Probably because it's an elfish looking color and makes it seem mystical and all that jazz. Yellow, purple and teal would be horrible choices for link, they just don't fit the character and his background.
the main reason, i think according to its actual storyline in the main series Zelda games:
link grew up thinking he was a kokiri, although he was a hylian given to the great deku tree because of the crisis that happened before ocarina of time (rumors say that skyward sword is that exact timeline of the previous crisis that made link's mom send him over to the great deku tree)
i also assume that kokiris wear green to symbolize honor and loyalty to the great deku tree. They are, after all, the children of the forest. Link's other colors are more based on the game they're present in. but since ocarina of time was the first main series, my theory seems to be quite accurate. Now the kokiri's evolution from ocarina of time to wind waker... im not so sure how that happened
if anyone knows how zoras -> rito, children -> plant things... and how octoroks in skyward sword are on land... please tell me in a reply! and what is the name of those big fish that resemble a sea like peehat in wind waker?
Oh, I also think that kokiri's are basically elves with fairies. and green is the color that symbolizes elf features. So thats why link wears green to so he can fit in with the other kokiri children. hope i gave good info for an answer! who knows, maybe the developers were just thinking about trees when they were designing link's character!
like most of people think green is the clothing of kokoris that link grew up with
another explanation would be that green represents courage ( the sacred stone of courage was green) and almost all links have the triforce of courage and others have to find them(wind waker and zelda 2) the only 3 don't had the triforce of courage involved (the original since the second is the same link and had to find the triforce of courage other don't had because the storyline said that gannon had all three another in the spirit tracks )
Link's environment is centered around the color green mainly because that's where he lives, in a forest rich with trees and bushes. If I had to make a good guess why Link wears green I'd say it's his favorite color and the fact that he has pointy ears like an elf (yes I know he is Hyrulean) makes him look like Santa's elves which represents the giving and good nature of Link.
I think the green is supposed to symbolize nature. As far as I can tell, each and every Link came from humble beginnings: i.e., he had to know nature to live. It also emphasizes the forest; most of the Links came from a forest.
In the beginning, they either wanted him to look like an elf (with his pointed ears) or kinda like robin hood (because he also wears those kind of clothes, although not the hat). Whatever it is, each thing is green, so they made link green.
What would've been the Kokiri's population's response to Link being blue or red? While them being forest people in green tunics! REMEMBER, in Ocarina of Time, the Kokiri ridiculed Link because he didn't have a fairy, let alone him being the same height and color to everyone in there.
Although, in every Legend of Zelda game, Link either starts out with a green tunic, or receives them briefly later on the game (ex. Spirit Tracks). I think it's because it's a 'symbol' of Link, the guy in green saving the princess and the land of Hyrule (and some other lands too).