Title: Green Building Councils: Policy Instrument Or Fashion?
1Green Building Councils Policy Instrument Or
Fashion?
Gunther Maier, WU Wien Sabine Sedlacek, MODUL
University
2Introduction
- Greening the construction industry has become
big business recently - WGBC lists 60 organizations, 18 in Europe
- 20 established GBC
- 3 emerging GBC
- 23 prospective GBC
- 14 associated group
- Three areas of activity
- information, promotion, awareness building
- lobbying for standards and policies
- develop, manage, operate a rating system
3Introduction
- WGBC lists 9 rating systems
- Examples BREEAM, Green Star, CASBEE, LEED, DGNB
- standard procedure
- project is registered for assessment
- certified assessor evaluates based on standards
- organization verifies assessment and awards
certificate - GBCs are interesting from governance perspective
- typically NGOs
- perform a public function
- financed by the addressee of their policy
(membership, certification fee)
4Introduction
- Is this structure sustainable?
- Do GBCs fulfill a function that is economically
valuable? - What is this function? Do all GBCs fulfill it?
- Structure
- Where is the problem for GBCs to solve?
- conventional view
- economic view
- GBCs as element of economic governance
- Empirical analysis
- Conclusions
5The problem to solve
- Conventional view Vicious circle of blame
(Cadman, 2000, Keeping, 2000, Cadman, 2007,
Hartenberger, 2008, Ratcliffe et al., 2009,
Robinson, no year).
Constructors
Occupiers
Investors
Developers
6The problem to solve
- Basic argument
- potential demand exists, but market is too
complex or actors are too dumb - information problem
- One positive example will reveal the opportunity
- Best GBC strategy Promotion and awareness
building - Problems with this argument
- no reference to characteristics of real estate
market - why certification of individual buildings?
- why should business finance GBC activities?
7The problem to solve
- Economic view Prisoners dilemma trap
- quality uncertainty in all relations
- potential buyer (e.g. investor) is uncertain
about the quality he/she gets - supplier (e.g. developer) cannot proof the
quality of the building - buyer is not willing to pay the full premium for
higher quality - supplier has a strong incentive for cheating
- although both market participants would benefit
from higher quality, it is not produced and
therefore not traded ? trapped in a prisoners
dilemma
8The problem to solve
- information and awareness or the market alone
cannot solve this problem - in the prisoners dilemma trap no supplier
actually cheats the expectation of cheating is
enough - prisoners dilemma in one of the relations is
sufficient to block the whole circle
9GBCs and economic governance
- Governance may be provided by private actors
- governance and government should not be regarded
as almost synonyms (Dixit, 2009) - Prisoners dilemma trap creates a need for
governance - Two possible approaches
- create a high enough penalty for cheating actors
- establish a mechanism for more accurate and
reliable information about the quality of a
building
10GBCs and economic governance
- Second approach falls under enforcement of
contracts by third party institutions. - Third-party institutions provide governance by
outsiders who are not direct parties to this
class of transaction (Dixit, 2009). - certification of buildings
- increases the share of sustainable buildings and
reduces the probability of cheating - both effects increase the investors expected
profit ? investor is willing to pay more for such
a building ? higher incentive for construction of
it
11GBCs and economic governance
- When GBCs reliably certify the quality of
buildings, they help to resolve the prisoners
dilemma trap - both actors benefit from this directly
- other actors benefit indirectly through the side
effect on the market - GBCs in this case provide a valuable service to
the whole market - honesty of these third parties is not automatic
(Dixit, 2009) - own interests of GBCs need to be compatible with
governance function
12GBCs and economic governance
- valuable service is tied to certification
- reputation and honesty of the organization
- certification has to be selective to perform the
function - certification has to be wide enough to allow for
enough applications to develop the reputation
13Empirical analysis
- To what extent do GBCs fulfill these functions?
- Web-based survey of GBCs from the WGBC directory
- 26 responses (some incomplete) 12 Europe (9 CEE
countries), 6 Americas/Caribbean, 7 Asia Pacific,
3 Africa
14empirical analysis
Romania (Europe, CEE) Albania (Europe,
CEE) Australia (Asia/Pacific) Bulgaria
(Europe, CEE) Colombia (Americas/Caribbean)
Czech Republic (Europe, CEE) Dominican
Republic (Americas/Caribbean) Georgia (Europe,
CEE) Hong Kong (Asia/Pacific) Israel
(Asia/Pacific) Italy (Europe)
Japan (Asia/Pacific) Mauritius (Africa)
Mexico (Americas/Caribbean)
Morocco (Africa) New Zealand (Asia/Pacific)
Paraguay (Americas/Caribbean) Peru
(Americas/Caribbean) Poland (Europe,
CEE) Qatar (Asia/Pacific)
South Africa (Africa) Turkey (Europe, CEE)
United Emirates (Asia/Pacific) Croatia
(Europe, CEE) France (Europe) Spain
(Europe) Vietnam (Asia/Pacific)
15empirical analysis
16empirical analysis
Membership status Activities Activities
Established GBCs (n5) Established GBCs (n5) Established GBCs (n5)
- development and operation of rating tools (3) - certification of projects (3) - rating tool development (3) - to improve the certification system (3) - marketing (1) - research - conferences (1) - attract new members (1) - networking (1) - education courses (1) - advocacy
Emerging GBCs (n3) Emerging GBCs (n3) Emerging GBCs (n3)
- adaptation of the certification system (3) - working with 'certification board' and 'materials board' (3) - communication with members, other councils and international resources (1) - PR (1) - sponsorship, membership, communication, fund raising (1) - website development/ideas (1)
Prospective GBCs (n5) Prospective GBCs (n5) Prospective GBCs (n5)
- networking (1) - reminding board members to do any tasks required as per last meeting (1) - review documents sent by members (1) -review any tasks completed, before circulation (1) - communication (1) - develop the marketing materials, prepare the legal paper work and all the others milestones for our status (1) - administration, registration of members, getting sponsorship, committee meeting, event organization, research and development (1) - strategic planning - committee coordination (1)
Associated Groups (n6) Associated Groups (n6) Associated Groups (n6)
- website development (1) - business plan development - email correspondence (1) - capacity building (1) - meetings with volunteers and potential members ( 1) - sustainable building competition development - engage participants (1) - training (1)
1 information, awareness, 2 lobbying and
policy, 3 certification activities
17empirical analysis
type 1 type 2 type 3
established GBC 5 (45.5 55.6) 0 (0.0) 4 (36.4 44.4)
emerging GBC 4 (66.7) 0 (0.0) 2 (33.3)
prospective GBC 8 (88.9 100) 0 (0.0) 0 (0.0)
associated group 6 (75 100) 0 (0.0) 0 (0.0)
only more advanced GBCs engage in certification
activities cause/effect? Chi-square prob. 0.06
18empirical analysis
- number of members
- large spread
- substantial numbers only in top categories
- Australia, South Africa, Italy, New Zealand
19empirical analysis
- Importance of nine factors for mid-term goals (1
high) - marked differences
- related to certification
- adaptation of exist-ing system ratherthan
developing own
20empirical analysis
- Summary of empirical evidence
- too few cases for hypothesis testing
- results indicate the importance of certification
system - certification organizational status - of
members - no information yet about dynamic aspects
- anecdotal evidence from CEE countries supports
these results
21summary and conclusions
- theoretical argument
- prisoners dilemma trap
- GBCs need instruments to overcome this ?
certification - information awareness building is not
sufficient as a service to industry and the
market - empirical evidence
- cannot (yet) proof the theoretical result
- does not contradict it
- certifying GBCs are organizationally more
advanced and have larger numbers of members (and
more resources)
22summary and conclusions
- Research question are GBCs valuable governance
institutions or a temporary fashion? - GBCs can fulfill a valuable function
(certification) - Those who provide this service have a good chance
to stay in business those who do not are
likely to fade away over time (lack of support
from industry, lack of resources, lack of
publicity) - a certification system is not a sufficient
condition - reputation, design of certification system,
market size, form of organization