Cost-benefit analysis of green buildings: An Israeli office buildings case study

Abstract Are green buildings costlier to build than conventional ones? If yes, by how much? How can we find out? Those questions have been asked for years, but answers have been of limited applicability, since specific solutions tend to be location-bound, and green buildings—few. This paper addresses the questions by developing a cost-benefit model based on the voluntary Green Building Standard (Israel Standard IS 5281) launched in 2005, and focusing on office buildings of different sizes and finish standards. Each building type was matched against IS 5281. Cost of compliance with the standard was evaluated for every item, alongside the benefit for both the entrepreneur and the public, for a 20-year period. We estimated the optimum alternative, leading to maximum savings in resources use, and the economical alternative, which minimizes initial investment. The optimum alternative, involved an additional cost, ranging between 4% and 12%, whereas under the economical alternative the additional cost was only 0.12–1.33%. Interestingly, in other countries, the added cost of green building is similar—i.e., between 0% and 10%.

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