Green Building Councils: Policy Instrument Or Fashion? Gunther Maier, WU Wien Sabine Sedlacek, MODUL...

Green Building Councils: Policy Instrument Or Fashion?

Gunther Maier, WU WienSabine Sedlacek, MODUL University

Untertitel - hier einfügen

Introduction

Greening the construction industry has become „big business“ recently

WGBC lists 60 organizations, 18 in Europe 20 established GBC 3 emerging GBC 23 prospective GBC 14 associated group

Three areas of activity:1. information, promotion, awareness building2. lobbying for standards and policies3. develop, manage, operate a rating system

FUßZEILE 17.10.09


Introduction

WGBC lists 9 rating systems Examples: BREEAM, Green Star, CASBEE, LEED, DGNB standard procedure:

project is registered for assessment certified assessor evaluates based on standards organization verifies assessment and awards certificate

GBCs are interesting from governance perspective typically NGOs perform a public function financed by the addressee of their policy (membership,

certification fee)


Introduction

Is this structure sustainable? Do GBCs fulfill a function that is economically valuable? What is this function? Do all GBCs fulfill it?

Structure:2. Where is the problem for GBCs to solve?

a) conventional view

b) economic view

3. GBCs as element of economic governance

4. Empirical analysis

5. Conclusions


The problem to solve

Conventional view: “Vicious circle of blame” (Cadman, 2000, Keeping, 2000, Cadman, 2007, Hartenberger, 2008, Ratcliffe et al., 2009, Robinson, no year).

Constructors

DevelopersInvestors

Occupiers



Basic argument: potential demand exists, but market is too complex or

actors are too dumb information problem

One positive example will reveal the opportunity Best GBC strategy: Promotion and awareness

building Problems with this argument:

no reference to characteristics of real estate market why certification of individual buildings? why should business finance GBC activities?



Economic view: Prisoners‘ dilemma trap quality uncertainty in all relations

potential buyer (e.g. investor) is uncertain about the quality he/she gets

supplier (e.g. developer) cannot proof the quality of the building

buyer is not willing to pay the full premium for higher quality

supplier has a strong incentive for cheating although both market participants would benefit from

higher quality, it is not produced and therefore not traded trapped in a prisoners’ dilemma



information and awareness or the market alone cannot solve this problem

in the prisoners’ dilemma trap no supplier actually cheats; the expectation of cheating is enough

prisoners’ dilemma in one of the relations is sufficient to block the whole circle


GBCs and economic governance

Governance may be provided by private actors “governance and government should not be

regarded as almost synonyms” (Dixit, 2009)

Prisoners’ dilemma trap creates a need for governance

Two possible approaches:1. create a high enough penalty for cheating actors

2. establish a mechanism for more accurate and reliable information about the quality of a building



Second approach falls under “enforcement of contracts by third party institutions”. “Third-party institutions provide governance by

outsiders who are not direct parties to this class of transaction” (Dixit, 2009).

= certification of buildings increases the share of sustainable buildings and

reduces the probability of cheating both effects increase the investor’s expected profit

investor is willing to pay more for such a building higher incentive for construction of it



When GBCs reliably certify the quality of buildings, they help to resolve the prisoners’ dilemma trap both actors benefit from this directly other actors benefit indirectly through the side effect on the

market

GBCs in this case provide a valuable service to the whole market

“honesty of these third parties is not automatic” (Dixit, 2009) own interests of GBCs need to be compatible with

governance function



valuable service is tied to certification reputation and honesty of the organization certification has to be selective to perform the

function certification has to be wide enough to allow for

enough applications to develop the reputation


Empirical analysis

To what extent do GBCs fulfill these functions? Web-based survey of GBCs from the WGBC directory 26 responses (some incomplete); 12 Europe (9 CEE

countries), 6 Americas/Caribbean, 7 Asia Pacific, 3 Africa


empirical analysis

Romania (Europe, CEE)

Albania (Europe, CEE)

Australia (Asia/Pacific)

Bulgaria (Europe, CEE)

Colombia (Americas/Caribbean)

Czech Republic (Europe, CEE)

Dominican Republic (Americas/Caribbean)

Georgia (Europe, CEE)

Hong Kong (Asia/Pacific)

Israel (Asia/Pacific)

Italy (Europe)

Japan (Asia/Pacific)

Mauritius (Africa)

Mexico (Americas/Caribbean)

Morocco (Africa)

New Zealand (Asia/Pacific)

Paraguay (Americas/Caribbean)

Peru (Americas/Caribbean)

Poland (Europe, CEE)

Qatar (Asia/Pacific)

South Africa (Africa)

Turkey (Europe, CEE)

United Emirates (Asia/Pacific)

Croatia (Europe, CEE)

France (Europe)

Spain (Europe)

Vietnam (Asia/Pacific)


empirical analysis


empirical analysis

Membership status Activities

Established GBCs (n=5):

- development and operation of rating tools (3)- certification of projects (3)- rating tool development (3)- to improve the certification system (3)- marketing (1)- research

- conferences (1) - attract new members (1)- networking (1)- education courses (1)- advocacy

Emerging GBCs (n=3):

- adaptation of the certification system (3)- working with 'certification board' and 'materials board' (3)

- communication with members, other councils and international resources (1)

- PR (1)- sponsorship, membership, communication, fund raising (1)- website development/ideas (1)

Prospective GBCs (n=5):

- networking (1)- reminding board members to do any tasks required as per last meeting (1) - review documents sent by members (1)-review any tasks completed, before circulation (1)- communication (1)

- develop the marketing materials, prepare the legal paper work and all the others milestones for our status (1)

- administration, registration of members, getting sponsorship, committee meeting, event organization, research and development (1)

- strategic planning - committee coordination (1)

Associated Groups (n=6):

- website development (1)- business plan development - email correspondence (1)- capacity building (1)- meetings with volunteers and potentialmembers ( 1)

- sustainable building competition development - engage participants (1)- training (1)

1 = information, awareness, 2 = lobbying and policy, 3 = certification activities


empirical analysis

type 1 type 2 type 3

established GBC 5; (45.5%; 55.6%) 0; (0.0%) 4; (36.4%; 44.4%)

emerging GBC 4; (66.7%) 0; (0.0%) 2; (33.3%)

prospective GBC 8; (88.9%; 100%) 0; (0.0%) 0; (0.0%)

associated group 6; (75%; 100%) 0; (0.0%) 0; (0.0%)

only more advanced GBCs engage in certification activities; cause/effect?Chi-square prob.: 0.06


empirical analysis

number of members

large spread substantial

numbers only in top categories

Australia, South Africa, Italy, New Zealand


empirical analysis

Importance of nine factors for mid-term goals (1 = high) marked differences related to

certification adaptation of exist-

ing system ratherthan developing own

.00

.501.001.502.002.503.003.50

Knowledge pooling

National lobbying

International lobbying

Workshop organization

Develop own certification system

Adjust existing certification system

Evaluate buildings for certification

Award certificates

Maintenance of a certification system

established

emerging

prospective

associated


empirical analysis

Summary of empirical evidence too few cases for hypothesis testing results indicate the importance of certification

system certification – organizational status - # of members no information yet about dynamic aspects anecdotal evidence from CEE countries supports

these results


summary and conclusions

theoretical argument: prisoners’ dilemma trap GBCs need instruments to overcome this certification information & awareness building is not sufficient as a

service to industry and the market

empirical evidence: cannot (yet) proof the theoretical result does not contradict it certifying GBCs are organizationally more advanced and

have larger numbers of members (and more resources)


summary and conclusions

Research question: are GBCs valuable governance institutions or a temporary fashion?

GBCs can fulfill a valuable function (certification) Those who provide this service have a good chance

to “stay in business”; those who do not are likely to fade away over time (lack of support from industry, lack of resources, lack of publicity)

a certification system is not a sufficient condition reputation, design of certification system, market size, form

of organization

Green Building Councils: Policy Instrument Or Fashion? Gunther Maier, WU Wien Sabine Sedlacek, MODUL...

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