Report calls for developers and stockholders to embrace ‘green’ building

Tuesday, August 11th, 2009

By Kate Yoshida

The report titled Removing Market Barriers to Green Development (U.S. EPA, Northeast-Midwest Institute and Delta Institute, 2008) grew out of earlier work done to promote redevelopment on brownfield sites. By carefully identifying obstacles at every step and in every conceivable direction, EPA Region 5, the Delta Institute and the Northeast-Midwest Institute have compiled many of the conditions that block green building from becoming the norm. The report, aimed at all development , planning, and government professionals, examines current market dynamics, suggests specific actions that can help shift the market towards embracing green building, and casts light onto some of the major issues that impede green development practices. By focusing on the market and policy mechanisms which stand in the way, this report rallies for change, and gently calls for top-down “institutional” changes in accountability. It aims to make all stakeholders responsible-from grassroots up- for changing the status quo.

The participants from the Market Barriers forum suggest that the underlying causes for most barriers fall into five major categories. 1) Many of the benefits of green buildings are not quantified, making justifications for investment more difficult. Metrics for improvements in occupant productivity, public health, building longevity, water conservation and energy costs need to be readily available. 2) There is a lack of clear communication along the development chain about the reliability and relative value of green development compared to “old” methods. 3) There is no incentive for developers to invest in features that pay off over the long-term if they plan to sell the building, or if they pass along operating costs to lessees. 4) Underwriting criteria currently used might not match up with projected payback periods, skewing perceptions of risk and returns. Finally, 5) Lack of expertise with design, reviews, approvals and construction methods, outdated and/or inflexible codes, and related liability questions, often delay projects and add cost and stress.

While this is all very discouraging, the six Green Development Principles lay out approaches to overcoming barriers, cite case studies, and list actions that can be taken. One of the most compelling principles is to apply integrated design, which calls for strategically involving all design/construction/business personnel at key points to achieve higher performance at a lower cost. The report notes that selectively picking points off of a checklist does not equal thoughtful integrated design. At the same time that EPA as a whole realizes that lists and strategies are not a panacea, they also realize that working within existing frameworks is vital for moving forward with their own internal goals to protect the environment and human health. In other words, by providing feedback to ASHRAE and USGBC (for example) when it comes time to update standards, EPA is able to give input that advances EPA’s objectives, thus supporting these vital relationships.

The “Issues just over the horizon” section identifies, even understates, what the larger problem really is, stating that “higher accountability for emissions, waste, runoff, and usage may boost interest in sustainable development.” As Robert F. Kennedy says, “Show me pollution and I’ll show you a subsidy.” In other words, our current market system is mostly unable to assign social costs (damages borne by the public) to those who reap the benefits. When viewed as a whole system, the prices we pay rarely reflect the total costs associated with products and services.

To further the point, the report suggests that if we bridge the knowledge gaps in green development quantification, we would be able to justify increased upfront costs. And let’s not forget the underlying problem–the lack of appropriate price signals that incorporate social costs. EPA cannot address this thorny, highly politicized issue by itself, but the report points out hopeful signs of change. Impact fees on developers fund infrastructure and other public costs, for example, and the discussion on carbon pricing rages on. The Smart Growth office of EPA has extensive resources and information on environmental benefits available on its website. Many of their publications make excellent companion pieces to the Market Barriers report.

The Removing Market Barriers report correctly points out that smart growth strategies, location-efficient mortgages, embodied energy calculations and carbon regulation are underutilized. These strategies are more than just innovative ideas—they are the framework on which a green market can be built.

Chris Choi (EPA Region 5), who managed the Market Barriers to Green Development effort and co-wrote the report, provided background for this review.

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