Decision model to optimize long-term subsidy strategy for green building promotion

Abstract

• The decision model simulates the long-term interactions among stakeholders. • The decision model outputs balance the intertwined interests of stakeholders. • The case study recommends subsidy to homebuyers with price control. • The case suggests two moderators: the premium reduction and subsidy proportion. • The decision model extends the green building movement literature. Green buildings reduce energy use and CO 2 emissions toward the sustainable built environment. The last milestone of the green building movement is to promote public acceptance, while barriers exist such as the incremental cost for developers and the premium price for homebuyers. Subsidy programs are offered by government agencies to address the barriers; however, most of the subsidy strategies highlight the interest of single stakeholder such as government (policy side), developer (supply side), or homebuyer (demand side). This study creates a decision support model using evolutionary game theory to reach an optimal subsidy strategy among multiple stakeholders and increase the green building acceptance. This model considers the interactions of the government, developer, and homebuyer, and seeks their common interests – the long-term benefits for the society in the contexts of green building movement. Demonstrated via a real residential development project, the model identifies the optimal subsidy strategy and associated factors, e.g., subsidy allocation, subsidy proportion, and premium reduction. The results recommend a subsidy strategy to homebuyers as well as combined with price control. The case study also suggests two moderators on the green building market expansion – the premium reduction and subsidy proportion – which depend on the government's budget and ambitions.