What drives “green housing” construction? Evidence from Switzerland

Abstract

PurposeSwitzerland boasts arguably the highest density of green properties in the world. In 2008, more than 15 percent of total new construction received the Swiss energy building label Minergie. The spatial distribution of these green buildings, however, is highly heterogeneous. In some regions, more than half of the new dwellings are built according to the Swiss green building standard. In others, this share is still negligible. The purpose of this paper is to identify the determinants of the distribution of green housing.Design/methodology/approachFor 2,571 Swiss municipalities, the author computes the green building share of new residential buildings. Data are collected for several variables measuring demographic, geographic, social, cultural, and political aspects that – according to the authors' hypothesis – may influence green building activity. Count regression is used to estimate the impact of these variables on the demand for green buildings.FindingsIt is found that differences in income levels and cultural affiliation between Swiss municipalities account for the largest part of the variation in green building activity. The impact of homeowners' stance on environmentalism is highly significant but less important. Government subsidies do not seem to trigger additional green housing activity.Originality/valueThe paper presents one of the first empirical analyses regarding the determinants of green building activity. Thanks to a comprehensive dataset, the authors are able to investigate the impact of potential drivers of “green housing” construction activity. The regional variation in governmental incentives is analysed and delivers valuable insight for policymakers interested in spurring the development of green buildings.

The role of psychological factors in influencing consumer purchase intention towards green residential building

“…Along the same lines, the surge in global interest on eco-friendly building and energyefficient buildings is obvious and has been promoted as the most vital strategy for encouraging energy saving, and the concept has been a critical strategy to diminish the disintegration of the earth (Lan and Sheng, 2014;Salvi and Syz, 2011). Based on the online resources obtained from the GBI website, the Malaysian Government launched the GBI on 21 May 2009 (GBI, 2013).…”

“…Although there were many research studies regarding green homes, few actually focused on the psychological factors that influence the consumer purchase intention, specifically among Malaysian house buyers. For example, there is research on the following: psychological determinants of intention to adopt green-labelled residential building in China (Liu et al, 2018); identifying the effect of the green experience on preferences and the willingness-to-pay for green building attributes in Hong Kong (Chau et al, 2010); drivers for green building and housing (Salvi and Syz, 2011;Bond, 2011); economic returns on energyefficient investments in the housing market in Singapore (Deng et al, 2012); research advantages of green buildings in the USA (Fuerst and McAllister, 2011) and Netherlands (Kok and Jennen, 2012); and recently, on green building technologies adoption by Chan et al (2018). On the other hand, a systematic review on literature about drivers for green building also been conducted by Darko et al (2017).…”

The Impact of Subsidies on the Prevalence of Climate-Sensitive Residential Buildings in Malaysia

“…Achieving efficient subsidies is difficult, as some elements of green buildings may require higher levels of subsidies to be financially viable, while others may need no subsidy at all for uptake; this is further complicated by variations in WTP by consumer socio-economic characteristics [101]. Subsidy levels that are too low to be effective [78] may result from failing to consider WTP. High quality information about developer costs and WTP are also necessary to avoid funding capture by developers [76].…”

“…This assumption was necessary as a starting point due to a lack of CSB data; these three factors are closely examined in scenarios and sensitivity analysis; (2) That subsidies are efficient at reducing the cost premium to homebuyers, whereas some of this funding may in fact be captured by home builders [76]. This would reduce subsidy effects, which would be reflected in the different subsidy cases examined; (3) That the cost premium of CSB and consumer WTP is same across all market segments, whereas demand for green buildings and WTP is positively correlated with income [53,77,78] and the cost premium to achieve CSB standards may be greater for the low-end market segment. We might expect slower uptake than predicted by the model if this assumption is not true and possible step-like delay behavior if different market segments behave substantially differently; it is difficult to estimate the magnitude of this effect; (4) That green/CSB building uptake in the commercial and industrial sectors do not substantially reduce cost premiums in the residential sector.…”

“…In 2015, self-reported rates of green building activity in thirteen countries range from 24-41% [99]; however, LEED adoption in the US only covered 8.7% of all new built space in the twenty year period between 1993 and 2013, comprising 2.9% of total built space [28]; likewise, in Switzerland in 2008, only 15% of newly constructed buildings completed the local Minergie certification process [78]. This suggests that the cost premium of green buildings is higher than the 0-2% commonly stated by advocates [46,47], that consumer WTP is very low, or that there is some market failure (e.g., over-estimation of risk) and is consistent with the frequent call for financial incentives.…”