NOW Value

http://www.costar.com/josre/JournalPdfs/06-Barriers-Green-Development.pdf

Removing Market Barriers to Green Development: Principles and Action Projects to Promote Widespread Adoption of Green Development Practices, by Christopher Choi, is an article that critically evaluates both intentional and unintentional barriers to sustainable development and makes recommendation on ways to break down these barriers in the hopes to spur green development and make green development the norm as oppose to the exception. 

I interpreted the five main barriers that Choi presents as obstacles to green development can be summarized as: The need for reliable performance cost and benefit information of green features, A failure in the communication chain regarding the benefits associated with such projects, Identifying which party captures the benefits from green features in terms of associated cost savings, The use of outdated financial analysis that don’t accurately take green development into accounting, and The lack of expertise and resources for green building in many communities which creates an environment that lengthens development time frames increasing cost.

Choi’s argument has a missing link between the barriers to green development mentioned in his paper and the solutions for future sustainable development.  The missing link is the continuous issue underling each of the previously mentioned barriers:  A lack of a working definition of the intangible benefits of green development translated into a NOW value.  These intangible benefits include reduction in land-fill use and carbon imitations, Revitalization, resource management, scarcity issues related to construction, job creation, and socio-economic impacts. 

There is differing perspective of the value of green development between the Investor/Developer which is concerned with the front-end cost which includes the “space-time-money relationship,” present/ future value, and holding periods as oppose to the User which is concerned with the cost savings on the back-end.  This differential perceived in the value between space-creators and space-users is similar to employers assigning a value to human capital, or going to another country and not accounting for currency differences.  This translates to a break down in green development because the Investor tends to base benefits on shorter term analysis that is often site-specific and focused on a smaller time frames (smaller-picture) compared to the User that is concerned with longer lease times, local and global economies (big picture). 

Choi attempts to reconcile these differences in his article Choi makes many points in support of sustainable development and includes suggestions on how to break down the five barriers to Green development by pointing out that green development commands higher rents, saves on utilities, higher resale values etc. he also proposes many actions such as incentivizing and regulatory programs that can offset the higher upfront cost of green development.  While I agree with Choi, his analysis doesn’t introduce a new concept to create a shift in this dichotomy between the different entities involved in development.  Choi’s is continuing to base his arguments on a tangible-benefits framework rather than shifting our perspective to new measurements of sustainability that are currently intangible and undefined.

According to The Greenest Building: Quantifying the Environmental Value of Building Reuse, a report by Preservation Green Lab, there are tangible benefits to redeveloping existing building and the benefits can be captured 10-80 years after rehabilitation.  Residential reuse development had the shortest benefit-recapture at about 6 years in each of the locations they observed. This means that an investor would need a holding period greater than 10-80 years to realize the measureable benefits. 

Choi is correct that public policy, regulation, and incentive programs need to reconcile these difference in the short-term until we can create a NOW value that is consistent across the entire life cycle of a development.  Failing to assign value to the intangible value of green development will hinder green innovation and change. 

 

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