Cost and Incentive Analysis of Green Building Label Upgrades in Taiwan’s Residential Sector: A Case Study of Silver to Gold EEWH Certification

Abstract

In response to the global push for sustainable development, green building certification systems have become a key policy instrument for reducing carbon emissions in the construction sector. In Taiwan, the EEWH (Ecology, Energy Saving, Waste Reduction, and Health) system serves as the primary framework for evaluating building sustainability. However, while government incentives such as floor area ratio (FAR) bonuses aim to encourage adoption, private sector participation remains limited, especially in the residential sector. This study investigates the cost implications and incentive benefits of upgrading green building certification from the Silver level to the Gold level under the EEWH system, using eight collective housing projects in the Taipei metropolitan area as case studies. Through a detailed analysis of certification components, upgrade strategies, and construction cost estimates, this research quantifies the additional costs required for each sustainability indicator and evaluates the alignment between upgrade investments and incentive rewards. The findings reveal that the average cost increase associated with the Silver-to-Gold upgrade ranges between 1% and 3% of total construction costs, with certain design strategies offering high cost-effectiveness. Moreover, the study examines whether the current FAR bonus policy provides adequate motivation for developers to pursue higher certification levels. The results provide valuable insights for policymakers seeking to optimize incentive structures and for developers considering sustainable building investments.

1. Introduction

The construction sector plays a pivotal role in global efforts to mitigate climate change and transition toward sustainable development. According to the Intergovernmental Panel on Climate Change (IPCC), buildings account for approximately 36% of global final energy consumption and nearly 39% of energy-related carbon dioxide emissions, making the sector one of the largest contributors to environmental degradation. The building sector is the largest single contributor to global energy consumption and greenhouse gas emissions [1]. For instance, buildings consume approximately 40% of the total primary energy use in the U.S. and the E.U., and 27.3% in China [2]. In addition, with the consolidation of the demand for thermal comfort, HVAC systems (and their associated energy consumption) have become an unavoidable asset, accounting for almost half the energy consumed in buildings, and around 10–20% of total energy consumption in developed countries [3]. To address this issue, many countries have implemented green building certification systems that aim to reduce the environmental impact of buildings across their life cycles—ranging from design and construction to operation and demolition [4,5,6,7,8,9,10,11,12,13,14,15,16,17,18,19,20,21]. These certification systems, such as LEED (Leadership in Energy and Environmental Design) in the United States [5,6,7,8,9,10,11,12,14,16,18,21], BREEAM (Building Research Establishment Environmental Assessment Method) in the United Kingdom [5,9,10,11,12,13,14,16,21], and CASBEE (Comprehensive Assessment System for Built Environment Efficiency) in Japan [9,11,15,16,17,18], serve as both evaluative frameworks and policy tools to promote environmentally responsible design.

In Taiwan, the government developed its own green building evaluation system—EEWH, which stands for Ecology, Energy Saving, Waste Reduction, and Health—in 1999 [4,19,20,21,22,23]. EEWH was tailored specifically to Taiwan’s subtropical climate and urban development conditions. The system includes a set of nine indicators designed to evaluate a building’s performance in areas such as biodiversity, greening, water retention, daily energy saving, CO₂ reduction, indoor environmental quality, water resource management, waste reduction, and sewage and garbage improvements; in addition, EEWH certification is categorized into several tiers: Basic, Bronze, Silver, Gold, and Diamond [21,22]. While the system has been widely applied to public buildings and government-led projects, the diffusion of EEWH-certified buildings in the private residential sector—particularly multi-family housing—has been relatively limited. Additionally, in 2009, the EEWH Eco-Community assessment system (EEWH-EC) was introduced as a standard for assessing eco-communities in Taiwan [23].

The strategies for improving green building incentives were found in a study, the most important of these being the need for the government to redirect its approach of providing incentives so that owners can be encouraged to pursue green building [24]. An example is the Green Mark Gross Floor Area incentives scheme in Singapore, in which owners who achieve the highest Green Mark Platinum or Green Mark Gold Plus rating are granted an additional floor area of up to 2% of the total gross floor area of the project [25]. For the last decade, the central and local governments in Taiwan have been creating a new system of transferable development rights (TDR) as leverage to facilitate urban redevelopment [26].

However, despite the presence of such incentives, the actual rate of private sector participation in EEWH certification remains low. A study on Taiwan’s Green Building Evaluation System (EEWH) analyzed 2503 green building cases from 2000 to 2018, and the results showed that 71.4% were public sector buildings and only 28.6% were private sector buildings [27]. In an effort to enhance the uptake of green building certification in the private sector, the Taiwanese government introduced a series of incentive mechanisms, most notably through the Urban Renewal Regulation Amendments implemented in 2008. These regulations allow residential developers to receive floor area ratio (FAR) bonuses—up to 10%—if their projects achieve EEWH certification at the Silver level or higher. The policy is based on the assumption that providing additional developable space serves as a meaningful economic incentive that can offset the incremental costs of green building upgrades.

One of the key barriers often cited by developers is the perceived high cost associated with implementing green building features, especially when aiming for higher certification levels. While international studies have shown that the incremental cost of green building features could affect the total construction costs—even though the results of a study showed that the average construction cost of a green building certification residential building was only 1.58% higher than a general residential building, indicating that green building certification does not require a large increase in costs [4]—developers in Taiwan still have expressed concerns that such upgrades may lead to much higher costs. Furthermore, the certification process itself is often considered administratively burdensome, adding to developer hesitation. These uncertainties regarding the alignment of costs and benefits remain a critical obstacle to the broader adoption of sustainable building practices in the private housing sector.

Despite the policy importance of green buildings in achieving carbon reduction goals and enhancing urban sustainability, empirical studies that quantify the relationship between green building upgrade costs and incentive returns—particularly in the context of Taiwan’s EEWH system—remain scarce. Existing research often focuses either on technical evaluation of green building performance or on user perceptions of environmental quality, with limited attention paid to the economic rationale behind certification decisions from the developer’s perspective. Moreover, the lack of reliable and transparent cost data on EEWH upgrades has led to persistent misconceptions in the real estate industry regarding the true financial burden of green construction.

This study aims to address this gap by providing a detailed cost and incentive analysis of upgrading residential buildings from Silver to Gold level under the EEWH system. Using eight multi-family housing case studies located in the Taipei metropolitan area, this research examines the additional construction costs required to achieve the Gold level certification and evaluates whether the associated FAR bonus serves as a sufficient economic incentive. The analysis includes a breakdown of the cost contributions of various green building design strategies across the nine EEWH indicators, highlighting which measures offer the highest cost-effectiveness. By comparing the costs of specific design interventions to the potential revenue gains from increased developable floor area, this study provides insights into the financial trade-offs involved in green building decision-making.

The findings contribute to both academic and policy discussions by empirically examining the alignment between public sector incentives and private sector behavior in the context of sustainable housing development. The results not only help clarify the real financial implications of green building certification upgrades but also inform strategies to optimize incentive structures for greater environmental impact. As the global construction industry continues to pursue net-zero and climate-resilient goals, understanding the economics of green building certification in local contexts—such as Taiwan’s EEWH system—offers valuable lessons for broader application in urban sustainability policy worldwide. EEWH, Taiwan’s indigenous green building assessment system, shares commonalities with widely recognized frameworks such as LEED (U.S.) and BREEAM (U.K.) in its multi-criteria structure, including energy efficiency, water conservation, and indoor environmental quality. However, EEWH incorporates localized priorities such as biodiversity and construction waste reduction, making it more attuned to Taiwan’s climatic, regulatory, and market context.

This study focuses on the upgrade from Taiwan’s more common “Silver” Green Building Label to the “Gold” level because this transition is both the most feasible and most widely applicable pathway for private residential developments. Silver level certification represents the prevalent baseline in the market, and upgrading to Gold can be achieved with moderate incremental investment while maximizing the practical benefits of existing incentive schemes.

2. Methodology

This study adopts a mixed-method research design combining document analysis and case-based cost estimation to evaluate the economic implications of upgrading green building certification from Silver to Gold level under Taiwan’s EEWH system. The primary objective is to quantify the additional construction costs incurred by such upgrades and to assess whether the associated floor area ratio (FAR) incentives offer sufficient compensation for private developers. The methodology includes four key components: (1) indicator framework review, (2) case selection, (3) upgrade strategy identification, and (4) cost and benefit estimation.

2.1. Research Framework and Evaluation Logic

The EEWH system comprises nine assessment indicators, including biodiversity, green coverage, water retention, energy saving, CO₂ reduction, indoor environmental quality, water resource conservation, waste reduction, and sewage and garbage improvement. This study adopts a novel comparative cost–benefit methodology tailored to Taiwan’s EEWH system. The approach estimates, in a systematic manner, the incremental construction costs required to upgrade an EEWH-certified residential building from the Silver to the Gold level and then compares these costs with the quantifiable economic benefits derived from the additional floor area ratio (FAR) bonus granted by government policy. While previous studies in international contexts (e.g., LEED, BREEAM, CASBEE) have explored the cost implications of green building certification, they have rarely examined upgrades between intermediate certification tiers or linked cost estimations directly to a specific development incentive mechanism. By integrating both the technical upgrade requirements and the corresponding policy-driven economic returns, this study contributes a new framework for evaluating whether incentive structures effectively encourage developers to pursue higher certification levels.

The research framework depicted in Figure 1 was selected to ensure a systematic linkage between the technical requirements of EEWH certification and the economic incentives influencing developer behavior. A phased approach was considered essential to address the study’s dual focus: first, to identify and simulate feasible technical strategies for upgrading from Silver to Gold certification; and second, to evaluate the economic returns of these strategies under Taiwan’s FAR bonus policy. Each phase in the framework serves a distinct function aligned with the research objectives:

Phase I establishes the policy and market motivation, ensuring that the research addresses a documented gap in EEWH upgrade cost–benefit evidence; Phase II situates the study within the global and local green building literature, providing a basis for selecting relevant EEWH indicators; Phase III applies this foundation to real-world cases, allowing the simulation of upgrade strategies under practical design and construction constraints; and Phase IV integrates cost estimation with policy incentive valuation, enabling evidence-based recommendations for both developers and policymakers.

This integrated structure combines methods common in green building performance research (e.g., LEED, BREEAM cost–benefit analyses) with a novel application to EEWH’s intermediate tier upgrades, ensuring both academic contribution and practical policy relevance.

Figure 1 illustrates the overall research framework, which begins with data collection and EEWH score reconstruction, followed by the identification of design interventions necessary for certification upgrading. Subsequently, the additional costs of these interventions were estimated using market unit prices and professional quantity surveys. Finally, the economic value of the government-provided FAR bonus was calculated and compared against the upgrade costs to assess incentive adequacy.

The choice of this framework also reflects the need for a holistic analysis that bridges technical evaluation and economic assessment. By embedding cost–benefit comparisons within a structured, indicator-based upgrade simulation, the framework allows the study to measure whether the magnitude of policy incentives is sufficient to influence market behavior. This dual-structured approach—grounded in prior international methodologies yet adapted to Taiwan’s EEWH and FAR bonus context—ensures that the findings are both locally specific and globally comparable. To provide a clearer visual representation of the upgrade process, a simplified decision tree (Figure 2) illustrates the key pathways from EEWH Silver to Gold. The diagram integrates cost thresholds (1.6–3.2% of total construction cost) and corresponding benefit triggers (e.g., FAR bonus, energy savings), allowing stakeholders to quickly assess feasibility based on project parameters.

2.2. Case Study Selection and Scope

The empirical basis of this study consists of eight multi-family residential projects located in the Taipei metropolitan area, all of which were constructed between 2008 and 2013. These projects were selected based on the following criteria:

• Certified at EEWH Silver level (or eligible for Silver level criteria reconstruction);
• Possess sufficient design documentation and certification data;
• Represent typical collective housing types within urban renewal or private development contexts;
• Cover a diversity of building sizes, configurations, and site conditions.

For the projects included in this study, the “Silver” designation is not an informal assessment but is based on official EEWH certification results. Each project had undergone a professional review process conducted by accredited assessors under the Architecture and Building Research Institute (ABRI) and was formally awarded the “Green Building Label” by the central government. These official certification records serve as the authoritative indicator confirming the Silver level status of each case.

According to the Taiwan Green Building Label (EEWH) database maintained by the Architecture and Building Research Institute (ABRI), a total of 35 residential projects in the Taipei metropolitan area obtained EEWH Silver certification between 2008 and 2013. From this population, projects were screened using the inclusion criteria outlined above. The eight cases in this study were selected through purposive sampling to ensure diversity in building scale, site conditions, and urban context, while also meeting the requirement of having complete architectural documentation and verifiable EEWH score breakdowns. Where multiple eligible projects existed within the same subcategory, the case with the most comprehensive data was chosen in consultation with green building certification experts. This selection process ensures that the sample is both representative of mainstream urban housing developments during the study period and suitable for detailed upgrade simulation analysis.

The eight cases were anonymized and labeled Case A through Case H. Each case includes data on floor area, site characteristics, original EEWH scores, and upgrade potential based on indicator-level gaps. While the original certification level for all projects was Silver, this study simulates the required improvements to achieve Gold level certification.

2.3. Certification Upgrade Strategy Identification

For each case, the study reviewed the project’s original EEWH certification report and architectural design drawings to identify the set of additional design features required to raise the project’s score from Silver to Gold. These strategies were categorized according to the nine EEWH indicators. Typical upgrades included enhancements in water-saving devices, solar heat gain reduction techniques, increased vegetation coverage, use of high-efficiency HVAC systems, and improved construction waste management plans.

The upgrade measures were evaluated based on their point-contribution potential and technical feasibility. Only design changes that could realistically be implemented without altering the building’s structural layout were included. Expert interviews with green building consultants and certification auditors were used to validate the upgrade paths and assumptions.

2.4. Cost Estimation Procedure

The additional costs associated with each upgrade strategy were estimated based on current construction market prices in Taiwan, adjusted to reflect average values during the 2008–2013 period. Cost data sources included:

• Unit prices provided by the Construction and Planning Agency (CPA);
• Market price databases for green building materials and systems;
• Case-specific quantity estimates derived from architectural plans.

All cost estimations were converted to cost per square meter (NTD/m² and USD/m²) to facilitate comparison across cases. To improve transparency, the analysis reports both the total upgrade cost and marginal cost per EEWH point gained.

The total cost of upgrading each project from Silver to Gold was then compared to the value of the additional developable floor area permitted under the FAR bonus policy. The incentive benefit was estimated by applying standard housing market prices (per square meter of saleable area) to the extra area granted by the EEWH-based FAR bonus, capped at 10%.

The core calculations in this study were not performed using a proprietary simulation program. Instead, they were based on the basic building data submitted for the “Green Building Label” certification process for each of the eight projects, all of which had achieved the official EEWH Silver designation following professional review and approval by the central government. Using these certified data sets ensured the accuracy and reliability of key input parameters, including floor area, envelope performance, and site characteristics. Cost and benefit estimations were then performed through manual calculations applying unit price data from the Construction and Planning Agency and market price databases. This approach aligns with established EEWH upgrade analysis practices and allows for transparent replication and validation.

All project cases analyzed in this study were constructed or planned between 2008 and 2013, and the simulation of upgrade strategies was based on cost data, building code requirements, and certification procedures available during that time. While the EEWH certification structure has remained relatively stable, construction material costs, labor prices, and land values have changed significantly over the past decade. Therefore, the monetary estimates in this study are not intended to represent current market conditions, but rather to illustrate cost-effectiveness patterns and incentive structures under typical conditions of the policy framework.

2.5. Limitations

Several limitations of this methodological approach should be noted. First, cost estimates are based on standardized assumptions and may not fully capture site-specific variations in construction methods or material availability. Second, the valuation of FAR bonuses assumes average market rates and does not account for fluctuation in land prices or location premiums. Third, while this study focuses on direct construction costs, it does not include soft costs such as certification fees, design consulting, or administrative delays. Nevertheless, the methodological design provides a reasonable approximation for comparing economic input and policy incentive output under current EEWH regulations.

Nevertheless, the comparative analysis presented in this study differs from earlier green building cost assessments in its explicit coupling of upgrade costs with incentive-derived revenues. The novelty lies in (1) simulating Silver-to-Gold upgrades for multiple EEWH-certified residential projects, (2) quantifying costs at both the indicator and project levels using historical market data, and (3) translating the policy incentive (FAR bonus) into a market-equivalent monetary benefit. This integration enables a direct economic feasibility judgment that can inform policymakers about whether the existing incentive magnitude is sufficient to influence developer decision-making. Such an approach can also be adapted to other jurisdictions where green building incentives take the form of density bonuses, transferable development rights, or similar mechanisms.

This study focuses on the cost–benefit implications of upgrading from EEWH Silver to Gold certification based on certified design and construction documentation, as reviewed and approved by the official Green Building Label process. The research does not incorporate post-occupancy performance monitoring, as the primary objective is to evaluate the economic feasibility and incentive structures at the design and construction phases. Integrating post-occupancy performance data would require long-term operational data collection beyond the scope of the present study. In addition, the scope of this research is limited to private residential developments in urban areas. Projects located in rural settings or categorized as luxury housing were excluded, as the study aims to evaluate the feasibility and policy relevance of upgrading from EEWH Silver to Gold certification within the mainstream urban residential market segment, which accounts for the majority of new housing supply in Taiwan’s major cities.

In addition, this study evaluates economic implications from the perspective of project developers, focusing on direct cost–benefit outcomes associated with upgrading from EEWH Silver to Gold certification. While public co-benefits such as reduced carbon emissions, improved air quality, and enhanced urban livability are recognized, these were not quantified using Life Cycle Assessment (LCA) or Social Return on Investment (SROI) frameworks, as such analyses require broader datasets and multi-stakeholder valuation beyond the scope of this research. Furthermore, for the purpose of isolating the cost–benefit implications of EEWH certification upgrades, this study adopts constant value assumptions for land prices, construction costs, and financing conditions. While market fluctuations in these variables can influence the actual economic return, they are beyond the scope of the present analysis. The findings, therefore, represent a baseline scenario under stable market conditions.

3. Results

This section presents the empirical findings derived from the analysis of eight residential building projects in the Taipei metropolitan area. Each project was evaluated based on its potential to upgrade EEWH certification from Silver to Gold level. The results are presented in three parts: (1) overview of certification upgrade strategies, (2) cost analysis of selected interventions, and (3) cost–benefit alignment through floor area ratio (FAR) incentives.

3.1. Classification of Upgrade Strategies and Indicator Focus

This section analyzes upgrade strategies used to elevate eight newly built multi-family residential projects in the Taipei metropolitan area from EEWH Silver to Gold level. The simulation process was based on real-world practices gathered through expert interviews and cross-referenced with indicator application trends in residential projects certified in 2013. Six key indicators were consistently adopted across the eight cases: Greening, Site Water Retention, Energy Conservation, Indoor Environmental Quality, Water Resource Management, and Waste and Sewage Improvement. Indicators such as Carbon Emission Reduction and Construction Waste Minimization were excluded from the simulation due to their rare application and the projects’ scale or function.

Notably, three of the cases (A, B, and C) had not yet reached Silver level at the outset of analysis. Thus, an initial upgrade simulation was performed to estimate the improvements required to meet Silver level standards, referencing both expert input and the indicator profiles of the five certified Silver level cases (D–H). Following this, all eight projects were modeled for their progression from Silver to Gold certification.

Table 1. Summary of EEWH Upgrade Strategies by Indicator Category.

EEWH Dimension	Indicator	Upgrade Strategy
Ecological	Greening (Vegetation)	- Replace tree species with bird-/butterfly-attracting or native trees - Increase greening coverage through rooftop, balcony, and wall greening - Apply multi-layer planting (e.g., combining shrubs with small trees)
	Site Water Retention	- Use permeable paving materials (e.g., interlocking blocks, natural stones) - Construct infiltration basins or permeable open spaces
Energy	Envelope Energy Saving	- Install shading devices based on orientation and climate - Use low-SHGC glazing and insulation materials to reduce envelope U-value
	Lighting Energy Saving	- Use energy-efficient lighting systems
	Air Conditioning	- Select energy-efficient HVAC units
Health	Indoor Environment	- Increase use of certified green materials - Improve window sound insulation (airtight windows) - Optimize natural daylight via glass type and glare control - Enhance slab insulation for noise
	Water Conservation	- Use low-flow fixtures with water-saving certification - Install rainwater harvesting or greywater recycling systems - Reuse condensate water from HVAC systems
	Sewage & Waste	- Design composting facilities for leaves - Centralize kitchen waste collection with outsourced disposal - Provide refrigerated, frozen, or compacted garbage storage facilities

presents a consolidated set of EEWH indicator categories, specific sub-indicators, and upgrade strategies used in the simulation process. All proposed interventions are compliant with Taiwan’s building codes, reflect feasible design practice, and respect typical user behavior patterns. This classification framework helps delineate cost-effective strategies and commonly adopted indicator combinations among Taiwanese residential developers seeking to meet higher EEWH standards. It also provides a baseline for subsequent cost estimation and incentive evaluation in the following sections.

Table 1 summarizes the EEWH indicator categories and specific upgrade strategies identified for simulating the transition from Silver to Gold certification in the eight case study projects. These strategies were derived from a review of each project’s original EEWH certification report, architectural documentation, and expert consultation, ensuring both technical feasibility and compliance with Taiwan’s building codes. The listed interventions represent common, practical measures adopted in Taiwanese residential developments to improve performance in areas such as ecological greening, site water retention, energy conservation, indoor environmental quality, water conservation, and waste management.

3.2. Cost Evaluation of Green Building Upgrade Strategies

This section presents the cost estimation results for upgrading EEWH certification from Silver to Gold level across eight multi-family residential case projects (Cases A–H) in the Taipei metropolitan area. The simulation incorporated actual site conditions and feasible retrofit strategies to meet Gold level criteria, based on a combination of expert consultations and review of EEWH scoring records for 2013.

While the upgrade strategies varied across projects, the analysis quantified unit costs associated with each point increment and per-ping construction area. The resulting range of additional cost per point per ping varied significantly, ranging from 0 to NTD 327.99, depending on the selected intervention and site conditions.

Table 2. Cost Overview of Selected Upgrade Strategies Across Eight Projects.

Upgrade Strategy	Average Cost per Point per Ping (NT$) 1	Adoption Rate
Improved wall insulation to reduce envelope U-value	0.00	Moderate
Use of energy-efficient hot water piping (fixed equipment)	0.00	High
Permeable paving design	0.00	Low
Balanced installation of bathtubs and showers (energy-efficient use)	0.00	Moderate
Leaf composting and reuse system	0.22	High
Reinforced floor slab insulation	1.31	Moderate
Substitution with native trees or bird-/butterfly-attracting shrubs	1.99	Low
Increased usage of green-certified building materials	7.19	High
Installation of stormwater infiltration basins or permeable open spaces	11.22	Moderate
Centralized food waste collection with outsourced processing (no reuse onsite)	11.82	Moderate
Installation of energy-efficient gas stoves	23.36	Low
Installation of energy-efficient water heaters	119.15	Moderate
Upgrading to airtight windows	256.01	Low
High-transmittance glazing to enhance natural lighting	323.73	Moderate
Solar heat gain control with low-SHGC or reflective glazing	327.99	Moderate

¹ Note: 1 ping ≈ 3.3 m²; NT$1 ≈ US$0.03.

summarizes the detailed cost structure and cost-effectiveness ranking of the upgrade strategies.

The most cost-effective interventions—those with minimal or zero cost per point per ping—include improved building envelope materials, use of permeable pavements, and composting facilities. These strategies are either mandated by building code, already incorporated in standard practice, or associated with minimal marginal costs.

In contrast, strategies involving advanced façade treatments (e.g., Low-E glazing or upgraded airtight windows) or high-performance mechanical systems (e.g., solar water heaters) tend to incur significantly higher costs, often exceeding NTD 250 per point per ping. While these upgrades can contribute to performance improvements and occupant comfort, they may deter adoption due to high capital investment and longer payback periods.

This analysis reveals that developers aiming to achieve EEWH Gold certification tend to prioritize low-cost, high-efficiency interventions. The cost heterogeneity among strategies highlights the need for more targeted incentive structures that align economic feasibility with sustainability performance.

The detailed numerical results of the cost estimations are presented in Table 2, which lists the average cost per point per ping for each upgrade strategy. For greater clarity, Figure 3 summarizes these results by ranking strategies according to their cost-effectiveness, highlighting those with the lowest marginal costs and highest adoption rates.

3.3. Evaluation of FAR Incentive Benefits and Economic Feasibility

3.3.1. Cost-to-Benefit Assessment of Upgrading from Silver to Gold Certification

This subsection evaluates the economic return of upgrading residential buildings from EEWH Silver to Gold certification, based on eight simulated cases (A–H). The analysis compares incremental construction costs against potential benefits obtained through Taipei’s Floor Area Ratio (FAR) bonus scheme, which grants developers additional buildable floor area as an incentive.

According to current regulations under the Urban Renewal Regulation Amendments (Construction and Planning Agency, Ministry of the Interior), EEWH Silver level certification earns a 6% FAR bonus, while Gold level certification grants 8%. This provision results in an additional 2% FAR bonus for projects upgraded from Silver to Gold. This FAR bonus ratio has been consistently applied in urban renewal projects since its introduction in 2008.

The eight case study projects are located in various districts across the Taipei metropolitan area, representing a mix of central urban and suburban contexts. All are multi-family residential developments ranging from mid-rise to high-rise construction, with site areas between approximately 1511.91 m² and 13,874.58 m² and legal floor area ratios from 200% to 292.5%. A summary of the eight case study projects, including zoning type, site area, floor area, legal FAR, and FAR bonus calculations, is presented in

Table 3. Summary of Case Study Project Characteristics, Upgrade Costs, and FAR Bonus.

Case	Zoning	Site Area (m2)	Floor Area (Ping 1)	Legal FAR (%)	Bonus FAR (Ping 1)	Total Upgrade Cost (NTD)	Minimum Upgrade Cost (NTD)
A	Residential	1770.08	535.45	200	21.42	5,067,354	479,537
B	Residential	1511.91	457.35	200	18.29	4,399,777	1529,788
C	Residential	2413.21	730.00	292.5	42.70	1152,618	167,448
D	Residential	5738.94	1736.03	200	69.44	10,496,357	10,485,858
E	Residential	1678.59	507.77	200	20.31	314,356	177,840
F	Residential	13,874.58	4197.06	210	176.28	15,961,620	0
G	Commercial Zone 1	2296.48	694.69	240	33.34	11,360,658	11,700
H	Residential	3160.47	956.04	200	38.24	1603,362	117,060

¹ Note: 1 ping ≈ 3.3 m²; NTD 1 ≈ USD 0.03.

. These parameters provide an overview of the sample’s demographic and physical characteristics, offering context for the subsequent cost–benefit analysis.

From the simulations, the average cost of implementing all upgrade measures was NTD 820/ping, whereas the minimum required cost for meeting Gold level thresholds averaged only NTD 217/ping. Applying these figures to a hypothetical residential project with a 5000-ping site and 200% FAR (i.e., total floor area = 10,000 ping), the developer would receive an additional 2% FAR, or 200 ping, by upgrading from Silver to Gold.

Upgrade cost (820 NTD/ping × 10,200 ping) = NTD 8,364,000

Construction cost of bonus area (200 ping × 116,400 NTD/ping) = NTD 23,280,000

Market value of bonus area (200 ping × 500,000 NT$/ping) = NTD 100,000,000

Net gain = NTD 100M − NTD 8.364M − NTD 23.28M = NTD 68,356,000

This analysis shows that even at the highest upgrade cost assumption, developers can still gain over NTD 68 million through FAR bonuses. Thus, the current green building incentive scheme provides economic returns far exceeding the required investment. Table 3 presents the underlying project-level data used for these calculations. To facilitate visual comparison, Figure 4 illustrates the upgrade cost as a percentage of total construction cost for each case, alongside the corresponding estimated net gains from the FAR bonus.

3.3.2. Discussion on Incentive Rationality and Policy Sustainability

Although the incentive mechanism motivates developers to pursue higher certification levels, the disproportionate benefit-to-cost ratio raises concerns. Specifically, the FAR bonus may encourage overdevelopment, leading to increased urban density and infrastructure burden, ironically undermining the environmental goals of green building policy.

However, the favorable cost–benefit ratio of FAR incentives may lead to unintended consequences. Urban governments have begun to recognize that excessive FAR bonuses, if not tightly regulated, may incentivize overdevelopment without corresponding improvements in environmental performance. For instance, New Taipei City revised its incentive structure in 2014, capping the FAR bonus at 3% for Gold and 6% for Diamond-level EEWH certification, citing concerns over increased density, infrastructure strain, and reduced public support for green building policies. This represents a policy shift toward balancing sustainability incentives with urban carrying capacity.

Furthermore, contrary to market assumptions, the analysis confirms that green certification upgrades are achievable at relatively low cost when supported by appropriate planning and design strategies. Therefore, reducing FAR incentive levels—while strengthening technical assistance or non-FAR rewards—may align better with long-term sustainable development goals.

3.4. Policy Implications and Reform Recommendations

Moreover, the pursuit of higher EEWH certification primarily for FAR bonuses may shift the focus away from genuine sustainability objectives, a phenomenon commonly referred to as goal displacement. Developers may prioritize easily attainable indicators over those with greater environmental impact but higher costs, leading to suboptimal resource allocation. Additionally, disproportionate benefits may accrue to large-scale projects capable of absorbing upgrade costs, potentially exacerbating equity concerns in urban land markets.

To address these issues, a more balanced policy mix could include non-FAR-based incentives such as property tax rebates, green building design subsidies, or preferential financing mechanisms. Alternatively, establishing a baseline green certification requirement for all new developments, with limited FAR bonuses reserved for top-tier performance, may help better align market behavior with long-term sustainability goals.

4. Discussion

This study provides empirical evidence on the economic feasibility of upgrading residential green building certification from Silver to Gold under Taiwan’s EEWH system, using eight case studies in the Taipei metropolitan area. The findings carry broader implications for both the formulation of green building policy and the understanding of developer decision-making behavior. This section discusses four key themes: (1) the cost-effectiveness of upgrade strategies, (2) the incentive adequacy of Taiwan’s FAR bonus system, (3) the role of perception gaps in market response, and (4) the broader applicability and transferability of findings in international contexts.

4.1. Cost-Effectiveness of Green Building Upgrade Strategies

The results, as summarized in Table 2 and Table 3, confirm that upgrading from EEWH Silver to Gold can be achieved at a relatively modest cost—typically between 1.6% and 3.2% of total construction cost. These percentages were calculated by dividing the simulated incremental upgrade costs (per ping) for each case by the respective total construction costs, using unit price data from the Construction and Planning Agency and project-specific area data. This cost range was consistent across the eight case studies analyzed in this research. Among the nine EEWH indicators, strategies related to energy conservation, indoor environmental quality, and water efficiency demonstrated the highest cost-efficiency ratios. These results align with international studies on LEED and BREEAM-certified projects [6,9,11], where marginal investments in envelope insulation, LED lighting, and low-flow fixtures have been shown to provide favorable returns in terms of both energy savings and certification points. The consistency between our findings and those reported in the literature reinforces the reliability of the cost-effectiveness patterns identified in this study.

However, the analysis also reveals that not all EEWH indicators offer equally efficient upgrade paths. Measures such as green roofs, biodiversity enhancements, or advanced greywater systems often carry high installation and maintenance costs but contribute relatively few EEWH points. These findings suggest the need for a more differentiated incentive structure within the EEWH framework that encourages adoption of cost-effective sustainability measures without overburdening developers with low-return strategies.

4.2. Adequacy and Consistency of FAR-Based Incentives

The floor area ratio (FAR) bonus offered under Taiwan’s Urban Renewal Regulation has the potential to be a powerful driver of green building adoption. When granted at the full 10% level, the bonus far exceeds the cost of certification upgrades, yielding benefit–cost ratios above 20 across all analyzed cases. From a market logic perspective, such returns provide more than sufficient financial motivation for developers to pursue higher-tier certification levels.

Nonetheless, practical challenges in FAR implementation were identified during case analysis and developer interviews. In several projects, local government agencies reduced the actual bonus below the statutory maximum due to site-specific constraints, public opposition, or discretionary negotiations. These inconsistencies undermine the predictability and credibility of the incentive, weakening its effectiveness as a market signal. For the policy to function optimally, greater transparency and procedural consistency in FAR bonus allocation are necessary.

While this study’s FAR bonus calculations are based on prevailing market prices at the time of analysis, the financial impact of upgrading from EEWH Silver to Gold may fluctuate under varying market conditions. In periods of rising real estate prices, the additional 2% FAR could yield proportionally higher returns, whereas in slower markets, the relative gain would be smaller. This highlights the importance of aligning FAR-based incentive policies with current market dynamics to sustain their effectiveness.

4.3. Bridging the Perception Gap Between Policy and Practice

One of the central findings of this study is the significant discrepancy between perceived and actual costs of green building upgrades. While this study confirms that upgrade costs are generally below 3% of total construction expenditure, many developers continue to cite prohibitively high costs—ranging from 10% to 25%—as a reason for avoiding certification. This perception gap is partly due to anecdotal evidence, insufficient market data, and limited dissemination of empirical findings.

Bridging this gap requires more proactive information-sharing by public agencies, including the publication of real-world cost benchmarks and success stories. Establishing a national cost–benefit database for EEWH-certified projects could help developers make better-informed investment decisions. In addition, simplifying the certification process and offering design consultation support may further lower perceived administrative and technical barriers.

4.4. Policy and International Implications

The findings from this study contribute to the broader global discourse on incentivizing sustainable housing. While Taiwan’s FAR-based incentive model is relatively unique, similar tradeable development rights and density bonuses are employed in cities such as Tokyo, New York, and Singapore. The empirical demonstration that a modest green building investment can unlock substantial economic benefits may offer useful insights to other rapidly urbanizing regions facing the dual challenge of housing demand and environmental responsibility.

Moreover, this research underscores the importance of aligning green building certification systems with market realities. As Taiwan moves toward carbon neutrality and net-zero construction goals, adjusting the EEWH system to better reflect performance-based outcomes—such as life cycle energy savings or embodied carbon metrics—could enhance its credibility and long-term relevance. Internationally, the experience of EEWH implementation in Taiwan highlights the value of localized yet adaptable certification systems that balance environmental ambition with economic viability.

4.5. Limitations in Accounting for Broader Public Benefits

While this study focuses on the private cost–benefit dynamics for developers upgrading from EEWH Silver to Gold certification, it does not account for the broader societal and environmental benefits associated with green building upgrades. These may include energy conservation, carbon emission reduction, stormwater mitigation, improved indoor air quality, and enhanced urban resilience—all of which generate positive externalities for the wider community and government.

For instance, strategies such as installing low-SHGC glazing or adopting native vegetation may reduce urban heat island effects, contributing to climate adaptation goals. Likewise, composting systems and water-saving fixtures yield long-term resource efficiency gains beyond the project level. A more comprehensive evaluation could employ life cycle assessment (LCA) or social return on investment (SROI) frameworks to quantify these co-benefits and assess the alignment between private incentives and public value.

5. Conclusions

This study examined the cost and incentive implications of upgrading green building certification from Silver to Gold level under Taiwan’s EEWH system, focusing on eight residential projects in the Taipei metropolitan area. By analyzing certification upgrade strategies, estimating construction costs, and assessing the value of government-provided floor area ratio (FAR) incentives, this research provides empirical insights into the economic feasibility of green building investment in the residential sector.

5.1. Important Research Findings and Results

The findings demonstrate that EEWH certification upgrades from Silver to Gold are financially attainable, with the average incremental cost ranging between 1.6% and 3.2% of total construction expenses. Cost-effective upgrade strategies—particularly those related to energy efficiency, water conservation, and indoor environmental quality—contributed significantly to certification point increases while minimizing financial burden. In contrast, certain indicators, such as biodiversity enhancement and waste reduction, offered relatively lower cost-effectiveness and were less frequently prioritized in upgrade decisions.

The analysis also confirmed that Taiwan’s FAR-based incentive mechanism, when fully applied, offers substantial economic benefits that far exceed the costs of certification upgrades. Benefit–cost ratios across all cases exceeded 20, suggesting that the current incentive structure can be highly effective in motivating private developers to pursue higher levels of green certification. However, the practical implementation of the FAR bonus is not always consistent, with some projects receiving less than the maximum allowable increase due to site constraints or discretionary administrative decisions. Such inconsistencies may weaken policy effectiveness and erode developer confidence.

In addition, this research identifies a persistent perception gap in the real estate market regarding the true cost of green building certification. Although empirical data support the affordability of EEWH upgrades, many developers continue to overestimate costs and view the certification process as administratively burdensome. Addressing this perception gap through greater transparency, cost benchmarking, and technical support could significantly improve market adoption rates. In addition to private financial feasibility, future research should integrate quantifiable social and environmental benefits into cost–benefit frameworks, thereby enabling more holistic green building policy evaluations that better reflect long-term societal value.

5.2. Policy Recommendations

Based on the findings, the following policy implications are proposed:

• Optimize the weighting and scoring of indicators in EEWH: Enhance the cost-effectiveness of the certification system by rebalancing indicator scores to better reflect achievable, performance-based outcomes.
• Strengthen Implementation Consistency of FAR Incentives: Establish transparent guidelines and streamline administrative procedures to ensure predictable and equitable application of floor area bonuses.
• Promote Empirical Cost Transparency: Develop a national green building cost–benefit database to support evidence-based investment decisions by private developers.
• Offer Technical Support for Upgrade Planning: Provide design consultation subsidies or training workshops for developers seeking to upgrade to higher EEWH levels, especially for small- to mid-scale projects.

5.3. Limitations and Future Research

This study is limited to eight residential cases within a specific urban context in Taiwan. While the selected cases are representative of mainstream urban housing projects, results may not be directly generalizable to rural areas, luxury developments, or public housing schemes. Future research could expand the sample size, incorporate longitudinal post-occupancy evaluations, and explore life cycle cost analyses, including operational savings and carbon emissions reductions over time. Comparative studies between EEWH and other international certification systems (e.g., LEED, BREEAM, CASBEE) could also offer valuable insights for harmonizing sustainability frameworks across regions.

This study is limited by the historical nature of the case data (2008–2013), and cost figures may not reflect current market dynamics. However, the policy logic, EEWH structure, and incentive mechanisms remain largely intact, allowing the findings to provide useful insights for ongoing green building policy evaluation and incentive reform in Taiwan. While this study does not include post-occupancy performance validation, the findings provide a robust pre-occupancy economic feasibility framework that can be applied in policy and developer decision-making. Future research could integrate operational performance data to further assess realized environmental and financial outcomes. In addition, the case studies did not include rural or luxury housing projects, as the focus was on the urban residential sector where EEWH Silver certification is most prevalent and policy incentives are most applicable.

Future studies could extend the framework to examine other market segments. Furthermore, the research does not include a formal LCA- or SROI-based quantification of public co-benefits. Future studies could incorporate these approaches to capture societal and environmental value in addition to the direct economic incentives examined here. While the current EEWH framework adopts fixed threshold criteria for each certification level, a dynamic scoring mechanism that reflects actual operational performance over time could enhance both market responsiveness and environmental impact. Future research could explore linking certification scores to measured post-occupancy performance metrics, thereby creating an adaptive incentive structure for sustained building efficiency.