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American Economic Review: Vol. 100 No. 5 (December 2010)

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Doing Well by Doing Good? Green Office Buildings

Article Citation

Eichholtz, Piet, Nils Kok, and John M. Quigley. 2010. "Doing Well by Doing Good? Green Office Buildings." American Economic Review, 100(5): 2492-2509.

DOI: 10.1257/aer.100.5.2492

Abstract

This paper provides the first credible evidence on the economic value of "green buildings" derived from impersonal market transactions rather than engineering estimates. We analyze clusters of certified green and nearby buildings, establishing that "rated" buildings command substantially higher rents and selling prices than otherwise identical buildings. Variations in premiums are systematically related to energy-saving characteristics. Increased energy efficiency is associated with increased selling prices -- beyond the premiums paid for a labeled building. Evidence suggests that the intangible effects of the label itself may also play a role in determining the values of green buildings in the marketplace. (JEL G31, M14, Q52, R33)

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Authors

Eichholtz, Piet (Maastricht U)
Kok, Nils (Maastricht U)
Quigley, John M. (U CA, Berkeley)

JEL Classifications

G31: Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
M14: Corporate Culture; Social Responsibility
Q52: Pollution Control Adoption Costs; Distributional Effects; Employment Effects
R33: Nonagricultural and Nonresidential Real Estate Markets


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