DOES THE INCREASED RIGOR OF THE BCA GREEN MARK SCHEME LEAD TO A HIGHER GREEN PREMIUM?

Abstract

Following the increased awareness of the harm the built environment has on the environment, coupled with advances in green technology, there has been a rising trend in building owners and occupants turning towards constructing more sustainable developments. The long-term cost savings that green buildings bring to building owners and occupiers have proven to be an incentive for increased investment in green buildings. Setting a benchmark and framework to ensure higher standards for green developments, green certification schemes have been introduced in many countries. Based on the criteria laid out in these green certification schemes, buildings are rated and classified into the various certification levels. These green certification schemes also provide developers and building owners with monetary incentives to encourage retrofitting and construction works to build more sustainable developments.

Likewise, in Singapore, the Green Mark scheme was launched by BCA in 2005, in a bid to attain the goal of certifying at least 80% of the country’s building stock by the year 2030 (BCA, 2013). Since its introduction, revisions to the Green Mark scheme have been made. This paper examined the Revised Green Mark Criteria for New Buildings issued in 2010 as a major change that increased the rigor of the Green Mark scheme. The paper set out to determine if the green premium for Green Mark certified residential units would increase with the introduction of new, more rigorous Green Mark criteria.

To study the Green Mark premium, the changes in the price differential between residential developments certified in 2005 and their comparables was observed. Propensity Score Matching (PSM) was carried out to eliminate all other variables, thereby determining the green premium. It was found that with the increased rigor of the BCA Green Mark scheme based on the major change in 2010, the green premium reflected by the market also increased by 4.09% from 2005 to 2015.