Creative Commons courtesy BullionVault
The latest in a mounting body of evidence that demonstrates real value in Green Labels was released recently. The Value of Green Labels in the California Housing Market is an academic and science based approach to answering the question of Green Label value. The authors, Nils Kok and Matthew Kahn conducted a thorough and thoughtful study of the question and concluded that the answer is “Yes”!
Now of course, their work and the answer itself is more nuanced than that, but we can take heart, those of us with hearts that is, that all the work that’s gone into building a solid, stable, defensible and respectable industry has begun to pay off. For the purposes of their study, Green Labels included Energy Star, LEED for Homes and GreenPoint (California program) homes.
This study is one of a number of recent studies demonstrating performance of our industry across a variety of metrics. Here a couple of recent and important related studies:
Some of these studies are getting a bit long in the tooth, but all of them are within the last three years; which incidentally is all encompassed in the great housing meltdown. Now some of the data is from before the meltdown, but much of it is after and during the debacle. One takeaway is the growing amount of data that points to success; as you are talking with key stakeholders; builders, policy makers, media, etc. there is a growing amount of research to direct them to, don’t forget to use it!
Back to the California study — these were key points for me from my reading of the report:
- Energy efficiency appears to be the highest correlation to increased value with Energy Star commanding a 14.5% premium when disaggregated from the others.
- The homes in the study were primarily production, not custom homes.
- Where cooling loads are higher, buyers are “… willing to pay more for the energy efficiency of their dwellings.”
- Energy price variations (in kWh) did not appear to affect buyer’s willingness to pay more for green.
- Hybrid vehicle ownership correlates closely to green certification value (if you were wondering if building green would be good for your neck of the woods)
I contend that any area has a demographic that is ready to pay a premium for energy efficiency and green. Not every place will have the same premium, but the numbers from the report indicate that the premium is big enough to cover a lot of margin of error.
Let’s note here that the energy foundation for all of these labels is the HERS rating system (yes, I know its California and it’s not the same – for consumers the differences are in the noise as they should be). There has been a tremendous amount of movement across the country to embrace the HERS index. There are a variety of reasons that this is happening, from the yeoman efforts of RESNET Raters to new programs like Southern Energy Management’s new EcoHome program that are based on the HERS index.
Most of us are fighting an uphill battle around Energy Star Version 3 adoption. The ability to continue to promote our services via the vehicle of a HERS rating and upsell to more aggressive programs is very important. It’s also back to the future as that’s what we used to do and there’s nothing particularly “wrong” with it. When Energy Star became synonymous with code, most of us took advantage of that. I’ve said it before and I’ll say it again, this is business and you better be able to adjust when times change. This is one of those times, but the work I’ve noted above didn’t exist before and we’re in a much better position now to not just keep clients, but expand our businesses and the industry; and serve our nation in the process.
To the ramparts!