Collective Housing Subsidies: A Public Policy Proposal for Sustainability

Abstract

One way in which governments foster sustainable homebuilding and housing is by subsidizing single homes’ investment in sustainability technologies. The problem with these programs is that they incentivize inefficient investment by supporting technologies that make technical and economic sense on a small scale. Furthermore, this arrangement constitutes a flawed marketing system, producing a limited impact on global well-being and sustainability in the long term, as it rules out more efficient sustainability technologies. This paper addresses these shortcomings by designing a public policy proposal based on a contract between the government and homeowners that incentivizes the adoption of collective sustainable technologies, changing the marketing system with a shift in the behavior of a dominant actor, the government. Results indicate that an equilibrium in which the homeowners choose to participate in the new collective program in exchange for a subsidy is feasible and stable. Moreover, the generalization of the proposed program may generate a new way to incentivize the more efficient use of sustainable home technologies in the long run.