Making Energy-Efficiency and Productivity Investments in Commercial Buildings: A Choice of Investment Models

摘要

This study examines the decision to invest in buildings and the types of investment decision rules that may be employed to inform the 'go--no go' decision. There are a range of decision making tools available to help in investment choices, which range from simple rules of thumb such as payback periods, to life-cycle analysis, to decision theoretic approaches. Payback period analysis tends to point toward lower first costs, whereas life-cycle analysis tends to minimize uncertainties over future events that can affect profitability. We conclude that investment models that integrate uncertainty offer better explanations for the behavior that is observed, i.e., people tend to delay investments in technologies that life-cycle analysis finds cost-effective, and these models also lead to an alternative set of policies targeted at reducing of managing uncertainty.