Transaction Cost and Agency Perspectives on Eco-Certification of Existing Buildings: A Study of Hong Kong

Abstract

Eco-certification schemes are usually launched with various incentives provided by local governments to facilitate green building development and building energy retrofits. A number of barriers to building energy retrofitting have been identified in previous literature, while the barriers to the eco-certification of existing buildings are under-researched. Drawing on a set of building data retrievable from the BEAM Society and other sources, we carried out an analysis and found the building energy retrofitting, as well as the certification process, were unwelcomed in multi-owned residential buildings. The identified shortfall is put forward from the perspectives of transaction cost theory and agency theory. The findings reveal that high transaction costs incurred during negotiations and coordination among a large number of co-owners within a typical apartment building can outweigh the benefits of retrofitting and eco-certification. Besides, the remuneration structure of third-party property management agents discourages agents from facilitating co-owners to initiate retrofitting. This study provides significant implications for policymakers to understand the concerns of building owners and managers over the decisions and the processes of both the building energy retrofits and eco-certification. The problems and barriers unveiled in this study will facilitate the refining of current energy efficiency policies and related incentives designs.

Collective renovation decisions in multi-owned housing management: the case of public–private homeowners associations in Poland

“…Another advantage is that the central authority has the professional expertise to mobilize owners to cooperate and can represent the owners as a whole when dealing with a third party. In contrast, the major drawbacks of this approach include rent-seeking and principal-agent problems (Chen & Webster, 2005;Yau et al, 2021;Yip et al, 2007). Rent-seeking refers to special-interest group behavior that generates significant personal benefits for a limited, identifiable number of group members while imposing a small individual cost on all members of the group.…”

Evolutionary Game Analysis of Energy-Saving Renovations of Existing Rural Residential Buildings from the Perspective of Stakeholders

“…Only when the government, energy saving service enterprises and village residents have the subjective willingness to participate can energy-saving renovations of the existing buildings be effectively promoted. However, previous studies on energy-saving renovations to existing buildings mainly focused on evaluation methods [20,[24][25][26][27], retrofitting influence factors [28,29], cost-benefit analysis of retrofitting [30][31][32][33][34], evaluations of the effectiveness of retrofitting [35,36], barriers to retrofitting [37], and technical or scheme retrofittings [38][39][40][41][42]. In addition, some scholars are committed to reducing existing building energy consumption through energy modernization of buildings.…”