Green Building Benefits and Barriers:
Upfront Costs vs. Lifecycle Savings

While incorporating new, environmentally-friendly technologies and design into buildings may sound prohibitively expensive, in reality, developing green buildings can yield impressive savings, year after year. These lifecycle savings are the result of lower electricity, heating, cooling, water, and waste disposal costs. Significant benefits can also be gained through lower operations and maintenance costs and health benefits like increased productivity and reduced absenteeism due to illness.

How cost-competitive are green buildings?

A 2003 study conducted for the California Sustainable Building Task Force shows that an initial increase in upfront costs of approximately 2% for green design will yield lifecycle savings of more than ten times the initial investment, or 20% of total construction costs (based on a conservative estimate of a 20-year building life).¹

Based on the study’s findings, if $40,000 in green design is initially invested to incorporate green features into a $2 million dollar project, the initial investment is repaid within two years. Over a 20-year period, savings amount to $400,000. This example shows the importance of performing a lifecycle cost analysis of green buildings, rather than simply taking a first-cost view of the green technology investments.

According to the US Green Building Council (USGBC), even the first costs of some green buildings are comparable to or less than prevailing construction prices in their areas, because of resource efficiency and correctly-sized mechanical, electrical, and structural systems.² In standard buildings, these systems are often oversized, and therefore more expensive and less efficient.

Multiple studies have been performed on the costs and financial paybacks of green buildings. Find out more about these studies in How to Get Involved.

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¹ The Costs and Financial Benefits of Green Buildings: A Report to California’s Sustainable Building Task Force. Principal author: Greg Kats of Capital E. 2003.

² Building Momentum: National Trends and Prospects for High-Performance Green Buildings. U.S. Green Building Council, prepared for the U.S. Senate Committee on Environment and Public Works. 2002.