Article Date: 03/01/2013

How Difficult is It to Determine the Cost Effectiveness of Green Buildings?

By Steve Rizer


Just how difficult is it to gauge the long-term cost effectiveness of green buildings? It may be extremely difficult, at least for the U.S. Department of Defense (DoD), which asked the National Research Council (NRC) for some objective advice on this matter in preparation for a report to Congress. After an extensive search of relevant literature, here is what an NRC ad hoc committee told DoD for the department’s report on energy efficiency and sustainability standards for military construction and major renovations of buildings:


“[We] did not identify any research studies that conducted a traditional benefit-cost analysis to determine the long-term net present value (NPV) savings, return on investment (ROI), or long-term payback” related to the use of the green building standards and rating systems undergoing DoD consideration, the committee stated in a pre-publication copy of its report to the department.


Among other things, DoD had asked NRC to “conduct a literature review that synthesizes the 'state of the knowledge' about the costs and benefits, ROI, and long-term payback of specified design standards related to sustainable buildings.” Those specified design standards include American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Energy Standard 90.1-2010; ASHRAE Standard 189.1-2011; LEED Silver, Gold, Platinum, and Volume certifications; and other American National Standards Institute-accredited standards, such as Green Globes.


In its research, the committee focused on 25 studies that met its criteria for timeframe, robustness, and relevancy to the DoD operating environment. Only two of the studies provided some analysis of NPV benefits, ROI, or payback associated with high-performance and green buildings. Those two studies, however, did not evaluate the cost effectiveness of specific building standards or green building certification systems, according to the committee. “Instead, they looked at the cost effectiveness of green buildings compared to conventional buildings.”


DoD also had asked NRC to evaluate a consultant-generated methodology and analysis of the cost-benefit, ROI, and long-term payback for specified building design standards and judge the consultant’s application of the methodology using empirical data from department buildings.


Although NRC acknowledged that the consultant did conduct a traditional benefit-cost analysis for the specified building standards and green building certification systems, the council reported that the committee “had significant concerns about the data used for the analyses and the application of those data, such that it could not support the absolute NPV benefits calculated by the DoD consultant for the ASHRAE standards, LEED, or Green Globes.”


NRC informed DoD that the committee’s work was complicated by several factors, one of which being an inability to find research where building performance could be measured in an objective manner. “The research on high-performance or green buildings inherently incorporates some level of subjectivity because of the unique nature of buildings, diversity in baselines for comparison studies, and the lack of a standard protocol for research on this topic.”


The council further commented that all buildings differ in terms of location, materials, design, size, function, technologies, operational practices, and other factors, which influence overall building performance. The diversity in building design and the multitude of factors that contribute to any building’s performance make it difficult to isolate the specific factors that contribute to energy use, water use, or other performance measures, NRC stated.


The NRC report, entitled “Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations,” can be accessed via the following link:



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