Stimulating key stakeholders to promote residential green building in Israel

Green buildings (GBs) are buildings that are designed to reduce the environmental impact of construction while improving human comfort and health. High upfront costs are frequently cited as a hurdle to the widespread adoption of GBs, although construction costs might be offset by long-term maintenance and energy savings. Yet the lack of knowledge or uncertainty about GB benefits, might prevent prospective homebuyers and other stakeholders from entering the GB market. Therefore, it is essential to convince main stakeholders that investment in GBs is justifiable. In the present study we investigate factors that influence investment decisions of different interest groups – consumers, architects and building developers – in GBs. Additional goals are to examine the potential impact of prevalent GB policy instruments on the size acceptable size of GB price premium, and to assess the extent to which knowledge about GB benefits and time-to-purchase affects the acceptable size of GB price premium.The study is based on a nationwide survey of potential homebuyers, architects and developers, carried out by the "Dialog "Survey company. The first part of the survey was carried out in April-June of 2015 and its second part was conducted in April-May 2016. Each wave of survey covered about 500 respondents and had the sample error of ±4.5%. The surveys were funded by the Israel Ministry of Environmental Protection.The study reveals that different groups of stakeholders are driven by different reasons to invest in GB: improving professional image for architects, requirements of building standards and energy prices for developers, and potential maintenance savings for consumers. Financial incentives, such as tax breaks and subsidized loans, are found to result in lesser, rather than greater, willingness to pay the GB price premium. Improved knowledge about GB benefits was also found to have varying effects on different groups of stakeholders: Consumers and architects, who are more familiar with GB benefits, are found to be willing to pay (or add) higher GB price premium, as opposed to consumers and architects who are less familiar with the GB concept. By contrast, among the developers, the acceptable size of GB price premium was found to be inversely related to the level of knowledge: the developers who are more familiar with the GB concept are found to be willing to add lower GB premium in compare to developers who are less familiar with it. Willingness to pay a price premium for GBs was also found to change with the time to purchase.We explain these findings by the fact that the above-mentioned interest groups – consumers, architects and developers – have different interests in GBs and priorities associated herewith. As architects do not bear construction costs, and their fees are often set proportional to the costs of construction, they might be willing to add a Hight GB premium to their projects. However, additional construction costs might become a serious consideration for consumers and contractors who bear such costs directly. Furthermore, the results of the study indicate that financial incentives to homebuyers may be counterproductive by generating emotive and opposite responses, and that a long-term governmental commitment to support GB maintenance may be more effective. We also explain the observed "inverse" effect of knowledge on developers' willingness to inflate building costs by incorporating GB features by the fact that developers who were previously involved in GB projects might be aware about a relatively small price premium that consumers are willing to pay for accommodations in such buildings and long bureaucratic approval procedures. As we also argue, people who have no immediate home buying intention, might have only limited knowledge about contemporary housing market trends and thus do not consider GB as a viable alternative to traditional construction.The study contributes to a better understanding of how stakeholders' support for GBs can be stimulated. In that sense, the present study may assist in developing strategies, best tailored to different interest groups, such as strengthening legislation, improving education and knowledge about GB among various groups of stakeholders.