Traditional housing is generally considered wasteful in its use of land and/or energy and is often demolished for more intensive and more energy-efficient housing, despite the resulting loss of embodied energy and urban amenity. A research project was undertaken to study the environmental performance of traditional housing in Hangzhou, China. The project analyzed and compared embodied energy and CO2 for seven dwellings. In addition, indoor climate data were recorded and collected in the form of hourly temperature and humidity readings for one year in six local houses and in a modern unit as a control for one year. The research results reveal that the traditional housing performed as well as modern construction and the value of conservation rather than demolition was identified as a strategic development goal for the construction industry.