Peer effects and voluntary green building certification

Empirical evidence is provided to show that peer effects have statistically significant and positive impacts on the diffusion of green building certificates. Application and approval records of green certificates by commercial buildings in NY and AZ are used. The challenge of self-selection is addressed by the usage of fixed effects and the challenge of reflection is addressed by the time lag delay between a building's application and its approval. Empirical results show that an additional approved LEED certificate within a zip code will increase the probability of a commercial building in the same zip code to apply for a LEED certificate by 3-4 percentage points; an additional approved Energy Star certificate within a zip code will increase the probability of a commercial building in the same zip code to apply for an Energy Star certificate by 1-2 percentage points.