On the Economics of Energy Labels in the Housing Market

Abstract

The residential housing market can play an important role in the reduction of global carbon emissions. This paper reports the first evidence on the market adoption and economic implications of energy performance certificates implemented by the European Union. The results show that adoption rates are low and declining over time, coinciding with negative sentiment regarding the label in the popular media. Labels are clustered among smaller, post-war homes in neighborhoods with more difficult selling conditions. We also document that the adoption rates of energy labels have a positive relation to the number of "green" voters during the 2006 national elections. Within the sample of labeled homes, the energy label creates transparency in the energy performance of dwellings. Our analysis shows that consumers capitalize this information into the price of their prospective homes. JEL codes: D12, Q51, R21

Residential energy use and conservation: Economics and demographics

“…These energy certificates convey information on energy efficiency relative to the market and could nudge consumers to opt for more energy-efficient alternatives. Recent research suggests that homeowners value the energy efficiency signaled by energy labels (Brounen and Kok, 2011). However, household discount rates for energy efficiency investments are still unclear.…”

Green luxury goods? The economics of eco-labels in the Japanese housing market

“…They also find that this effect tends to be larger for terraced dwellings and flats compared to detached and semi-detached houses. Earlier, Brounen and Kok (2011) [2] had examined the relationship between EPC ratings and sale price for 31,993 residential sale prices in 2008-9 in the Netherlands and report significant premiums for more energy-efficient buildings. Although their dataset contains a large number of control variables, the adoption rate of EPCs in the Dutch housing market was relatively low at the time (7-25% depending on the year) which may limit their findings.…”

Why Invest in Energy Efficiency? The Example of Lighting

“…In addition the relative advantage of the compact fluorescent tube contra LED lighting is reduced; however, the compact fluorescent tube technology wins in terms of cost. (see table 4) The cost advantage of energy-efficient technologies is more spectacular in this case than in the previous ones. The biggest change can be observed in the return period.…”