Green buildings cost premium: A review of empirical evidence

• We analyzed the empirical studies which address the issue of green cost premium.
• There is no conclusive answer about the green buildings cost premium.
• There is no conclusive empirical evidence that the green building tends to cost more.
• Significant gap exists in the quantified cost premium range.
• The green cost premium that can be generalized ranges from −0.4% to 21%.

Evidence indicates that green buildings can outperform conventional (non-green) buildings in many performance areas. Nevertheless, the perceived higher upfront cost by building owners and investors is frequently cited as a hurdle to a widespread adoption of green buildings. In this study, an extensive literature survey was conducted to aggregate the green cost premiums which were reported as results of published empirical studies that investigated the cost premium associated with the green building. Results and methodologies of 17 empirical studies were tabulated and comparatively analyzed to find a conclusive answer whether the green building costs more or less than its conventional counterpart. Yet, consensus is not reached, and a significant gap exists in the quantified cost premium range. More than 90% of the reported green cost premiums through empirical investigations fall within a range from −0.4% to 21%. Two studies found that green buildings cost less than their conventional counterparts. Surprisingly, among the 17 reviewed empirical studies, only six publications were classified as academic publications, of which four research articles published in peer-reviewed journals, one conference paper, and one book. The size of the literature which addresses the issue of green buildings cost premium does not reflect the significance of the problem.