While green-labeled buildings have been found to sell at a premium compared to nearby controls with similar observable characteristics, the voluntary nature of the labeling decision implies green-labeled buildings may have different unmeasured characteristics that may account for at least a portion of the premium. Therefore, it is unclear whether green-labeled building premiums are a causal effect of the labels. I use data on repeat sales transactions and detailed hedonic characteristics to test whether green-labeled office buildings were selling at a premium before they were labeled, and combine these results with post-labeling price premium estimates to identify realized cost-benefit ratios for green-labeling policies. The data suggest the causal net benefits of green labels range from $11.50-$19.95 per square foot. The estimated net benefits are smaller than previous estimates that have focused solely on the benefits and ignored the potential biases from nonrandom selection.

Additional Metadata
Keywords Green Labels, Nonresidential Real Estate, Cost-Benefit Analysis
Publisher Department of Economics
Series Carleton Economic Papers
Citation
Papineau, M. (2015). Pre-Labeling Market Valuations in the U.S. Green Building Stock and the Causal Effect of Green Labels (No. CEP 15-05). Carleton Economic Papers. Department of Economics.