickly.

The value from a property generates from two aspects; immediate sale value and rental value. Since the owner can charge a price premium; hence the green building’s immediate sale value would be higher than the conventional structure. Due to the already mentioned benefits offered, green building owners can charge a rent premium if they decide to give their property to rent. Due to their higher level of customer satisfaction, green buildings are capable of retaining their customers for a long. This helps in rent loss (owing to sudden vacancy) reduction and rent rise over time.

The fewer operating costs for green buildings are significant factors turning green building investment profitable. Due to the use of LED lights, lower energy consumption, better exposure to sunlight and improved ventilation, high configuration air-conditioner fitted with the intelligent sensor, low emission small boiler all eventually leads to lower consumption of energy and lower operating costs. Since the operating price is lower than the conventional building, and so is the maintenance cost, hence once the initial brunt of cost is incurred, the owner can now reap higher net profit by giving the facility to rent. Another critical aspect of higher valuation and a better investment proposition embedded in the green building comes from the lower level of risk associated with green building investment. “Green building value also shows up in the risk-mitigating protections these assets offer to owners and banks. In the appraisal and underwriting process, high-performance as well as new legislation and rising electricity costs, buildings will provide hedges against shifting customer tastes. It is possible to best-in-class business place make assets future-proof, protecting the going-out cap rate. Recognizing the relative safety of green assets, one major insurer now offers discounts for green buildings.” In coming times the growth rate of demand for green building would be much higher than that of the conventional structure. In this background, investing in the green building seems to be a better means of an investment than investing in traditional buildings. Another aspect of green building investment needs to be mentioned here; with the entire world running towards greener pasture, investing in the green building might also help individuals enter the elite league. It might help him to show off his environmental awareness and commitments towards future generations. It is a widely accepted fact that has emerged with substantial academic research that with a rise in the gross domestic product (GDP) or, more precisely, per capita gross domestic product, people tend to favor amenity values higher than before. Though this sentiment does not have anything to do with immediate return on investment, it might eventually help create brand value and provide deep psychological satisfaction. Regarding the legal hazards such as a license for new construction, a green building owing to clarity of its image due to energy saving, recycling, low emission rate; is expected to attract the good faith of the licenser and end up getting licensing much quicker than a conventional building. Even after accepting all the investment potential of green building investment, it is worth mentioning that all these returns are a long-term phenomenon associated with short-run loss. Still, it has the potential to outweigh the same eventually. 


This research has discussed the background of green buildings considering environmental problems and energy crises, the growth of energy price over the years as well as the construction cost, comparison of the conventional and green building regarding methods and materials used, human values related to green building development, environmental, economic and investment aspects of green buildings. An effort has been made to compare green buildings and conventional buildings at each stage. The entire concept of green building emerged in the 1970s in the wake of the energy crisis. The limitations of exhaustible fuel resources were felt, and the use of renewable resources along with alternative energies was stressed. In 1980 following the Brandt Commission Report, the concept of sustainable development instead of economic growth emerged as the underlying principle for the way ahead for human civilization. Gradually, it was realized that apart from industries, conventional real estates are a significant contributor to environmental pollution, and green buildings might be capable of downsizing real estate’s ecological impact.

Owing to the industrial revolution and successive high rate of urbanization, commercialization of agriculture and global energy demand increased many times over with the increase in population. Emission of carbon dioxide into the environment at an unprecedented rate along with other hazardous materials and high levels of deforestation soon forced the world to face annihilation through the greenhouse gas effect, porous ozone layer, and an air impossible to breathe. Again, the annual average temperature of the earth’s surface and that of the atmosphere rose at an alarming rate.

Initially, it was perceived that industrial growth and growth in transportation in an unsustainable manner were at the root of this problem. But later studies revealed that the real estate sector tops the list considering the negative impact on the environment. The heat-absorbing properties of the conventional building materials, use of standard air-conditioners, traditional chillers and boilers (do you mean refrigerators and stoves?), (chiller has several other applications apart from refrigeration and boiler has much broader application than some) no emphasis on recycling material and waste management as well as no hid to the water conservation program had turned conventional buildings into stationary environmental bomb waiting to explode at any moment. (Note: the previous sentence needs to be rephrased.) (What’s wrong with this sentence? This is not run on, and the stationary environmental bomb has been intentionally used to emphasize the environmental pollution caused by the stationary sources) To address this problem, the first initiatives towards the green buildings were started. The lacunas with the conventional buildings were identified and managed through the mix of changed material, site plan, building plan, energy sources, etc. Green buildings replaced the human-made non-environment friendly construction materials of conventional buildings with environment-friendly biodegradable construction materials, the site plan considered leaving space to avoid congestion, the building plan carefully used vertical heights to turn small space to look larger, opted for better sunlight and ventilation that minimized dependence on artificial air and light thereby saved energy.

Moreover, alternative and renewable energy forms started to be used in a higher proportion in green buildings to minimize fossil fuel used. This, on the one hand, saved exhaustible energy resources and, on the other, minimized carbon dioxide gas emission. Furthermore, green buildings started to abstain from any halogen use, such as chlorofluorocarbon. These combinations turned green buildings into an environment-friendly abode that agrees with the sustainable development motto.

These developments, though, come at a cost premium, however as explained; environmental benefit (arising out of lower CO2 emission and use of environment-friendly materials in construction as well as recycling activities), economic benefit (from energy cost savings, lower operational cost, health benefits, and occupant productivity enhancement) and investment benefit (better future market, favorable discount rate while property valuation, longer lease and associated brand value) along with the feel-good factor together, in the long run, outweighs the short-run cost incurred and makes green building a better option than the traditional building. 

However, this proposition still has a kink to address. The mass level acceptance for green buildings is yet to be achieved, and questions have already been raised regarding the incomplete regulation and certification system. The need of the time regarding promotion of green building at a much higher rate seeks for the development of a public awareness program addressing the public regarding the cost premium myths and potential profit associated with green buildings; better marketability, documentation of information regarding green buildings comprising of potential buyer list and priority-based area ranking.

The neoclassical growth theory has exposed the world to environmental threats. Unless some immediate, meaningful actions can be taken to restore the environment somewhat, soon its resilience would be broken. After that, it would be impossible to get it back in shape so that future generations may enjoy growth and development at a better or the same rate as the present generation. Green building development at a mass scale and its eventual acceptance can solve some significant issues related to sustainable growth. They should be taken up with lightning promptness.

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