Monetary valuation of the environmental benefits of green building: A case study of China
Introduction
Global resources are being consumed at an alarming rate through excessive exploitation by humans (Olubunmi et al., 2016). Traditional building construction methods have many negative impacts on the natural environment, such as water depletion and pollution, greenhouse gas emissions, and land occupation, which could be reduced via an integrated green design approach (Ali and Al Nsairat, 2009). Green building (GB) was proposed in the 1980s and has become an inevitable choice for the transformation and upgrade of the construction industry (Li et al., 2020). GB was initially defined based on the creation and responsible management of a healthy built environment according to resource-efficiency and ecological principles (Huang, 2022). A series of green technologies are applied on the building to achieve green goal; therefore, GB incurs higher initial costs than conventional buildings. But the main benefit of GB is reducing the negative impacts on the environment, which is external benefit that difficult to internalize into the initial cost. Furthermore, the environmental benefits are usually evaluated by the environmental indicators with different units and implications, including carbon reduction, energy saving and land saving. Many key business sectors, including developers, bankers, and appraisers, would like to determine the benefits of GB in monetary terms (Ji et al., 2014) to make these benefits comparable in terms of costs and other benefits.
Various legal and policy instruments have been proposed to stimulate GB in Europe, the USA, Canada, China, India, and Australia (Shen and Faure, 2021). In China, the government issued the “Implementation Opinions on Accelerating the Development of Green Buildings” in 2012 to accelerate GB development, and the first goal requires that 30% of new construction meets GB standards by 2020 (Zou et al., 2017). By the end of 2018, more than 2.5 billion square meters of GB had been constructed, thus accounting for more than 40% of the new urban civil buildings, and 10139 projects had been accredited by the Chinese GB assessment standard (Shen and Faure, 2021). In 2020, the new goal of GB development was for 70% of new construction to meet GB standards by 2022. The construction industry plays a vital role in a country's economic growth (Kong and He, 2021), and GB can make direct contributions to local economies when developed on a large scale (Likun et al., 2017). Environmental improvements are the primary benefits of GB. However, these benefits must be evaluated in monetary terms to provide basic data for analyzing the macroeconomic impact of GB development.
Therefore, this study proposes methods of identifying, quantifying, and valuing the environmental benefits of GB. Technologies that have positive effects on the environment were fully identified based on GB rating system. A cause-and-effect relationship between green technologies and environmental elements was established, and the monetary valuation methodology of environmental economics was applied in a quantitative analysis. A time-varying function was introduced to realize the environmental valuation of the long-term benefits produced over the lifecycle of the building. A case study was performed on the environmental benefits of Chinese GBs in 2015, and these benefits were evaluated using the proposed method as a case study. This study makes the following contributions.
- i.
To date, GB has mainly been evaluated by the standards with fixed points related to green technologies. However, quantitative indicators of environmental benefits are lacking. Although researchers have studied the environmental benefits of GB, these benefits have not been fully identified, and the contribution of each green technology has not been analyzed. Therefore, this research assesses GB using environmental indicators by considering green technologies, and the findings can provide clear and comprehensive information on the environmental benefits to related sectors.
- ii.
The higher initial cost is one of the main obstacles to GB development (Morton et al., 2016). Environmental benefits are external benefits of GB that thus, are difficult to internalize into construction costs. Although terms related to the environment constitute a considerable portion of the body of GB literature (Darko et al., 2019), research on evaluating environmental benefits in monetary terms is rare, which hinders the realization of the full potential benefits of GB. This study proposes a methodology of valuing the environmental benefits produced by different technologies. The results can facilitate the internalization of environmental benefits into the incremental costs of GB and the identification of green technology with great environmental contributions.
- iii.
GB development on a large scale affects economic systems. Previous researchers have studied this effect without considering the environmental benefits of GB in detail (Krarti et al., 2017; Hartwig and Kockat, 2016; Likun et al., 2017). This study offers basic data for analyzing the macroeconomic effects of GB development to obtain more accurate and reasonable conclusions.
Section snippets
Literature review
Research publications on GB have experienced explosive growth in recent years (Wu et al., 2021), and scholars have wide-ranging studies on different aspects of GB (Yadegaridehkordi et al., 2020). The environmental aspect of GB sustainability has received special attention, whereas the economic sustainability and economic value of such green practices have been largely ignored (Darko et al., 2019). The environmental aspect can be evaluated using the valuation method of environmental economics,
Materials and methods
Different countries and regions have a range of characteristics, such as distinctive climatic conditions, unique cultures and traditions, diverse building types and ages, and wide-ranging environmental, economic, and social priorities, all of which shape their approach to GB (Darko et al., 2019). Therefore, green technology systems should be developed based on local characteristics. In this study, the environmental benefits of GB are identified by focusing on China based on the public data of
Case study
With the method proposed in Section 3, the environmental benefits of GB in China accredited by the ASGB from 2008 to 2015 are valued as a case study. Statistical data related to these projects have been published in official reports, thus providing basic data and information to realize valuation assessments.
Conclusions
The purpose of GB development is to decrease the negative environmental impacts of construction. The environmental benefit is the main advantage of GB. The present rating systems and studies evaluate GB without quantifying results related to the impact on the environment, the environmental contribution of each technology, or relationship with the economic system. In this study, the main environmental effects of GB were identified based on mastering the technical principles to establish a rating
CRediT authorship contribution statement
Chunqing Zhao: Conceptualization, Methodology, Validation, Formal analysis, Investigation, Writing – original draft. Mingjun Liu: Supervision. Ke Wang: Writing – review & editing.
Declaration of competing interest
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
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