Differential effect of knowledge on stakeholders’ willingness to pay green building price premium: Implications for cleaner production

Shoshi Ofek, Boris A. Portnov

Research output: Contribution to journalArticlepeer-review

Abstract

Green buildings (GBs) are designed to reduce the environmental impact of construction while improving human comfort and health. However, green buildings are often more expensive than conventional buildings, because green building price premium tends to cover extra costs, such as import prices, investment in research and development, and more efficient, but more expensive, construction systems. The present study aims to assess the extent to which knowledge about green building benefits affects the acceptable size of green building price premium across different groups of stakeholders. The survey was carried out in Israel in 2016 and covered 438 potential homebuyers, 50 architects, and 50 building contractors (developers). As the study revealed, consumers more familiar with green building benefits are willing to pay 9.25% of green building price premium, as opposed to 7.74% extra costs acceptable to consumers being less familiar with green building benefits (P < 0.05). By contrast, among the developers, the acceptable size of green building price premium was found to be inversely related to the level of knowledge – about 17% among developers more familiar with green building vs. 29% among developers less familiar with it. We explain these differences by the fact that developers previously involved in green building projects, may be more aware about a relatively small price premium that consumers are willing to pay for accommodations in such buildings. Developers with past green building experience may also have better knowledge about long bureaucratic procedures and complex management of green building projects, which may reduce their willingness to add green buildings to their investment portfolios. The main finding of the study is that improved knowledge about green building benefits has varying effects on different groups of stakeholders. Therefore, in order to stimulate cleaner production in the construction industry, user-tailored strategies aimed at stimulating interest in green building among various groups of stakeholders should be applied.

Original languageAmerican English
Article number119575
JournalJournal of Cleaner Production
Volume251
DOIs
StatePublished - 1 Apr 2020

Keywords

  • GBs
  • Green buildings
  • Knowledge
  • PP
  • Price premium
  • Stakeholders
  • WTA
  • WTP
  • Willingness to add
  • Willingness to pay

All Science Journal Classification (ASJC) codes

  • General Environmental Science
  • Industrial and Manufacturing Engineering
  • Building and Construction
  • Renewable Energy, Sustainability and the Environment
  • Strategy and Management

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