Greening offices: Willingness to pay for green-certified office spaces in Bengaluru, India

  • Pleasa Serin AbrahamEmail author
  • Haripriya Gundimeda


The rapidly growing construction sector in India has a large resource foot print but can offer a vast potential to mitigate and adapt to climate change. Greening the building sector is feasible through various policy measures and incentives to deal with recycling and waste treatment, reduction in energy use, emissions and the use of other hazardous substances, which have several public and private benefits. The objective of this study is to understand whether or not and by how much would the consumers be willing to pay for green buildings if the information asymmetry is reduced by information provisions of benefits from green buildings. This paper uses a choice experiment to evaluate the firms’ willingness to pay for green-certified office spaces in the Indian city of Bengaluru. The study relied on primary survey data drawn from around 115 firms working in rented office spaces in Bengaluru, who were asked to choose between status quo and different levels of green certification. The Tobit model was used for estimation, and the results show that firms value private benefits like reduction in electricity and water bills, water and waste recycling significantly. The willingness to pay of firms is negatively related to rent of the office space and positively related to annual turnover of the firm and prior knowledge on the green building certification.


Green buildings Willingness to pay Discrete choice experiment Tobit Green building certification 


  1. Banfi, S., Farsi, M., Filippini, M., & Jakob, M. (2008). Willingness to pay for energy-saving measures in residential buildings. Energy Economics, 30, 503–516.CrossRefGoogle Scholar
  2. Binilkumar, A. S., & Ramanathan, A. (2009). Valuing wetland attributes using discrete choice experiments: A developing country experience. In: 17th Annual conference of the European association of environmental and resource economists. Amsterdam.Google Scholar
  3. Brounen, D., & Kok, N. (2011). On the economics of energy labels in the housing market. Journal of Environmental Economics and Management, 62, 166–179.CrossRefGoogle Scholar
  4. BWSSB. (2013). The Bangalore water supply (amendment) regulations, 2012. In BWSSB notification I. Bangalore. Bengaluru.Google Scholar
  5. Chaikumbung, M. (2013). Estimating wetland values: A comparison of benefit transfer and choice experiment values. Melbourne: Deakin University.Google Scholar
  6. Chau, C. K., Tse, M. S., & Chung, K. Y. (2010). A choice experiment to estimate the effect of green experience on preferences and willingness to pay for green building attributes. Building and Environment, 45, 2553–2561.CrossRefGoogle Scholar
  7. Dippold, T., Mutl, J., & Zietz, J. (2014). Opting for a green certificate: The impact of local attitudes and economic conditions. Journal of Real Estate Review, 36(4), 435–473.Google Scholar
  8. Dulleck, U., Rudolf, K., & Matthias, S. (2011). The economics of credence goods: An experiment on the role of liability, verifiability, reputation, and competition. American Economic Review, 101(2), 526–555.CrossRefGoogle Scholar
  9. Eichholtz, P., Kok, N., & Quigley, J. M. (2010). Doing well by doing good? Green office buildings. American Economic Review, 17, 2492–2509.CrossRefGoogle Scholar
  10. Gou, Z., Lau, S. Y., & Prasad, D. K. (2013). Market readiness and policy implications for green buildings: Case study from Hong. Journal of Green Building, 8, 162–173.CrossRefGoogle Scholar
  11. Haneman, W. M. (1994). Valuing the environment through contingent valuation. Journal of Economic Perspectives, 8(4), 19–43.CrossRefGoogle Scholar
  12. Heinzle, S. L., Yip, A. B. Y., & Xing, M. L. Y. (2013). The influence of green building certification schemes on real estate investor behaviour: Evidence from Singapore. Urban Studies, 50, 1970–1987.CrossRefGoogle Scholar
  13. Hu, H., Geertman, S., & Hooimeijer, P. (2014). The willingness to pay for green apartments: The case of Nanjing, China. Urban Studies, 51(16), 3459–3478.CrossRefGoogle Scholar
  14. Hydes, K., & Creech, L. (2000). Reducing mechanical equipment cost: The economics of green design. Building Research and Information, 28, 403–407.CrossRefGoogle Scholar
  15. IDFC. (2011). Green office buildings: Current market dynamics and future directions. Google Scholar
  16. IGBC & CII. (2018). India achieves 5 Billion Sq. ft. green building footprint. Hyderabad: IGBC & CII.Google Scholar
  17. Kjær, T. (2005). A review of the discrete choice experiment - with emphasis on its application in health care. Health Economics Papers, No. 1. Syddansk Universitet.Google Scholar
  18. Kok, N., Miller, N. G., & Morris, P. (2012). The economics of green retrofits. Journal of Sustainable Real Estate, 4(1), 2–22.Google Scholar
  19. Lucon, O., Ahmed, A. Z., Akbari, H., Bertoldi, P., Luisa, F. C., Nicolas, E., et al. (2014). Buildings. In Climate change 2014: Mitigation of climate change. Contribution of working group III to the fifth assessment report of the intergovernmental panel on climate change. Cambridge: Cambridge University Press.Google Scholar
  20. Mohideen, P. K. (2015). An overview of construction sector in Indian economy. International Journal in Management and Social Science, 3(2), 217–226.Google Scholar
  21. Ott, W., Baur, M., & Jakob, M. (2006). Direct and indirect additional benefits of energy efficiency in residential buildings. Zurich: EWG of Swiss Federal Office of Energy. Swiss Federal Office of Energy. Bern: Study by E-concept and CEPE ETH Zurich on Behalf of the Research Programme.Google Scholar
  22. Palmal, K. (2012). Dynamics of construction sector in India: An analysis. Vidyasagar University Journal of Economics, 16, 127–139.Google Scholar
  23. Parikh, K. (2011). The final report of the expert group on low carbon strategies for inclusive growth. New Delhi: Planning Commission.Google Scholar
  24. Pettifer, G. (2004). A case study in commercial green construction. In Proceedings of the CIBSE national conference on delivering sustainable construction. London.Google Scholar
  25. Planning Commission, Government of India. (2011). Faster sustainable and more inclusive growth: An approach towards the twelfth five year plan. New Delhi: Government of India.Google Scholar
  26. Portnov, B. A., Trop, T., Svechkina, A., Ofek, S., Akron, S., & Ghermandi, A. (2018). Factors affecting homebuyers’ willingness to pay green building price premium: Evidence from a nation-wide survey in Israel. Building and Environment, 137, 280–291.CrossRefGoogle Scholar
  27. Qifa, J. (2013). Analysis on the relationship between GDP and construction based on the data of UK and China. In International Conference on Education Technology and Management Science (ICETMS 2013) (pp. 1296–1299). Nanjing: Atlantis Press.Google Scholar
  28. Rakotonarivo, O., Schaafsma, M., & Hockley, N. (2016). A systematic review of the reliability and validity of discrete choice experiments in valuing non-market environmental goods. Journal of Environmental Management, 183, 98–109.CrossRefGoogle Scholar
  29. Satya, S. S., Lal, R. B., Sridharan, U., & Upadhyay, V. P. (2016). Environmental sustainability guidelines for green buildings in India: A review. Indian Journal of Scientific Research and Technology, 4(1), 11–18.Google Scholar
  30. Singh, A., Matt, S., Grady, C., & Sinem, K. (2010). Effects of green buildings on employee health and productivity. Journal of Public Health, 100(9), 1665–1668.Google Scholar
  31. Sun, S. (2011). Meta-analysis of Cohen’s kappa. Health Services and Outcomes Research Methodology, 11, 145–163.CrossRefGoogle Scholar
  32. UNEP. (2016). Global roadmap towards low-GHG and resilient buildings. Google Scholar
  33. UNEP, GABC, IEA. (2017). Towards a zero-emission, efficient, and resilient buildings and construction sector: Global status report 2017. UNEP.Google Scholar
  34. Vedala, S. C., Bilolokar, R. V., Parnandi, P., Parnandi, P. K., Khosla, R., Jaiswal, A., et al. (2012). Constructing change: Accelerating energy efficiency in India’s building market. Hyderabad: Administrative Staff College of India and National Resources Defense Council.Google Scholar
  35. Wiencke, A. (2013). Willingness to pay for green buildings: Empirical evidence from Switzerland. Journal of Sustainable Real Estate, 5(1), 111–133.Google Scholar
  36. Xia, W., & Zeng, Y. (2007). Consumer’s attitudes and willingness-to-pay for green food in Beijing. In Sixth international conference on management. iii. Wuhan: Science Press.Google Scholar
  37. Xie, X., Lu, Y., & Gou, Z. (2017). Green building pro-environment behaviors: Are green users also green buyers. Sustainability, 9(10), 1703.CrossRefGoogle Scholar
  38. Yau, Y. (2012). Willingness to pay and preferences for green housing attributes in Hong Kong. Journal of Green Building, 7(2), 137–152.CrossRefGoogle Scholar
  39. Yung, Y. (2012). Eco-labels and willingness-to-pay: A Hong Kong study. Smart and Sustainable Built Environment, 1(3), 277–290.CrossRefGoogle Scholar
  40. Zalejska-Jonsson, A. (2014). Stated WTP and rational WTP: Willingness to pay for green apartments in Sweden. Sustainable Cities and Society, 16, 46–56.CrossRefGoogle Scholar

Copyright information

© Springer Nature B.V. 2018

Authors and Affiliations

  1. 1.Department of Humanities and Social SciencesIIT BombayMumbaiIndia

Personalised recommendations