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One of the members of GREG recently published some research which investigates the value of credentials concerning “green” buildings. This issue is a big problem because gaining a credential such as LEED is costly. Many people view this cost as an investment similar to buying a piece of capital and, if so, then the proper way to “solve” this class of problems is to ask if the rate of return on this investment is good enough.

Avis Devine and her co-author Shaun Bond find that the signal is important but that the analogy to a capital investment is not entirely accurate. If the investment were effective then the benefits would be evident without third-party certification; they find an extra return due to certification. To read a brief discussion of their results and the estimated size of the rent premium associated with certification, please follow this link. to an article written for the Green Building Information Gateway(GBIG).

PA

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