Evaluation of direct and indirect benefits of green office buildings in Israel

This applied research evaluates the business case for the construction of green office buildings, while quantifying the benefits – both direct and indirect – resulting from improved indoor environmental quality (IEQ). Green building construction provides both direct and indirect benefits: direct benefits mainly include savings on operating and maintenance costs; and indirect benefits affect building users by reducing illness, curtailing employee turnover and absence, increasing personal and organizational productivity, and boosting overall satisfaction. While there is difficulty in quantifying these benefits, studies conducted worldwide indicate that green office buildings increase productivity and improve the health and wellbeing of the buildings’ users. Given the fact that direct savings in operating and maintenance costs of green office buildings constitute only a small fraction of their overall economic benefits, the business case for green building construction is overwhelming.

Research Question

  • How can the indirect benefits of building green office buildings be evaluated to calculate the return on investment?
  • What are the indirect benefits associated with green office buildings in relation to conventional office buildings?

Research Structure

The first chapter of this paper provides a literature review that establishes the theoretical basis for the positive effect that green buildings have on their users because of higher IEQ. The second chapter presents an economic model that estimates the benefits and costs of green building construction, the net present value of constructing green office structures in Israel, and the return on additional investment that green construction requires. In addition, the model estimates the macroeconomic impact of green building on workforce productivity in the Israeli market. The discussion section in the third chapter presents additional data regarding green building sector: the reduction of healthcare expenditures due to green building; mapping the value chain of economic stakeholders in the green building market; an overview of the barriers to implementing green building in Israel; and the business case for green employment buildings on the basis of data regarding the scope of the office market in Israel. In the conclusions chapter, the paper recommends policy measures to overcome existing barriers and areas for follow-up research.

Ron Govezensky
A 2017-2018 fellow, Govezensky interned at the Ministry of Environmental Protection. Prior to joining the program, he worked as an environmental planner at the non-profit organization "Israel Union for Environmental Defense" (IUED) and at "Yozmot – green initiatives" company, as...
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