Green Buildings

Does information exposure influence people’s willingness to pay for green housing?

Promoting green buildings is thought to be an ideal solution to mitigating the environmental impacts of buildings.

In Beijing,

the residential buildings are estimated to consume 1.5-2.0 times as much energy for winter heating as residential buildings in similar cold climates in Western Europe or North America.

 

Despite the Chinese Government’s Green Building goals (20% of all new buildings should be green), the market has shown a very weak response to such policies.

We examine how access to information on green buildings for investors influences their willingness to pay for green housing in Beijing.

In Dec 2014,

we gathered 240 surveys from randomly selected households in 4 residential complexes. Two of the complexes were green buildings, and were each paired with a non-green building that is similar in location and physical attributes. 

 

Surveys were taken before and after an information card with green vs. non-green building facts was distributed to respondents. The information card clearly showed that green buildings perform significantly better than non-green ones in terms of temperature, relative humidity, background noise, and luminance under natural lighting conditions.

Before information exposure

What are the most common reasons for residents to buy or not buy green apartments?

Overall, lack of reliable information about green buildings impacts people's decision to not buy green apartments.

What is the willingness-to-pay (WTP) probability of current green and non-green building residents to purchase green apartments in the future? 

Those living in green buildings have on average a higher WTP for green apartments due to their stronger preference and higher existing knowledge.

After information exposure,

Do residents' willingness-to-pay (WTP) change after reading the benefits of green buildings on the information card?

Residents living in non-green buildings have an increased willingness-to-pay for green housing. Residents living in green buildings have a slight decrease in willingness-to-pay for green housing.

 

This may be due to the change in knowledge level of green vs. non-green buildings. Those living in non-green buildings initially are not as knowledgeable about the benefits. While those living in green buildings may find that the original information obtained from developers’ ads was overselling the benefits.

Our results highlight the important role of public information in promoting green housing development, and suggest that in addition to developer's advertisements, more concrete information is needed to improve people's preference for green housing.

Team

Siqi Zheng
MIT Sustainable Urbanization Lab, Department of Urban Studies and Planning, 
Center for Real Estate

Li Zhang
Tsinghua University

Cong Sun
Shanghai University of Economics and Finance

Hongyu Liu
Tsinghua University

Publications

Li Zhang, Cong Sun, Hongyu Liu and Siqi Zheng. “The Role of Public Information in Increasing Homebuyers’ Willingness-to-Pay for Green Housing: Evidence from Beijing”, Ecological Economics, 2016, 129: 40-49.

MIT Sustainable Urbanization Lab

Contact Us:

105 Massachusetts Ave.  9-334

Cambridge, MA 02139

cfclab@mit.edu

+1 (617) 715-2352

Subscribe to Our Newsletter

©2019 Massachusetts Institute of Technology Sustainable Urbanization Lab