User:Sawtoothgirl/Sustainable Real Estate Development

=Sustainable Real Estate Development=

Sustainable Real Estate Development Definition
In the simplest definition Sustainable Real Estate Development (“SRED”) is an attempt to combine “sustainable” values with real estate development. “Sustainability” has a range of definitions though so the idea of doing something sustainable can seem esoteric or ambiguous. The EPA defines sustainability as “the ability to achieve continuing economic prosperity while protecting the natural systems of the planet and providing a high quality of life for its people.” Similarly, the Brundtland Commission defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs." Both definitions are more a set of values than a prescriptive approach to decision making.

As Stephen Roosa explains in The Sustainable Handbook, “sustainability clothes itself in a systems analysis approach that considers how processes are redesigned and managed, with the hope of yielding better long-term outcomes.” [1] By encouraging, more diversified, dense, and connected communities, local and regional planners help minimize development’s negative impacts while providing for current populations.

Sustainable real estate development covers a wide spectrum of topics, including: urban planning, use of natural resources, energy, social concerns, and land and species conservation. Developing thriving communities is the foremost goal of sustainable real estate development. While green building is a component of SRED, the field encompasses much more than just the materials, methods, and design of buildings and spaces. SRED integrates development with multimodal transit opportunities, provides access to healthy food, develops bike and pedestrian infrastructure, ,connects employers and employees, develops community gardens and art installations, and much more. To be considered sustainable, development must encompass these services and others, aim to improve community, and protect local ecosystems. Transit-oriented development, mixed use, urban in-fill, land-banking, and redevelopment are all pieces of sustainable real estate development today.

Theory
The true cost of real estate development is often hidden by externalities paid for by future generations or hidden in subsidies for roads, power lines, emergency services, schools, buses, and water treatment. Hidden costs or the externalities of real estate development underscore why special attention needs to be paid to studying the valuation of development on current and future generations, because the “market value” does not always represent the true cost.

According to Environmental Economics & Management, "Classical microeconomic theory predicts an efficient outcome given certain assumptions about pricing, production definition, cost conditions, and entry barriers. If any of these assumptions fail to hold, market forces cannot operate freely. Depending on which assumption is violated, the result will be any of a number of inefficient market conditions, collectively termed Market Failure." Market failures in sustainable real estate development are evident in cases when developers build poorly insulated low efficiency row-homes in suburban areas removed from simple services like groceries, medical care, public transportation, and schools. Unless the developer is also paying for the utility bills of future owners, the roads, water lines, and electrical lines associated with any use of the development, the developer is not paying the true cost for the development.

Sustainable development uses the concepts described by environmental economics to find solutions to market failures. This includes identifying the causes of environmental damage, the sources of pollution, scope of environmental damage, and the environmental objectives of sustainable development. "Achieving an appropriate balance between economic growth and the preservation of natural resources is the essence of sustainable development." [2]

The Millennium Ecosystem Assessment
The importance of sustainable development is further outlined in the The Millennium Ecosystem Assessment which attempts to measure the consequences of ecosystems change on human well-being and helps to weigh options for reducing the environmental impact. From 2001 to 2005, the MA involved the work of more than 1,360 experts worldwide. Their findings provide a state-of-the-art scientific appraisal of the conditions and trends in the world’s ecosystems, the services these ecosystems provide, and the scientific basis for action to conserve these ecosystems.

The report set out to answer five questions :


 * What are the current condition and trends of ecosystems, ecosystem services, and human well-being?
 * What are plausible future changes in ecosystems and their ecosystem services and the consequent changes in human well-being?
 * What can be done to enhance well-being and conserve ecosystems? What are the strengths and weaknesses of response options that can be considered to realize or avoid specific futures?
 * What are the key uncertainties that hinder effective decision-making concerning ecosystems?
 * What tools and methodologies developed and used in the MA can strengthen capacity to assess ecosystems, the services they provide, their impacts on human well-being, and the strengths and weakness of response options?

The MA concludes that human activity is significantly impacting the biodiversity of world ecosystems, which was measured at 24 ecosystems worldwide. Over the last 50 years, only four have shown measurable improvement, yet fifteen are in serious decline, and five are in precarious condition.

The authors' summarize the report's four main findings in an opening "Summary for Decision-Makers." They find:


 * Over the past 50 years, humans have changed ecosystems more rapidly and extensively than in any comparable period of time in human history, largely to meet rapidly growing demands for food, fresh water, timer, fiber, and fuel. This has resulted in a substantial and largely irreversible loss of the diversity of life on Earth.
 * The changes that have been made to ecosystems have contributed to substantial net gains in human well-being and economic development, but these gains have been achieved at growing costs in the form of the degradation of many ecosystem services, increased risks of nonlinear changes, and the exacerbation of poverty for some groups of people. These problems, unless addressed, will substantially diminish the benefits that future generations obtain from ecosystems.
 * The degradation of ecosystems could grow significantly worse during the first half of this century and is a barrier to achieving the Millennium Development Goals.
 * The challenge of reversing the degradation of ecosystems while meeting increasing demands for their services can be partially met under some scenarios that the MA has considered, but these involve significant changes in policies, institutions, and practices that are not currently under way. Many options exist to conserve or enhance specific ecosystem services in ways that reduce negative trade-offs or that provide positive synergies with other ecosystem services.

Land Use Planning
Land Use Planning, which is the practice of ethical and efficient use of land, is critical to sustainable real estate, because like SRED, it attempts to address a range of environmental and social priorities in the built environment. Land use planning is used to ensure a practical and enduring use of land through sustainable building, resource management, zoning, and scale of development. Human and ecological interests are both taken into account in the decision making process. Land use planning involves a systematic assessment of the physical, social, and economic factors invovled in development to assist land users and developers in productive, maintainable use of land.

The history of land planning in the U.S. traditionally revolves around the idea of “highest and best use”, which is a concept used in real estate to value an estate’s market value. Although the process for determining the highest and best use of a piece of property is formalized, the value ascertained can be highly subjective and vary greatly depending on the appraiser. Traditionally appraisers in the US valued growth maximization, believing growth necessarily increases a community's standard of living and thus represents the highest and best use of a piece of property.

Suburban development evolved out of population increases, a larger middle class, fear of urban ills like crime and bad schools, and rural lands often being cheaper than urban lands, amongst many others. Critics argue suburban development, sometimes referred to as urban sprawl or suburban sprawl, negatively affects open space and ecosystems, increases pollution to water and air through increased driving and fossil fuel reliance, and increases obesity.

Single use zoning is part of what caused the ingrained problems in suburban sprawl—by isolating commercial development on large land tracts from residential development it set up a situation where most residents become automobile dependent. Similarly, zoning laws requiring low density in residential planning have led to large home plots, and zoning laws prescribing commercial development through height limits has had the unintended consequence of more land being used to gain square footage. As more people move to the suburbs, jobs have also, decreasing the central location of jobs and making public transportation more difficult to expand to increasingly disparate job sites. These factors and many others have increased the dependence on the automobile in the past few decades. The ramifications of this expand far beyond land use issues to issues of public health as a populace always driving in a car is less fit and less able to find time to make appropriate healthy living choices in eating and exercise.

New, innovative thinkers for sustainable suburban development are leading the charge toward changing the way suburbs are planned. In her speech about Suburbs in TEDx Atlanta, Ellen Dunham-Jones, mentioned two significant demographic shifts that are occurring right now in this country that are redefining suburbs (http://www.ted.com/talks/ellen_dunham_jones_retrofitting_suburbia.html). The first is the retirement of the Baby-Boomer generation. They no longer have children in their household (which largely drove the movement to the suburbs) and are looking for smaller, more urban homes with a greater community feel. Likewise, Generation Y, many of whom grew up in the suburbs, are now starting to make their own home purchase and renting decisions, and they too want to live in a much more active, dense, urban environment.

These shifts can lead to one of two things regarding land use planning: either people begin moving out of the suburbs and back into the downtown urban areas or these suburbs become re-planned and re-developed to meet these needs. In either case, planners have their work cut out for them. Suburbs that become empty or vastly underutilized could potentially be ‘re-greened’ or converted back to their natural environment. Dunham-Jones points to a couple examples of these in her speech. Alternatively, due to growth patterns, many places that used to be considered suburban locations are now located closer to job centers and public transportation options. Old, under-utilized parking lots and single-story retail shopping centers can be densified and re-developed into active, mixed-use community centers. Bel-Mar in Lakewood, CO is an excellent example of this type of land use planning and redevelopment.

Planners and developers have a number of "tools" to work with in order to meet market demands while at the same time meeting social demands that are missed by a "free market" system. Conservation Easements are a prime example.

Costs of Community Services (COCS)

"COCS studies are undertaken to examine the impacts of various land uses, including residential and agricultural lands, on a community’s fiscal balance sheet in a single year. Most COCS studies have shown similar results.  Residential land is more costly to service than all other types of land, while the reverse is true for agricultural and open space lands."

COCS studies involve three basic steps:
 * 1) Collect data on local revenues and expenditures.
 * 2) Group revenues and expenditures and allocate them to the community’s major land use categories.
 * 3) Analyze the data and calculate revenue-to- expenditure ratios for each land use category.

The definition of density
Density depends on the context in which it is used. For this discussion, higher density simply means new residential and commercial development at a density that is higher than what is typically found in the existing community. Thus, in a sprawling area with single-family detached houses on one-acre lots, single-family houses on one-fourth or one-eighth acre are considered higher density. In more densely populated areas with single-family houses on small lots, townhouses and apartments are considered higher-density development. For many suburban communities, the popular mixed-use town centers being developed around the country are considered higher-density development.

According to the Urban Land Institute (ULI), The National Multi Housing Council (NMHC), The Sierra Club, and The American Institute of Architects the low density developments of the last forty years is unsustainable. Communities across America have found that with their suburban sprawl has come a reduction in their natural areas, working farms and an increase in their commute times, traffic congestion, smog and water pollution. The infrastructure costs associated with basic infrastructure, roadways and schools, libraries, fire, police, and sewer services, that are spread over great distances is inefficient and expensive.

Benefits of Community Density

 * 1) Less Extensive Infrastructure

According to Sam Newberg and Tom O'neil in a 2003 study estimated that over $100 billion in infrastructure costs could be saved over the next 25 years by pursuing better planned and more compact forms of development. In fact, a growing number of urban sprawl developments have not generated enough property tax to cover the services it requires. SOURCE: Sam Newberg and Tom O’Neil, “Making the Case,” Multifamily Trends, vol. 6, no. 3, Summer 2003, p. 47.

The major cause for the difference between property tax revenue and the cost of public services is the cost for public schools and society's preferred housing choices. For instance, low-density suburbs and exurban areas generally attract families with more school-age children. For instance, single-family developments average 64 children for every 100 units, compared with only 21 children for every 100 units of garden apartments and 19 for every 100 unist of mid- to high-rise apartments. SOURCE (needs to be updated with 2010 figures) : U.S. Bureau of the Census and U.S. Department of Housing and Urban Development, 1999 American

Housing Survey (Washington, D.C.: U.S. Department of Commerce and U.S. Department of Housing and Urban Development, 2000). The effect on local governments is also staggering. As developments continue to sprawl farther and farther away from the community’s core, local governments must absorb much of the cost of longer sewer and water lines, electrical lines, and other public services. The new sprawling developments also need police and fire protection, schools, libraries, trash removal, and other services which further tax governmental resources.


 * 1) Less Traffic

On average the residents of single-family low-density home tend to have two cars per household while residents of single-family high-density apartments and condominiums have one car per household. The reason for this is that residents of more densely populated developments have more amenities at their doorstep facilitating walking and biking to locations versus automobile traffic. The walkability of denser neighborhoods also facilitates the ridership necessary for public transportation. This results in residents of higher-density housing and office products making fewer and shorter auto trips than those living in low-density housing. SOURCE: Institute of Traffic Engineers, Trip Generation, 6th ed., vol. 1 (Washington, D.C.: Author, 1997). It is estimated that a minimum density of seven dwelling units per acre is needed to make local bus service feasible with an intermediate level of service. SOURCE: Robert Dunphy, Deborah Myerson, and Michael Pawlukiewicz, Ten Principles for Successful Development Around Transit (Washington, D.C.: ULI–the Urban Land Institute, 2003).


 * 1) Crime rates are comparable to lower-density developments

Staying consistent with the research that shows that higher density developments are easier on community resources Arizona researchers found that when police data are analyzed per unit, apartments actually create less demand for police services than a comparable number of single family houses. In Tempe, Arizona, a random sample of 1,000 calls for service showed that 35 percent originated from single-family houses and just 21 percent came from apartments. SOURCE: Elliott D. Pollack and Company, Economic and Fiscal Impact of Multi-Family Housing (Phoenix: Arizona Multihousing Association, 1996).

There are several reasons that higher density developments help reduce crime. As pedestrian activity and a “24-Hour Community” emerge from higher density developments so do the number of people willing to help report crime in a given location. In fact, a ULI Study of Greenwich Connecticut, shows that higher-density housing is significantly less likely to be burglarized than single-family homes. This has actually led to residents preferring to live in high-density developments because they felt more secure.


 * 1) Environmentally friendly

Low-density development increases pollution to air and water and destroys areas by paving and urbanizing greater swaths of land through urban sprawl. As of 2003, approximately 2 million acres of land a year were being consumed by sprawling development. 50% percent of Americans live where the air is unhealthy to breath and childhood asthma is on the rise. Nearly half of the pollution in our lakes and streams is a result from runoff from paved surfaces.

The best solution to managing growth and protecting clean air and clean water is higher-density development. The best way to utilize community resources such as fire, police, schools, utilities and shops is by placing new development into already urbanized areas that are equipped with those resources. The economic downturn of 2008-2011 has left many municipalities scrambling to support the financial and environmental costs of stretching those services farther out than is economically feasible from the city’s core. Compact urban design reduces traffic, smog, and preserves natural areas such as watersheds, wetlands, working farms, open space, and wildlife corridors. It also minimized impervious surface area, which causes erosion and polluted stormwater runoff.

When it comes to driving; the average American man spends 81 minutes behind the wheel every day, while women average 63 minutes. And surveys show that the time spent driving has been consistently increasing every year. The national road network, currently at 4 million miles according to the U.S. Department of Transportation, is still growing at an alarming rate, mainly for the purpose of connecting new low-density suburbs back to core communities. Along with the water and air pollution, construction of these highways perpetuates the cycle of sprawl, fragments wildlife habitats, and dries up a community’s financial coffers. SOURCE: US DEPARTMENT OF TRANSPORTATION


 * 1) Can blend well with surrounding areas

Americans prefer higher density developments. By creating active streets and centers that showcase architecture, developers are able to create a sense of place in areas that previously only supported low-density development. Neighborhoods like Georgetown in Washington, D.C., Beacon Hill and Back Bay in Boston, The Country Club Plaza in Kansas City, and Lincoln Park in Chicago attest to the fact that some of the most desirable neighborhoods in America have historically been of higher density than those found in the typical suburbs.

A University of North Carolina study revealed that when given a choice between two attractively designed communities, one higher density and the other low density; the majority preferred the higher-density option. Other visual preference surveys confirm that there is an almost universal negative reaction to the visual appearance of commercial strip sprawl and an almost universal positive reaction to traditional town-like communities of the past, communities that almost invariably included a mix of densities and uses.

SOURCES: http://www.nmhc.org/Content/ServeFile.cfm?FileID=182. And http://www.nelessen.org/NAR_web_files/frame.htm.


 * 1) As diversity increases so does the preference for density

to be completed next week
 * 1) All income levels choose density

to be completed next week

Green Marketing
Green Marketing is the marketing of products or services that are considered to be environmentally friendly. Green marketing is a process by which company can advertise a product’s ‘green’ attributes such as its production process, reduced packaging, or its overall benefit without harm to the environment. The FTC Act gives the Federal Trade Commission the power to bring law enforcement actions against false or misleading marketing claims, including environmental or 'green' marketing claims. . The FTC issued its Environmental Guides, referred to as the "Green Guides," in 1992. The FTC’s “Green Guides" set forth the guidelines for the labeling and marketing of green claims on products. The FTC’s guidance document, “Complying with the Environmental Marketing Guides”, was distributed to help companies properly label and market their possible 'green’ products.

Green marketing with respect to Sustainable Real Estate Development focuses on two main attributes: cost savings/payback and human health and the environment. A third piece of green marketing is education both for consumers and for members of a development team.

Based on the majority of consumer reports in the residential market segment, cost savings is the greatest concern in considering building construction. In other words, consumers are willing to pay, and sometimes pay a premium, for green building attributes that will save them money in the long run. For example, installing higher grade insulation greatly improves the efficiency of a buildings heating and cooling consequently saving money on energy bills.

As a secondary green marketing strategy, consumers consider working and living in green buildings due to their health and environmental benefits. Preventing global warming, unlike saving money on bills, is not a benefit that is immediately felt by the consumer, but it does contribute to consumer’s feelings. Living and working in a green building provides tenants with a social benefit. Perhaps a greater draw to green buildings is their actual or perceived health benefits. Air quality tends to be much better in green buildings than traditionally built buildings. Employees working in green buildings and people living in green buildings take less sick days and are therefore more productive and happier than those in traditional buildings. From a developer’s perspective, building a green building could create a marketing advantage.

Many consider the key to green marketing is education. Many consumers understand solar panels and their environmental and cost benefits, but many consumers do not understand the benefits of insulation. Developers or construction contractors may also understand the benefits, but the appraisers who value the buildings do not. This disconnect between developers and consumers and between developers and appraisers leads to an undervaluation of green properties. In order to have successful green marketing, there must be enough education in the market and enough education in the delivery of property.

Greenwashing
In recent years there has been growing criticism about green marketing known as ‘green washing’.Greenwashing is sometimes referred to as spin but is basically the deceptive use of the green marketing to promote a company or product that could be perceived as not being truly environmentally friendly. Marketers have taken advantage of consumer’s confusion about environmental issues, and purposely make false or exaggerated 'green' claims.

Green Financing or Mission Related Investing
The movement in which public and private sector capital is earmarked to a vehicle solely used to fund sustainable projects. These projects typically include areas such as real estate, utility, or technological endeavors. Generally, green financing can be achieved at a rate favorable to traditional methods of funding in order to encourage this type of development. See also Green lending

Tax Exempt Bond Financing
Tax Exempt Bond Financing is one method of providing financial assistance for the perceived extra costs of sustainable real estate development. Tax-exempt financing allows developers to borrow money at a lower interest rate because the buyers of the bonds will not have to pay federal income taxes on any interest earned. The savings from tax-exempt financing can then be used to offset the costs of sustainable design components and infrastructure.

Mission Related Investing
Overview: A mission-related investment (MRI) is broadly defined as an investment made by a private foundation which seeks to generate a positive social or environmental impact in addition to providing a financial return. MRI's evolved out of foundation executors' desire to create synergies between the historically separate programmatic and investment arms of their organizations. Traditionally private foundations have invested funds in unrelated financial instruments in order to achieve 9% market rate returns. These returns are then allocated based on the following standard operating model: 5% to mission related grants, 1% to investment fees, and 3% reinvestment to sustain pace with inflation. In a 2005 Report by Luther Ragin, Jr. Vice President of the F.B. Heron Foundation, posed the question: "Should a foundation be more than a private investment company that uses some excess cash flow for charitable purposes?" As a result, many private foundations are focused on aligning their investing and programmatic activities in a manner that will add value by creating value for all stakeholders including communities, societies, the market place and the foundation.

Program-Related Investments
Overview: A program-related investment (PRI) is an investment made by a private foundation that is defined by the IRS as an investment in which “1. The primary purpose is to accomplish one or more of the foundation's exempt purposes; 2. Production of income or appreciation of property is not a significant purpose; and 3. Influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose.” PRIs were born out of the Tax Reform Act of 1969. PRIs can be used as a mechanism to provide low-interest (0-5%) loans to help finance specific real estate development projects like low-income housing or non-profit community centers. Similar to grants, PRIs can be used to provide capital to organizations that address social or environmental concerns in line with the foundation’s goals. However PRIs differ from grants in that they are expected to be returned to the foundation either with or without a net financial return. Because PRIs are paid back, the funds are recycled into the next charitable purpose PRIs provide charitable organizations or commercial ventures access to needed capital, typically at favorable terms. In return, the funder benefits in several ways: For the recipient, the benefit is access to capital at lower rates than may be otherwise available. Per the IRS, to be program-related, the investments must significantly further the foundation's exempt activities. They must be investments that would not have been made except for their relationship to the exempt purposes. The investments include those made in functionally related activities  that are carried on within a larger combination of similar activities related to the exempt purposes.
 * The foundation is often able to recycle PRI payments for subsequent charitable investments.
 * The foundation is generally able to count PRIs toward its minimum five percent payout of net assets.
 * PRIs allow foundations of every type and size to have greater programmatic impact.


 * 1) A trade or business the conduct of which is substantially related (aside from the mere provision of funds for the exempt purpose) to the exercise or performance by the private foundation of its charitable, educational, or other purpose or function constituting the basis for its exemption,
 * 2) A trade or business in which substantially all the work is performed for the foundation without compensation,
 * 3) A business carried on by the foundation primarily for the convenience of its members, students, patients, officers, or employees (such as a cafeteria operated by a museum for the convenience of its members, employees, and visitors),
 * 4) A business that consists of the selling of merchandise, substantially all of which has been received by the foundation as gifts or contributions, or
 * 5) An activity carried on within a larger combination of similar activities or within a larger complex of other endeavors that is related to the exempt purposes of the foundation (other than the need to simply provide funds for these purposes).

PRIs can also be used to invest in projects like affordable housing, environmental community centers, etc.

Energy Efficiency and Renewable Energy Systems Financing Programs and Incentives

 * Corporate Tax Incentives: Corporate tax incentives are available in certain states and, more recently, on the federal level to corporations that construct green buildings and/or purchase and install renewable energy or energy efficiency equipment. Incentives include tax credits, deductions and exemptions. Certain programs only give tax incentives if a minimum amount has been invested in an eligible project. Most programs specify a maximum dollar amount of the credit, deduction, or exemption, as well.
 * Grant Programs: Grants are typically available to the commercial, industrial, utility, education, and/or government sectors, and offer support for a broad range of technologies. Some grants are intended to help pay down the cost of eligible renewable or energy efficiency products or systems, while others are intended to support research and development or commercialization of products or systems.
 * Leasing Programs: Numerous programs have been developed by government agencies, utility companies, and private companies that allow end users to lease renewable energy and/or energy efficiency products/systems, thereby negating the need for large capital expenditures for such systems. Some programs have given the end user the option to purchase the product/system after a specified period of time.
 * Loan Programs: Loan programs offering low or zero-interest loans are typically offered by state and federal governments to the residential, commercial, industrial, transportation, public, and non-profit sectors. Loan programs offer financing for a wide range of energy efficiency and renewable energy systems.
 * PACE Financing: Property-Assessed Clean Energy (PACE) financing is similar to the loan programs mentioned above, but allow property owners to repay the amount borrowed by way of a special assessment on the their property. PACE financing provide financing for various types of renewable energy and energy-efficiency improvements. Additionally, PACE financing is typically offered through local governments that are authorized by state governments to offer such financing.
 * Performance-Based Incentives: Performance-based incentives (PBIs) – sometimes referred to as production incentives – provide payment to renewable energy system owners for energy produced by their renewable energy systems. Energy is typically purchased by local utility companies and payments are usually based on a renewable energy system’s actual performance – not rated performance.
 * Personal Tax Incentives: Similar to Corporate tax incentives, personal tax incentives provide individuals with income tax credits and/or deductions. Offered by state and federal governments, there is often a limit on the amount of credit or deduction that can be claimed and programs vary widely by state.
 * Property Tax Incentives: The majority of property tax incentives allow property owners to exclude a portion of the value of renewable energy systems from the property assessment for taxation purposes. For example, if a geothermal heating system is installed in place of a traditional heating system, the added cost of installing the geothermal system is excluded from the property assessment. Other incentives include exemptions, exclusions, abatements, and credits.
 * Rebate Programs: Rebate programs are widespread and varied, though they are almost always offered by state and local governments, and utility companies. Rebates are used as a way to promote the adoption of renewable and energy efficiency projects.
 * Sales Tax Incentives: States have increasingly offered an exemption from sales taxes for the purchase of renewable energy systems and/or energy efficient products, such as appliances.

Information about specific financing programs and incentives can be found here: http://www.dsireusa.org/

Tips for Greening Your Home

 * More durable roof coverings such as steel and fiber cement reduce the frequency of roof replacement. Lighter colors absorb less heat, reducing cooling costs in warm climates. Now, solar roofing products integrate asphalt shingles, standing-seam metal roofing, and slate or concrete tiles.
 * Energy-efficient windows incorporating advanced technologies like low-emittance (low-E) glass coatings, gas filler between layers, and composite framing materials keep heat inside in the winter and outside in the summer.
 * Vinyl siding on exterior walls saves money on installation and maintenance; fiber-cement siding is termite and water-resistant and warranted to last 50 years.
 * Increasing the amount and R-value of insulation (R-value (insulation) is a cost-effective way to save energy and help reduce heating and cooling bills, which account for at least half of energy use in the home. Sprayed insulation made of foam, cellulose or wool is an alternative to traditional glass fiber batting.
 * Incorporating passive solar design features like large, south-facing windows helps heat the home in the winter and allows for increased natural daylighting.
 * Xeriscaping, or using native plants, significantly reduces the need for watering, fertilizers and herbicides.
 * Covered entries at exterior doors help to prevent water intrusion, reducing maintenance and enhancing durability.
 * Selecting more efficient, correctly sized heating, cooling and water-heating equipment saves money. Tankless water heaters provide hot water on demand at a preset temperature rather than storing it, which reduces or eliminates standby losses. Geothermal heat pumps work with the Earth’s renewable energy and can also heat water.
 * Foundations should be as well insulated as the living space walls for efficient home energy use and enhanced comfort, particularly if the basement is used as a family room or bedroom.
 * In addition to natural wood, flooring choices include low-VOC (volatile organic compounds) carpets for better indoor air quality, laminates that successfully mimic scarce hardwood, and linoleum, a natural product making a design comeback.
 * Factory-built components including trusses and pre-hung doors allow more efficient use of raw materials, making the most out of every piece of lumber. These products eliminate the need to cut wood at the job site, further reducing waste.
 * The energy efficiency of refrigerators and freezers has tripled over the last three decades because they have more insulation, advanced compressors, better door seals and more accurate temperature controls. Front-loading washers use about 40% less water and half the energy of conventional models. Energy Star®-rated appliances save an average of 30 percent over standard models.
 * Recycled plastic lumber and wood composite materials reduce reliance on chemically treated lumber and durable hardwood for decks, porches, trim and fencing.
 * New toilets have redesigned bowls and tanks that use less water, but function more efficiently than first-generation low-flow models. Some use pumps for supplementary water pressure. Advanced shower and sink faucet aerators provide the same flow regardless of pressure to reduce water use and the energy required to heat it.
 * Tree preservation reduces landscaping and future energy costs and helps provide winter wind breaks or summer shade. Additional landscaping improves the environment even more: One tree can filter 60 lbs. of pollutants from the air each year.
 * Oriented strand board (OSB) is an engineered wood product that does not require large trees for its manufacture. It is resource efficient and enhances durability and is used to sheathe roofs and walls in 75 percent of new homes.

Passive Solar Houses
Passive solar houses or Passive Houses are so well designed they require as little as 10 percent of the energy standard homes use for HVAC and lighting. They rely on proper orientation to the sun in addition to and superior insulation and ventilation. A tight envelope (roof, exterior walls and floor) and highly insulated walls buffer against winter cold and summer heat, requiring little use of furnaces and air conditioners. Energy-recovery ventilators (ERVs) circulate fresh air for even temperatures and humidity. Natural light permeates passive houses in daytime.

In the northern hemisphere's colder climate zones passive homes are generally oriented to maximize winter solar gain from the south side of the structure with limited northern exposure (fewer windows and doors). Most make use of a 'heat bank' in the center of the house which captures heat from the sun during the day and radiates warmth into the house at night. Heat banks are often brick, stone, or water features. During the summer, this south side is shaded by virtue of the change in the sun's path.

In warmer climates passive solar houses make use of shade to create natural air flow and reduce the need for air conditioners. Domes create a natural air flow because one half of the dome is always in shade and one half in the sun. 'Passive swamp coolers' are also popular. They involve water screens or features near air intake locations which serve to cool any entering air.

Modular Houses
From material waste savings and more durable houses to reduced transportation impacts during construction, prefabricated housing could offer many environmental benefits. This section examines the most common environmental claims for prefabricated housing.

More durable houses

Materials are stored and assembled indoors, where they are less likely to be damaged, and quality-control measures are easier and more common in a factory setting than on a building site. In many factories, materials are checked for quality, and supervisors routinely check modules to ensure that construction procedures, such as proper framing or air-sealing techniques, are being followed. Factories also tend to employ longer-term labor, leading to higher levels of training and thus better construction.

Less waste

One of the benefits of prefabrication is that waste materials from one house can be stored for later use, limiting the amount of material that ends up in the landfill. Although statistics on waste are lacking, Rebecca Woelke, director of media relations for Michelle Kaufmann Designs (MKD) in Oakland, California, has estimated that modular homes yield up to 70% less waste than typical site-built homes. Such waste savings may be exceptional, given MKD’s green focus, but even mainstream housing manufacturers are moving towards waste reductions, driven by a focus on “lean production” techniques that save materials, time, and money.

Better energy efficiency

Building in a factory has another advantage: houses are built from the inside out, making insulating and air-sealing easier. A typical module is first framed and wired, then drywall is added, allowing insulation to go in behind the drywall before sheathing is added to the exterior. This allows workers to apply foam sealant behind outlets and other breaks in the wall more easily than if they were working from the inside. Houses are also built lower to the ground, making tough-to-reach corners more accessible for insulating and sealing.

Lower transportation impacts

A site-built house requires designers, contractors, and laborers to travel frequently to and from the site. Materials must also be delivered to the site, often in multiple small batches of less than a truckload. Although more commonly used in prefabricated construction, a crane may be needed on site if the project calls for prefabricated roof trusses, increasingly common in site-built houses. Prefabricated housing involves centralized production: workers come to a factory each day to work on one or more houses, each of which is then shipped to its site. Materials are also shipped in bulk to the factory, often in full trucks. A site may be all the way across the country, but most sites are fairly close to the factory, since the industry is generally regional.

Making It Affordable

Prefabricated housing has long been touted as a cost-saving building process, particularly in areas with high labor costs; modular and panelized houses take less time to build, thus lowering the amount of time one must pay for labor. This cost savings makes prefabricated housing a good choice for affordable housing, but green options such as increased insulation or environmentally friendly finish materials can currently raise costs, since the assembly line must be changed for a single house.

Challenges

There are many studies suggesting that green homes will ultimately save the owners significant sums of money due to lower utility costs, energy efficiency, increasing longevity, and enhanced value. However, these benefits are still not being recognized or reflected in green home sales. There are challenges on both the supply and demand side of this equation. On the supply side, anyone who has bought or sold a home knows how critical both appraisers and lenders are to the equation. Lenders hire appraisers to determine the fair market value of a home based on both comparable home sales as well as building replacement costs, and this value becomes the basis on which lenders base their loans. Neither appraisers nor lenders currently recognize the value of green homes in their practices. According to a joint report by CoStar and the US Green Building Council entitled “Current Trends in Green Real Estate,” there were 131,137 LEED Accredited Professionals in the United States. Out of that total, there were only 16 were appraisers and only 41 were lenders. This suggests that appraisers and lenders are not equipped with enough understanding of green building to adequately assess its value. Thus, the architects, builders, and developers who are building green homes and paying any premiums associated, are not being compensated for their efforts.

Even if appraisers and lenders do begin to recognize the added value of green homes, home buyers may not be willing to pay for it. Recent surveys of home buyers indicate that people are far more concerned with the location of the house, local school districts, size, and other more traditional measures than whether or not the home incorporates green building elements or are LEED or EnergyStar certified. In practice, green features in homes are sold as added options for buyers rather than included in the base price. Thus, consumers have to “opt in” to greener homes at an additional cost. The surveys suggest that if buyers had additional funds to spend on a home, they are more likely to spend it on a bigger home or a similar home in a better location, not on the benefits of green building. This is the demand side struggle for residential green building. In order to be fully accepted by the market, green homes must make sense financially, and the benefits to home buyers and costs to home builders need to be quantified and more importantly, understood.

Overview
Project location matters primarily because of the incentives and regulations that may be unique to a particular state (e.g. California) or region (e.g. Northeastern U.S.). A USGBG CoStar report on LEED office buildings found that the states with the most LEED APs and the greatest number of LEED buildings in them are California, Texas, Illinois, Florida and New York. These states also have both energy efficiency standards for public buildings and building energy codes at the state levels in addition to other random policies. Despite these existing regulations and incentives, when one examines LEED buildings as a percentage of total building stock, none of these states are in the top 10. Additionally, only CA is in the top 10 for the highest annual growth rate for LEED Certified buildings by state.

Washington D.C. poses a particularly unique case. D.C. has the second highest rate of LEED buildings as a percent of total building count, and a higher than average growth rate at an estimated 110%. Furthermore, D.C. is leading many of the other top states with a greater percent of possible LEED credits for many of the 5 core LEED categories (including ranking by popularity):
 * Indoor Environmental Quality (2)
 * Materials & Resources (4)
 * Energy & Atmosphere (5)
 * Water Efficiency (1)
 * Sustainable Sites (3)

The U.S. federal government has yet to pass climate regulation that mandates improved efficiency or decreased carbon emissions. However, in anticipation of future climate regulation or as a desire to minimize carbon emissions, many states and regions are adopting voluntary or regulatory policies. Not all states or programs have initiatives for the design or efficiency of a development. However the USGBC CoStar report includes preliminary data on LEED office products indicating that LEED office products may have lower vacancy rates than traditional office products in all markets, but that LEED buildings are not always able to command higher rents. Given this and the fact that no two LEED buildings may be alike in terms of geographic location or energy and environmental design, one cannot conclusively say that LEED certification pays off for office properties.

Demand for Green Building in commercial/retail spaces in increasing steadily. According to the USGBC, as of August 2010, there were 35,350 Commercial LEED registered projects with 6,602 certified projects totaling 900 million square feet. Perceived business benefits to green commercial buildings include decreases in operating costs and increases in building value, return on investment, occupancy ratios and rent ratios. Green building initiatives provide a key influence when tenants decide to sign a commercial real estate lease, according to a survey by GE Capital Real Estate. The survey, conducted over the past year, included more than 2,220 office tenants in the U.S., Canada, France, Germany, Sweden, the UK, Spain and Japan. Among the findings: Energy efficiency remains the No. 1 priority for tenants in most countries, followed by waste reduction programs. An average of 50% of those surveyed say green building initiatives are a high priority.

Overview
The built environment creates many unintended consequences – one of which is an Urban Heat Island (UHI). An UHI occurs when an urban area is significantly warmer than surrounding rural areas. The increased temperature is primarily caused by building materials that retain heat and – to a lesser extent – waste heat that is generated by energy usage. UHI’s are detrimental in the sense that they lead to increased air conditioning and refrigeration costs, and overall increased energy use in buildings. UHI’s also result in more intense and prolonged heat waves, which, in turn, leads to an increase in mortalities that result from extreme temperatures. Decreased water quality can also result from UHI’s as it increases the likelihood of warmer water flowing into area streams, thereby stressing the local ecosystem.

Cool Roofs
Two green building technologies that have been shown to reduce the effects of UHI’s are cool roofs and green roofs. Cool roofs are roofs that are made out of reflective materials and can reflect more than 70% of the sun’s rays. Reflecting such a significant portion of the sun’s rays reduces a building’s ability to retain heat and, in doing so, reduces the amount of energy used for air conditioning and refrigeration. Cools roofs typically fall into one of two categories: those made from inherently reflective material – such as white vinyl roofs – or those that have been coated with a solar reflective material. Reflectivity ratings for over 1,000 reflective roof products can be found on the Cool Roofs Rating Council’s website (http://www.coolroofs.org/).

Communities with limited budgets are often drawn to cool roofs because of their low cost – anywhere from $0.50 to $6.00/ sq ft. Building owners that do not intend to own their building for a long period of time and are primarily concerned with energy savings and lower operating costs are drawn to cool roofs for the same reason. Although cool roofs are effective at reducing the effects of UHI’s and are cost effective, they fail to offer many of the added benefits of green roofs.

Green Roofs
Green roofs are those roofs that are covered with vegetation. Green roofs reduce the effects of UHI’s and reduce the energy costs for building through shading and evapotranspiration. In regards to shading, the vegetation and associated growing medium prevent much of the sun’s rays from reaching the building’s actual roof membrane, thereby decreasing the roof’s surface temperature. Evapotranspiration is the combination of evaporation and transpiration. Transpiration is the process by which a plant moves water from its roots to leaves, whereas evaporation is the conversion of water from a liquid to a gas. When combined, the resulting outcome – evapotranspiration – cools the air by using heat from the air to evaporate the water from a plants’ leaves.

Extensive Green Roofs
Green roofs are typically classified as extensive or intensive. Extensive green roofs are often functional in nature and are used for storm-water management, thermal insulation, and fireproofing. Extensive roofs are typically covered in hardy vegetation – such as mosses and sedums, which are known for their stress-tolerance qualities – that thrive in an alpine-like environment, require less maintenance and little to no irrigation when compared to intensive green roofs, and rarely need the additional structural support that intensive green roofs require. Extensive green roofs are less costly than intensive green roofs, at approximate $5-$25/sq ft, and can be installed on slopes of up to 30 degrees – though they are rarely accessible for human use.

Intensive Green Roofs
Intensive green roofs, while functional in nature, also provide aesthetic value and increased living space. Many intensive green roofs are more like a conventional garden or park have few limits on the type of plant that can be planted – some even include shrubs and trees – and are often accessible by humans. When compared to extensive green roofs, intensive green roofs often require additional structural support, regular maintenance, extensive irrigation systems, and a much greater initial investment. Installation costs for intensive green roofs can run anywhere from $25-$40+/sq ft.

Green Roofs – Cost and Benefit Analysis
There are numerous benefits of green roofs – one of which is reduced energy use. For example, Chicago, which has installed a 20,300 sq. ft.semi-extensive green roof on its City Hall saves over 9,000 kWh per year on cooling and 740 million Btus on heating, representing annual savings of over $3,500. An additional benefit is reduced air pollution and greenhouse gas emissions. For example, researchers estimate that a 1,000 sq. ft. green roof can remove 40 pounds of particulate matter (PM) from the air per year – equivalent to the PM emitted by 15 cars per year. Enhanced storm-water management and water quality are additional benefits of green roofs. One study found that green roofs in North Carolina stored and then released – through evapotranspiration – more than 60% of all rainfall, thereby reducing the negative effects of runoff. Though difficult to quantify, the enhanced quality of life that is associated with green roofs is an additional benefit. Green roofs provide enhanced views from above and allowing public access provides additional green space in urban areas. Obviously, the benefits of green roofs do not come without a cost.

The costs of green roofs vary depending of growing medium, type of roofing membrane required, and the irrigation system required, if any. Some estimate that initial green roofs start at $10 per sq. ft. for a simple extensive roof, though cost vary widely depending on the complexity of the roof and location. For example, in Europe where green roofs are more common, costs are lower than in a country such as the United States where green roofs are far less common. Although the up-front cost of a green roof is much greater than a traditional roof, green roofs typically last far longer. As such, some believe that the annualized cost approached that of a traditional roof. For example, the city of Los Angeles estimated that an extensive green roof would cost from $1.03-$1.66/sq. ft. on an annualized basis compared to $0.51-$1.74/sq. ft. for a traditional roof.

Biomimicry and Green Building
Overview: Biomimicry is a concept, made popular by Janine Benyus’ book “Biomimicry, Innovation Inspired by Nature.” Biomimicry looks to nature as a model for design. By imitating natural design, scientists, builders, architects, and other practitioners can more efficiently solve design and construction problems. While scientists and philosophers have practiced this concept for centuries, it was only recently “labeled”. One of the ultimate goals of biomimicry is to improve sustainability of design, from manufacturing processes to architectural plans. The materials used in building and construction can be designed to emulate highly functional natural systems. One example of this is FLOR ,a carpet tile designed by Interface Carpet.

When considering residential or commercial construction with a biomimicry lens, one important factor might be how to construct a house whose parts could be deconstructed or reused. Biomimicry provides a framework for architects and designers to find inspiration in natural design and work towards more sustainable building practices by eliminating unnecessary waste and improving the efficiency of materials.

Biophilic Design
Biophilia, sometimes referenced as the biophilia hypothesis suggests that there is an innate bond between humans and the natural environment. As it relates to building design, biophilia can mean something as simple as hanging a picture of a forest on a wall or something as complex as an entirely naturally ventilated and lit building with natural lines, and a green wall that filters the buildings waste water. The role of biophilia in building is one that attempts to incorporate natural patterns, materials and surfaces into building design. There is little research on this topic, but that is changing. Steven Kellert has authored a book on the subject and claims that work productivity, absenteeism, and sick days can all be reduced by incorporating biophilic design. Additional benefits of biophilic design are improved sales, quicker recovery rates in hospitals and lower levels of stress. Biophilic design has a number of intriguing overlaps with sustainable real estate development practices. Such as the use of natural light, natural ventilation and using local natural materials. Some noteworthy buildings containing biophilic design features are the University of Guelph-Humber building, the Yale School of Forestry, Frank Lloyd Wright's Fallingwater, and the ING Bank headquarters in Amsterdam.

(Future, add research being done in this area)

Constructed Wetlands for Wastewater Treatment
Areas without municipal sewers normally rely on large areas of porous soils to absorb household wastewater. As residential densities increase and resultant wastewaters overload groundwater sources and aquifers, cleaner, more space-saving methods will be sought.

Constructed wetlands simulate natural wastewater treatment systems, using flow beds to support water-loving plants. The roots of these plants help provide an aerobic environment to aggressively break down contaminants. Constructed wetlands can offer an affordable solution to wastewater for sites with some of the following characteristics: warm climate, failed conventional absorption field, narrow or oddly-shaped lot, high water table, low soil percolation, high organic matter/suspended solids in wastewater and enough unshaded area. Because the systems are custom designed, they are applicable for all projects ranging from a one-bedroom house to a whole town.

There are different types of constructed wetlands. Subsurface flow is the most common for residential, as it keeps sewage effluent underground. Surface flow is sometimes more economical. Discharge systems allow some water to flow out of the wetland, whereas non-discharge can absorb all effluent. Different layouts include single-cell, dual-cell in series, or multiple-cell (parallel or in series). Subsurface dual-cell discharge is common for small residential applications.

Wetlands can be custom designed and built, or purchased as a system. Some system components can retrofit existing septic systems. The components of a complete system include: a filtered, two-cell septic tank (or two plain tanks, or a stabilization pond); a bermed or retained cell(s) that contains an impermeable liner, a gravel substrate, mulch and water-loving plants; a distribution system including header pipe, distribution pipe within the cell, collection pipe, water level control structure, various cleanouts and possibly pumps; and a drainage field if required by regulatory agencies. Treated water is high quality and could, in the right conditions, be directly released to a river or aquifer. Low-flow plumbing fixtures can act as a "pretreatment" method to minimize required cell area.

Constructed wetlands are site-specific; expert design and additional calculations to determine the economics are advised. Because year-round flow is necessary to sustain the plants, constructed wetlands are not appropriate for seasonal residences. In colder climates larger cells are needed for freeze-prevention design, and efficiency will be compromised. On steep slopes, cut-and-fill may be necessary to keep the effluent flow slow enough for proper absorption.

Renewable Energy
Renewable energy is typically defined as energy that 1) comes from natural resources and 2) can be replenished at the same rate it is used. Common sources of renewable energy include: sunlight, wind, rain, tides, and geothermal heat.

Renewable energy has increasingly taken the place of non-renewable energy sources in four distinct areas:
 * Power Generation: Approximately 18% of worldwide power is generated using renewable energy sources - the most common source being hydropower.
 * Heating: Solar hot water is the most common renewable heat source and meets the water heating needs of 70 million households worldwide. Other renewable sources used for water heating include the burning of biomass fuels and direct geothermal heat.
 * Transport Fuels: Biofuels have become an increasingly popular form of renewable fuel for transportation. In 2009, 93 billion liters of biofuels were produced - the equivalent of 5% of worldwide gasoline production.
 * Rural (off-grid) Energy Services

Conservation Real Estate
Overview: Conservation real estate, which combines traditional real estate practices and conservation ethics, is focused on responsible land use practices that are sensitive to impacts on resource use, allocation, and preservation. Once limited to the practice of using conservation easements to preserve land, conservation real estate has expanded into the realm of both residential and commercial real estate development.

Conservation Easements
One tool for the permanent protection of private land is a conservation easement ,which is a legally binding agreement restricting the use and development of a specific tract of land. In a conservation easement, a landowner voluntarily agrees to sell or donate certain rights associated with their property, primarily related to the development of the land. Conservation easements are often structured as agreements between landowners and public agencies or land trusts, with the intent to conserve the land as-is in perpetuity.

Certain activities and development rights can remain intact, based on specifications agreed upon by the landowner and public authority. While subdivision and high-density development is often excluded from future use, limited amounts of development can take place on the encumbered parcel of land. Conservation easements limit the possible future land, thereby affecting the future value of the land. To determine the value of the easement donation, the property is appraised at pre-easement, fair market value (highest and best use) and with the easement restrictions. The difference between these two appraisals is the value of the conservation easement donation.

Tax Implications of Conservation Easements Federal (as well as some State) tax codes allow for tax deductions for qualifying conservation agreements. Because the land is preserved for the benefit of the public, the government rewards the landowner with a reduced tax burden. Section 170 of the Federal Tax Code defines a qualifying contribution as “a contribution a) of a qualified real property interest, b) to a qualified organization, c) exclusively for conservation purposes.” To qualify for this income tax deduction, the easement must be perpetual, held by a qualified governmental or non-profit organization, and serve a valid "conservation purpose." A valid conservation purpose is defined as property having an appreciable natural, scenic, historic, scientific, recreational, or open space value.

Through the donation of a conservation easement, individuals may qualify for a tax deduction up to fifty percent of the contribution base (defined as adjusted gross income) in a single tax year. Should the value of the easement, and accordingly the tax deduction exceed that fifty percent benchmark, the remaining value can be deducted over the following fifteen years. Resources: Land Trust Alliance (http://www.landtrustalliance.org/policy/tax-matters/rules/conservation-donation-rules)

Conservation Easement Design and Implementation While a conservation easement can be crafted to restrict any number of uses on a property, the majority are intended to protect land and water as habitat for native plant and animal species. Easements can be structured to protect habitat from intensive agriculture practices, and conserve forests through limitations on timber management plans. Conservation easements focused on forest management can require that forests become certified by the Sustainable Forestry Initiative or the Forest Stewardship Council to ensure best management practices. These certification programs regulate the impact of harvesting timber while providing an on-going economic benefit to the landowner. Recreational uses such as hunting, hiking and fishing are often permitted under the language of the easement. Many landowners will allow public use of property in order to meet the qualifying public benefit easement definition. Resources: The Nature Conservancy (http://www.nature.org/aboutus/howwework/conservationmethods/privatelands/conservationeasements/) Land Trust Alliance (http://www.landtrustalliance.org/conservation0

Affordable Housing
The connection between Sustainable Development and Affordable Housing may not be immediately clear. However, when people who are critical to the success of a community (fireman, police officers, teachers, retail workers, servers in restaurants, etc.) cannot afford to live in the same community in which they work, many issues arise with respect to sustainability.

The most obvious challenge is commonly known as the jobs/housing balance (see http://www.cproundtable.org/media/uploads/pub_files/CPR-Jobs-Housing.pdf for a detailed explanation). On the simplest level, when a community has more employees than it does residences, that means that there are many people who have to commute in from other communities in order to do their job. In many cases, this will be by choice; people choose where they want to live, and if they don’t mind commuting a little further every day to and from work, that is their decision. However, a problem exists when there are people who would like to live closer to where they work but simply cannot afford to. Thus, they are forced to “drive until they qualify,” looking further and further away from their workplace until they find a suitable residence at a reasonable price. When this happens on a large scale, it creates a meaningful increase in traffic and automobile emissions, which in turn costs everyone in the community.

When community planners work hard to achieve a good balance between its workforce and a range of affordable housing options, their communities benefit not only from reduced traffic and pollution, but also cheaper access to supportive services, greater family and community stability, and an overall higher quality of life.

The application of sustainable building practices to affordable housing projects is becoming the industry standard for 3 main reasons: 1. Reduced operating costs 2. Residents of all income levels are attracted to a sustainable built environment 3. Equity investors are increasingly directing capital toward sustainable projects

In addition, Housing Authorities, as the primary providers of affordable housing for municipalities nation-wide, are beginnig to expand their focus beyond just sustainable building construction. They are now embarking on a holistic approach to community development. Sustainable affordable real estate development is not only associated with green building practices, but also many other characteristics such as multimodal transportation, job creation, supportive services and urban connectivity. This vision addresses the economic, social and environmental aspects that are vital to the foundation of every modern day community. Source: www.denverhousing.org

Emerging Real Estate Asset Classes (a.k.a. Environmental Markets or Ecosystem Services)
Ecosystems represent sources of natural capital and provide goods and services to society, also called ecosystem services. The Millennium Ecosystem Assessment identified over 24 ecosystem services that can be divided up into 4 general groups including: 1) provisioning, 2) supporting, 3) regulating and 4) cultural. Although not all of the ecosystem services have been incorporated into a market system, Figure 1 provides examples of ecosystem services for each group[19]. For example, agricultural ecosystems provision food, and forests regulate climate, provide clean water, and support nutrient cycling in soils.

Most ecosystem approaches require careful analysis of the surrounding area, including land use, ownership, population, demographics, and projected growth rates. Geographic Information Systems (GIS) and associated software can be hugely valuable as a tool for planning and modeling development and ecosystem impacts. Several organizations are exploring market based tools and other planning or zoning changes. The following list provides links to good resources: • Willamette Partnership (OR) • Natural Capital Project – InVEST tool • Charles River Watershed Association (CRWA) – Resource, Environmental, and Land (REAL) Planning

Water
Water is intertwined with development in numerous ways. First water may be required in the development process. It may be used to cut, clean and transport materials for instance. Secondly, water is incorporated in buildings for use by its inhabitants. These reasons are many and include personal hygiene, removal of waste, and consumption. In addition to the structure itself, buildings impact natural water movements. Most commonly this is perceived as a detriment to the environment as hard non-porous surfaces compound issues of flooding and create challenges with storm water runoff.

Water Rights and Sustainable Real Estate Development
A water right in the Western United States grants the legal right to use the physical supply of available water, but does not confer ownership. Types of water covered by water rights include both ground water and surface water. Once acquired, water rights must be put to “beneficial use” in order to be maintained. Examples of beneficial use include: irrigating agriculture, recreation, and general household use.

In the West, water is scarce and often water rights are unavailable at the times and in the locations needed by developers. Sustainable real estate projects should emphasize the use of a renewable supply of water, such as surface water as opposed to finite ground water sources. Buildings and projects should be designed to maximize water use efficiency for inside uses and especially outdoor irrigation. When putting agricultural land into a conservation easement, the associated water rights can often be tied to the conservation easement, ensuring the water will always remain on the land and be used for their historic agricultural purposes. In other cases, it may be beneficial to retire agricultural water rights and transfer them to instream flow uses for the benefit of fish and wildlife.

Carbon
Carbon markets are a relatively new approach used to control the pollution of carbon dioxide by providing economic incentives for reducing carbon emissions. These markets encourage developers to produce energy efficient buildings and landscapes. Most carbon markets are based on the cap and trade approach where a central authority (government) sets a limit or cap on the amount of carbon that can be emitted. Firms receive a cap allocated to them in the form of a permit. If firms emit more carbon than their allotted permits, they must purchase additional permits that are unused by other firms. Likewise, if a firm does not use all of the permits allocated to it, it has the right to sell those permits to other firms in need of them. This rewards firms that produce less carbon emissions than they are allocated and charges those firms that produce more carbon than they are allocated.

The current carbon market has been growing steadily according the World Bank, which has estimated the market size at 11 billion USD in 2005, 30 billion USD in 2006 and 64 billion in 2007. As an example of the effectiveness of cap and trade systems, the United States achieved a sulphur dioxide emissions reduction of over 40% after the 1990 Clean Air Act was passed. However there remains skepticism that this system may be ridden with problems such as the claim of offsets that are in fact nonexistent or the loss of revenue that could be collected from an emission fee or tax structure.

With buildings indirectly contributing one-third of global carbon emissions, the construction of energy and resource efficient buildings can reduce ongoing energy costs onsite, as well as upstream or offsite energy demands. System-wide efficiency can reduce public utility consumption of fossil fuels and allow regions to achieve carbon emission savings or limits. Government carbon reduction policies, building code requirements, incentives, private demand for accredited buildings, and a desire to increase long term property value are factors growing carbon efficient buildings.

Within multi-tenant buildings, individual unit metering and smart meters can hold individual users responsible for their energy costs and remove the inefficiency of master metering. On a city level, smart grid technologies utilize digital meters to provide real time information to consumers. In these programs, utilities can charge a variable price depending on the time of day energy was used. Likewise, consumers can adjust their energy use patterns like running energy intensive appliances during non peak hours.

Wetland Mitigation Banking
The Clean Water Act requires that the negative impacts to water resources be avoided and minimized. Loss of wetland functions can be replaced by restoration, creation, enhancement, and preservation of other watershed resources. Although onsite compensation is preferred, mitigation banking occurs when the benefits of improved wetland functions are stored to offset future development activities within the same watershed. Mitigation banking and in-lieu-fee arrangements are approved by the Army Corps of Engineers.

Ramsar Convention on Wetlands

Species Banking
Species banking can be seen as a subset of biodiversity finance. The concept exists as a market based solution to drive the preservation of species. Under the guidance of the government, individuals who plan to build on habitat occupied by endangered species must purchase a credit that will protect an equal amount of habitat for that species through a conservation easement on other land. Much of this new market arose out of provisions from the Endangered Species Act of 1973. There is debate about the effectiveness of species banking because it allows for the destruction of some of the land that endangered species depend upon. Also, it does not take into account buffer land that may indirectly affect the endangered species. An example of this is cited by The Economist of the checkerspot butterfly that was kept on a Jasper Ridge Biological Preserve, but eventually went extinct due to changes outside of their controlled habitat. However, transparency is seen as the main benefit from these markets.

People
Early Green Architects

The most famous of all American architects, Frank Lloyd Wright (1867-1959), is not only remembered for his innovative residential and public space designs, but also as an early proponent of the harmonious merging of built spaces with nature.

Wright’s early work is mostly derivative of styles common in the late Victorian era, when he was working at large, established architectural firms. Over time, Wright began to outgrow his more pedestrian assignments and the firms he worked for, and developed what became known as the Prairie school of architecture—designs developed with the local terrain in mind and using unfinished materials, as well as new interior concepts like open floor plans. Operating as an independent architect enabled him to advance his own design concepts freely, and as his reputation grew, he could take on projects of personal interest to him, not just those that paid well.

As Wright’s independence and nature aesthetic evolved over time, his boldness in design escalated to new heights. During this “Organic” period of his career, he designed some of his most famous residences, including Fallingwater in Pennsylvania and Taliesin West in Arizona. Both show some of his audacious attempts to merge surrounding natural features with the homes, giving the impression that the home is merged with its environment. Also critical to these designs are the effective use of natural lighting and the joining of indoor and outdoor spaces.

Not all of Wright’s ideas proved as prescient, at least looking back in hindsight. Despite his love of bringing together nature and the built environment, he also greatly embraced suburban development, and the attendant preference for large lots and general sprawl. Though not as green as some of his modern counterparts, he surely lays claim to being one of the earliest developers of a natural aesthetic in home and public space design.

CoStar Study
Background

A study by the CoStar Group performed in 2008, found that sustainable green buildings outperform their non-green peer assets in key areas such as occupancy, sale price and rental rates, sometimes by wide margins. The study was conducted by the President of CoStar, Andrew Florance, with Jay Spivey, CoStar's director of analytics, and Dr. Norm Miller of the Burnham-Moores Center for Real Estate at the University of San Diego. The group analyzed more than 1,300 LEED and Energy Star buildings representing about 351 million square feet in CoStar’s commercial property database of roughly 44 billion square feet, and assessed those buildings against non-green properties with similar size, location, class, tenancy and year-built characteristics to generate the results.

Results

The results indicate a broader demand by property investors and tenants for buildings that have earned either LEED certification or the Energy Star label and strengthen the business case for green buildings, which proponents have increasingly cast as financially sound investments.

According to the study, LEED buildings command rent premiums of $11.33 per square foot over their non-LEED peers and have 4.1 percent higher occupancy. Rental rates in Energy Star buildings represent a $2.40 per square foot premium over comparable non-Energy Star buildings and have 3.6 percent higher occupancy.

And, in a trend that could signal greater attention from institutional investors, Energy Star buildings are selling for an average of $61 per square foot more than their peers, while LEED buildings command a remarkable $171 more per square foot.

Criticism

With less than 1 percent of the space in CoStar’s database being accounted for by green buildings, it can be argued that the lack of supply of green buildings on the market creates a portion, if not all, of the premium seen in rents and selling price. However, this potential setback in the data will be marginalized as more and more green buildings are added to the market and supply catches up with demand.

Although the costs of developing green are coming down, the actual added direct costs of going green is still up for debate. Many of the surveys conducted today on costs have been performed by the USGBC, which, as many developers have stated, may have a downward bias. What can be more frustrating are the indirect cost of dealing with uninformed local building code regulators and a lack of expertise by the developer.

Multi-Family High Performance Buildings
Residential buildings consume 22% of all energy produced.

New Residential Buildings: How does a mass market residential developer chose among the green building standards when building new houses? Is LEED for Homes better than Energy Star? Is Living Buildings better than Passive House?

Existing Residential buildings:  Majority of the residential buildings are already built. How do owners chose which green building standard to follow when retrofitting?

Who are the customers for Green houses? Are the retirees on fixed income the target market? Is it the environmentally conscious group? How much premium are the customers willing to pay for the green features? How many customers are there?

Buildings
There are numerous case studies of green buildings with LEED certification at the USGBC (U.S. Green Building Council) website devoted to this topic: USGBC green building case studies
 * Alliance Center
 * Brower Center
 * Denver Museum of Contemporary Art
 * Natural Capital Building

Real Estate Asset Classes- Environmental Markets
Wildlands newest banks: Phase III River Ranch Valley Elderberry Longhorn Beetle Conservation Bank, Liberty Island Native Fisheries Conservation Bank, Toad Hill Ranch and River Ranch Wetland Mitigation Banks.
 * Malua Wildlife Habitat Conservation Bank
 * Ecosystem Marketplace
 * Wildlands Mitigation Banking
 * FOUR NEW MITIGATION AND CONSERVATION BANKS APPROVED IN CALIFORNIA

Details of the four projects: • 100-acre Phase III expansion of the River Ranch Valley Elderberry Longhorn Beetle Conservation Bank in Yolo County by USFWS. This is the expansion of a successful preserve dedicated to the recovery of the Beetle.

• 148-acre Liberty Island Native Fisheries Conservation Bank is approved to mitigate impacts to native delta fish including delta smelt and listed salmon. The project has been approved by NMFS, USFWS and CDFG. The project is approved to mitigate impacts to native fish habitat throughout the Sacramento-San Joaquin delta.

• 1,630-acre Toad Hill Ranch, located in western Placer County, has been approved to mitigate for impacts to wetlands and listed vernal pool crustaceans by the USACE, USEPA, and USFWS; and for impacts to Swainson’s hawk foraging habitat by the County of Placer. The project will create and restore over 95 acres of wetlands and vernal pools; and preserve over 1,600 acres of Swainson’s hawk foraging habitat.

• 113-acre River Ranch Wetlands Mitigation Bank is approved by the USACE, USEPA, and CDFG to mitigate permitted impacts to wetlands in Western Placer County, Northern Sacramento County and Yolo County.

With the number of banks currently being operated by Wildlands, the company has developed an on-line mitigation search engine on the company’s web page that allows permit applicants and their consulting teams to accurately determine which Wildlands mitigation bank may service their project. “We have received a lot of positive feedback from project proponents on our mitigation search engine, but it certainly will not replace the one-on-one customer service our clients expect,” remarked Monaghan. As Wildlands approaches its 20th year in business, several additional California banks are slated for approval in 2011. These include new projects throughout Southern California to help the state meet future growth and infrastructure needs.

Sustainable Development in your Area
Boulder, CO - Community Roots Urban Gardens: Featured in the Spring 2009 Urban Land Institute's Green Publication is Community Roots Urban Garden program founded by Kipp Nash. By turning front and backyard spaces into miniature farms, with produce sold to local farmer's markets or the community-supported agriculture program the organization has been able to feed twenty five families on less than one acre (0.4 ha) of land. This program and programs like it are gradually changing the way that society interacts with agriculture in their every day life. -

Organizations/Companies

 * Habitat for Humanity
 * Ecotrust
 * Denver Housing Authority
 * Urban Land Conservancy
 * Architecture 2030
 * Ecosystem Marketplace
 * Species Banking

Green Building Codes/Standards
LEED 2012 – The voluntary green building rating system, LEED, has been criticized by energy efficiency engineers as well as legendary architect. Among the many criticisms, the energy component of Leadership in Energy and Environmental Design is the subject of a recent class action law-suit. The bases for the law suit is LEED buildings does not actually use less energy than non-LEED buildings. Since its inception in 1998, now at version 3.0 (LEED 2009), continues to evolve. The next version, LEED 2012, moves closer to USGBC’s goal of developing a performance based rating system instead of prescriptive requirements. Specifically, energy use measurement, verification and performance have been moved to the new and aptly named “Performance” category. The category’ purpose is covering the on-going performance and measurement of building energy and water use.
 * U.S. Green Building Council

Similar to LEED, Energy Star is a voluntary rating system. Unlike LEED, Energy Star rating system for buildings is a building energy usage comparison tool, not a “green building” rating system; Energy Star allows direct comparison of energy use between same types of facilities. This is different than LEED as a LEED Gold building MAY or MAY not use less energy than a LEED Silver building.
 * Energy Star (c) Buildings and Plants

How does the rating system work? The energy use for a building is rated on a scale of 1–100 relative to similar buildings nationwide. This national survey, known as the Commercial Building Energy Consumption Survey (CBECS), is conducted every four years, and gathers data on building characteristics and energy use from thousands of buildings across the United States. A rating of 50 indicates that the building, from an energy consumption standpoint, performs better than 50% of all similar buildings nationwide, while a rating of 75 indicates that the building performs better than 75% of all similar buildings nationwide. To earn an Energy Star designation, a building must achieves a score of 75.

Energy Star rating is also available for the residential market. Due to demand, there are a few home builders that have embraced Energy Star for homes. For commercial buildings, there are researches showing Energy Star buildings receiving a 16% sales premium. Energy Star does have its share of issues and shortcomings. But, it’s the most widely recognized and easily understood labeling system. To its credit, energy star labeling has contributed to educating consumers about energy conservation. Like LEED, Energy Star has incrementally raised the requirements, the 2011 ( version3) Energy Star for home is on its way. The new version has striker requirements that address energy as well as water use efficiency.

Incorporated into LEED Rating Systems Under LEED V3 Existing Building Operation and Maintenance rating system, buildings eligible to be rated using Energy Star, must use Energy Star to determine its energy usage. A rating of 69 is the minimum (Prerequisite). Energy Star rating of 75 earns 4 credit points, up to Energy Star 95 receiving 18 points. Interestingly, if the building has an Energy Star rating of 74 – i.e NOT Energy Star certified, it can still earn 3 credit points. Other LEED Rating systems, such as New Construction, Core and Shell, Commercial Interior, do NOT use Energy Star for energy performance analysis. Core and Shell does give credit for using Energy Star appliance and equipment. LEED for Home also relies on Energy Star as the energy performance indicator.

Continuing in the green building standards developed by the voluntary LEED green building rating system, in January of 2011 the state of California implemented a mandatory code for all new buildings. CALGreen standards aim to reduce water use, gas emissions, and energy consumption. The standards will help California to meet state greenhouse gas emission reduction goals and zero net energy for new residential and commercial construction by 2020 and 2030 respectively. While still connected to the energy grid, zero energy buildings generate as much energy as they consume in an average year.
 * CALGreen Code

Implemented in 2007 by Mayor John Hickenlooper, Executive Order 123 positions Denver Colorado as “a national leader in sustainability by developing and implementing solutions to resource challenges that meet the needs of current Denver residents while securing the economic, social, and environmental health of future generations.” The mandate includes several standards. Those related to buildings include the incorporation of triple bottom line analysis in city policy decisions, a minimum standard of LEED-NC Silver for new city buildings, sustainable materials sourcing and disposal, and the promotion of water conservation in city operations.
 * Greenprint Denver


 * Passive House Institute US
 * International Living Building Institute
 * ASHRAE 189.1
 * Playbook for Green Building
 * STAR Community Index

Resources

 * Report of the World Commission on Environment and Development: Our Common Future -
 * Journal of Sustainable Real Estate
 * Program Related Investments -
 * Database of State Incentives for Renewables and Efficiency

Discussion
Would "Good to Great" be written differently today?

After reading Jim Collins' abstract about his "Good to Great" book, I couldn't help but wonder if his theories, particularly the Flywheel concept, would still hold true today. Stopping everything to get the right people in the right seats on the bus and then slowly and steadily re-building a successful company over 7, 8, or more years sounds like a wonderful idea in theory. However, in today's era of instant information, wikis, blogs, and online trading, investors demand results right away. They want to know what you are going to do to produce earnings this quarter, not half a decade from now. CEOs, much like NFL coaches, are fired after a couple years if a company doesn't return to profitability right away. I don't think American investors have the patience to wait for the flywheel to spin itself.

As a side-note, I'd love to hear Mr. Collins' opinion as to what went wrong at Fannie Mae, one of his 11 'great' companies.