Does energy efficiency matter to real estate-consumers? Survey evidence on willingness to pay from a cost-optimal analysis in the context of a developing country

Abstract

In most countries, energy efficiency at the residential level has been largely delegated to the dynamics of realestate markets after setting a minimum level. This regulatory definition is in certain cases supplemented by energy performance certificates, such as in the case of the European Union. This approach is based on the understanding that avoided energy-consumption costs positively affect the willingness to pay for them, thus leading to higher prices capable of offsetting production costs and thereby encouraging developers. The case of the private housing market in Santiago de Chile was selected as a reference for a developing country in which energy performance certificates, although they exist as an instrument, are not required to be applied in property transactions. However, unlike most of the research performed in developed countries, it is difficult to analyse price formation using methods based on observed preferences in areas in which there are few energy-certified buildings. Using the technique of contingent valuation, such as the method based on stated preferences, enables one to overcome this difficulty. This article investigates willingness to pay for improvements in the energy efficiency of buyers for new homes based on a representative investment/operation cost analysis. This approach has been addressed to open the debate on the convenience of modify the national construction code and rethink the energy certification scheme as well as an exploratory study to undercover further research lines to support the aforementioned debate. The results suggests that there is a number of potential home buyers ready to pay for energy efficiency when they are informed on the cost savings associated to structural modifications and the cost of providing such improvements and such willingness to pay is not monolithic across the respondents, but seems to be influenced by the education level plausibly associated to the purchase power.

Major Barriers to the New Residential Building Energy-Efficiency Promotion in China: Frontlines’ Perceptions

“…The result indicated that the barrier lying in the core position of new residential building energy efficiency promotion in China is "the ineffectiveness in translating expected energy savings into profits/benefits for home-buyers". This was also noted as the "energy efficiency gap" or "energy efficiency paradox" in other literature [39,55,56]. It broadly refers to the slower actual diffusion of energy-efficient goods (buildings, technologies and relevant energy-efficient products in new residential building sector) than the socially optimal level [57,58].…”

Energy-Efficient Real Estate or How It Is Perceived by Potential Homebuyers in Four Latin American Countries

“…On the other hand, less educated households appear to be more influenced by their attitudes toward EEMs and perceived behavioural control [32]. Encinas et al [39] found that in Santiago, Chile income and educational level, as well as other demographic aspects, have a positive influence on WTP. In the Latin American country, households with young children and respondents with higher education seem to have a more environmentally friendly behaviour [39].…”

Do Consumers Care about the Energy Efficiency of Buildings? Understanding Residential Choice Based on Energy Performance Certificates

“…Although many studies have focused on building energy performance and related policies, only a few studies have attempted to analyze consumer perceptions of energy-efficient buildings [20,21,[39][40][41][42][43]. Hoffman and Henn (2008) [39] and Yau (2012) [40] demonstrate that consumers are affected by several factors when deciding to move into energy-efficient buildings, such as economic or/and psychological reasons.…”

“…Hoffman and Henn (2008) [39] and Yau (2012) [40] demonstrate that consumers are affected by several factors when deciding to move into energy-efficient buildings, such as economic or/and psychological reasons. Encinas et al (2018) [42] and Liu et al (2018) [43] investigate the consumers' willingness to pay for energy efficient buildings, and both conclude that people tend to pay more for higher level of energy efficient buildings. Chau et al (2010) [20] apply discrete choice experiments to identify the factors affecting the preference for energy-efficient buildings in Hong Kong.…”

“…There are several methods to gather the stated preference data. One of approaches is contingent valuation method (CVM), which is directly asking the consumers their willingness to pay [42,44]. Although the CVM is a simple and easy to conduct, it presents a weakness by suggesting the existence of either overestimate or underestimate of the true values.…”