Abstract
‘Green’ building initiatives have led to the emergence of market-based policy approaches in a number of countries. Many of these have taken the form of environmental certification for buildings. A number of studies have examined the additional construction costs involved in achieving ‘green’ certification, and these studies suggest that they are relatively low, around 2% on average. Evidence is accumulating, however, that the "green premium" – or the extra cost that homebuyers pay to purchase a property in a certified green building – is systematically higher than this.
 
 This study aims to identify the nature and scale of the "green premium" in Israel, based on a novel comparative calculation method developed to examine how much ‘green’ building certification raises an apartment's price. We also examine how economically profitable it is to purchase a 'green' apartment for the homebuyer and for the Israeli economy overall. Finally, through a case study in Tel Aviv, we shed light on how the implementation of environmentally certified housing may lead to gentrification.
Highlights
Numerous policy instruments have been developed worldwide to reduce the energy demand and overall environmental impact of buildings and these efforts have increasingly come under the banner of "green building"
Growing out of the conceptual framework of sustainable development, which attempts to reconcile long-term environmental concerns with short-term socio-economic realities, green building initiatives have led to the emergence of market-based policy approaches in a number of countries
The “green” premium was calculated per square meter of dwelling unit in each municipality and for each year, using a list of 250 residential buildings that have received the SI 5281 certification from the Standards Institute of Israel (SII). (Note 1) We included in the sample only multi-family apartment buildings, and the comparison includes 91 sets of green vs. conventional residential buildings
Summary
Numerous policy instruments have been developed worldwide to reduce the energy demand and overall environmental impact of buildings and these efforts have increasingly come under the banner of "green building". Growing out of the conceptual framework of sustainable development, which attempts to reconcile long-term environmental concerns with short-term socio-economic realities, green building initiatives have led to the emergence of market-based policy approaches in a number of countries. Many of these have taken the form of voluntary environmental certification systems for buildings, such as Green Star (Australia), LEED (United States, Leadership in Energy and Environmental Design), Energy Star (United States), and BREEAM (United Kingdom, Building Research Establishment Environmental Assessment Method). In June 2013 those cities decided to adopt the green building standard as mandatory, to be phased in gradually over a period of several years
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