The Selection and Quantile Treatment Effects on the Economic Returns of Green Buildings

45 Pages Posted: 29 May 2017  

Wen-Chi Liao

National University of Singapore (NUS)

Daxuan Zhao

Renmin University of China - School of Business

Date Written: March 2017

Abstract

Global warming changes societal values and political climate. The movement toward environmental sustainability and initiatives of green-building certification have created an implicit mark for sustainable buildings. Whether the economic return adequately incentivizes developers is an important question for research, because the building sector is a primary source of greenhouse gas emissions and many countries have ratified international treaties and committed to reduce emissions. This paper uses Singapore housing data and examines the green building premium. It carefully handles the issue of selection to treatment. Specifically, propensity score methods, which include the propensity score matching and inverse probability weighting, address selection on observables and remove confounding. The quality of these remedial methods are assessed through comparison between unconditional and conditional average treatment effects. Inverse probability weighting performs better than matching in this research. The paper further extends the literature of green building from the examination of the average treatment effect to the study of the quantile treatment effects. Both the conditional and unconditional quantile treatment effects are estimated and analyzed. Economic returns are significant but vary considerably along the conditional and unconditional distributions of housing prices. Policy implications are discussed.

Suggested Citation

Liao, Wen-Chi and Zhao, Daxuan, The Selection and Quantile Treatment Effects on the Economic Returns of Green Buildings (March 2017). Available at SSRN: https://ssrn.com/abstract=2976364 or http://dx.doi.org/10.2139/ssrn.2976364

Wen-Chi Liao

National University of Singapore (NUS) ( email )

Daxuan Zhao (Contact Author)

Renmin University of China - School of Business ( email )

Beijing
China

HOME PAGE: http://daxuanzhao.weebly.com/

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