Net Savings in Nonresidential New Construction: Is a Market Based Approach the Answer?

The goal of this paper is to review the past methodologies for estimating the net impact of the California nonresidential new construction (NRNC) program Savings by Design (SBD) and to provide recommendations for improving the evaluation of the nonresidential new construction market in California. This paper begins with a brief overview of the Savings By Design program and highlights the key elements that present challenges to the net savings evaluation. The net-to-gross methodology review discussion summarizes the approaches that have been used since the mid-1990s, presents the netto-gross ratios from those studies and outlines some of the on-going issues for evaluation of this sector. Finally, we discuss the issues from the broader market perspective, and present the argument for measurement of the efficiency of the new building stock, from a market-centered approach, rather than a program participant-centered approach.