Green Building Costs

Green Building Costs

The misconception that the costs of green design, construction, and certification are prohibitive stands as one of the greatest barriers to the adoption of sustainable development. However, numerous studies and reports have demonstrated that though green buildings may incur initial increases (aka "green premium" ) beyond conventional construction costs, this premium is more than compensated for over the lifetime of the building in concrete financial returns such as savings in utility bills, increased property values and employee productivity gains.

The City of Bloomington uses the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system to assess the sustainability of its building projects.

What are the costs of green building?

Building Design and Construction ‘s "White Paper on Sustainability," published in November 2003, examined the building costs of 26 LEED-certified buildings and found the cost per-square-foot ranging from $13 to $425 (see chart). 1

A July 2007 report by Davis Langdon, a construction consulting company, compared the costs of LEED seeking buildings to conventionally designed and constructed counterparts. Eighty-three LEED seeking buildings and 138 conventional buildings were chosen for the study, a total of 221 academic, laboratory, library, and community center buildings, and health care facilities.

The following graphs show the costs per square foot of the conventional buildings versus buildings seeking various levels of LEED-certification. LEED seeking academic buildings are scattered broadly across the chart, showing no significant difference in the average costs of LEED seeking and non-LEED seeking buildings.

The same is true for library buildings and community centers:

The Davis Langdon report concluded:

"As the various methods of analysis showed, there is no ‘one size fits all’ answer to the question of the cost of green. A majority of the buildings we studied were able to achieve their goals for LEED certification without any additional funding. Others required additional funding, but only for specific sustainable features, such as the installation of a photovoltaic system. Additionally, our analysis suggests that the cost per square foot for buildings seeking LEED certification falls into the existing range of costs for buildings of similar program type. From this analysis we can conclude that many projects can achieve sustainable design within their initial budget, or with very small supplemental funding." 2

The City of Seattle reports that the average incremental cost of meeting LEED Silver standards across all projects is 1.7%. 3 The premium cost per-square-foot of LEED-certified buildings (the initial cost increase per-square-foot attributed to the inclusion of green features), is estimated at $3 to $5, an increase of just under 2% above traditional building costs. 4 Green building expert Gregory Kats broke down the increased premium by LEED certification level by analyzing 33 projects as follows: 5

Cost inflation in green buildings is generally attributed to the design and modeling time necessary to incorporate sustainability features into pre-existing projects. Incorporating green design in mid-project can lead to "added costs, due to redesign and additional change orders." 6 The inclusion of green design from the outset or early stage of a project can help avoid higher costs. 7 The investment of an additional 3% of project costs in the design phase can reduce construction costs by 10%. 8

What are the costs of LEED certification?

Buildings seeking LEED rating are subject to the costs of the certification process. This non-refundable fee gives the Project Administration and Team Members access to LEED Online and to the LEED credit interpretations database.

Fees for the several stages of consultation and review included in the certification process are listed below: 9

The USGBC will fully rebate any certificate on fees for buildings that achieve LEED Platinum status.

    A note on LEED-EB: LEED-EB is for Existing Building owners undertaking building improvements and/or maintenance changes; the EB rating system addresses the following:
Green Building Costs
    Whole-building cleaning and maintenance issues including chemical use Ongoing indoor air quality Energy efficiency Water efficiency Exterior maintenance programs, and Systems upgrades to meet green building energy, water, IAQ, and lighting performance standards, among others.

    In addition, the cost of hiring a LEED Accredited Professional, aka LEED AP (a designation from the USGBC, requires passing a LEED exam) as a consultant on the project should be considered. The USGBC notes that this person can act "as the project contact and team member responsible for coordinating the LEED process." While we were unable to find an average cost for hiring a LEED AP, those serious about working with a professional should consider this cost.

What is the payback period for green buildings?

Though the initial costs of building green may be higher than those of conventionally designed buildings, the savings generated in energy, water, maintenance, operations, and health costs offer quick investment returns, and ultimately revenues.

"The Costs and Financial Benefits of Green Buildings," report produced by the Massachusetts Technology Collaborative for the State of California Sustainable Building Task force presenting a definitive cost benefit analysis of green building based on a review of LEED-certified buildings, states:

"While the environmental and human health benefits of green building have been widely recognized, this comprehensive report confirms that minimal increases in upfront costs of about 2% to support green design would, on average, result in life cycle savings of 20% of total construction costs — more than ten times the initial investment. For example, an initial upfront investment of up to $100,000 to incorporate green building features into a $5 million project would result in a savings of $1 million in today’s dollars over the life of the building." 10

As indicated on the chart, all four certification levels show positive Net Present Value (NPV). manifesting positive financial returns.

1. Cassidy, Robert. "White Paper on Sustainability." Building Design & Construction November 2003 1-48. Available at: .

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