A common belief about sustainable building strategies is that they cost too much, particularly when building affordable housing, and that they are difficult to implement. Although available long-term analysis is limited, some recent studies have shown that as the market for green buildings grows, the incremental capital costs for implementing sustainable building features have decreased. This initial cost reduction can make the long-term reduction in operations costs more attractive. Much of the increased attention is attributed to more education and experience around sustainable building strategies throughout the building sector, a higher demand for these products and services, and the rising costs of energy and materials.

“The Costs and Benefits of Green Affordable Housing,” a report produced in 2005 by New Ecology and the Green CDC’s Initiative, presents an analysis of 16 green affordable-housing case studies. At that time, their projects showed an incremental cost for sustainable building and green building products ranging from 18% below to 9% above total development costs for a similar conventional development. The average across all projects was a somewhat low 2.42%, with this increase primarily consisting of construction costs as opposed to design costs. This wide range of incremental costs is an indicator of the wide range of possible choices among building strategies when deciding to build green.

The potential energy and other operational savings that can result from a sustainably designed home may justify some incremental capital costs for sustainable building features. Thinking about costs and benefits in this way—from design and construction to long-term operations—is known as life-cycle costing. Life-cycle costing requires understanding the total costs over the lifetime of the real estate. When evaluated from a life-cycle costing perspective, the premiums for sustainable building strategies are negligible, as the operating-cost benefits resulting from sustainable building strategies are considerable for residents.

The distinction between initial premiums (if any) and long-term operational savings is an issue of who pays and who benefits. In most cases the developer will not operate the home to recuperate the long-term savings. Therefore, additional incentives are required to make any initial cost premiums more attractive to the developer. These incentives include tax credits, expedited local government services (such as permitting), grants, mortgages and marketing benefits that can help distinguish your home from others in the marketplace.

Marketing benefits can be significant because of the growing recognition of and demand for buildings that are designed wisely and operated efficiently. These benefits can be best communicated using an industry certification to offer credible additional value, such as LEED, Chicago Green Homes, Energy Star or Green Communities.