The Selection and Quantile Treatment Effects on the Economic Returns of Green Buildings

How heterogeneous is the impact of energy efficiency on dwelling prices? Evidence from the application of the unconditional quantile hedonic model to the Portuguese residential market

“…Although in a stated preference context, Lang and Lanz (2021) also make use of the unconditional quantile framework to investigate whether the tenant's willingness to pay for energy efficiency improvements is homogeneous across the distribution of potential rent increases. Liao and Zhao (2019) constitute the only example providing evidence on conditional and unconditional quantile energy efficiency partial effects. These authors find fundamental differences in conditional and unconditional estimates of the effect of an individual residential unit being located in a certified green building in Singapore.…”

“…Notwithstanding these recent developments, the assessment of the impact of energy efficiency at various points of the price distribution is restricted to two recent papers. While Liao and Zhao (2019) analyse the impact on transaction prices of a residential unit located in a certified (green) building in Singapore, Evangelista et al (2020) focus on the individual residential unit certification level and provides evidence that the market reaction to the EPC label in the Portuguese market is relatively stable across the price distribution.…”

“…This strand of work is based on the application of the standard conditional quantile regression (CQR) method, which draws on the seminal paper of Koenker and Basset (1978). Liao and Zhao (2019) constitute a notable exception, where the recent unconditional quantile regression (UQR) approach proposed by Firpo (2007) is used. While conditional and unconditional quantile approaches provide valid results, it should be noted that they refer to different concepts, with the latter evaluating partial effects along a theoretical or conditional price distribution, and the former assessing the overall impact on the unconditional price distribution.…”

“…The paper adds to the literature in three ways. Firstly, since the impact of energy efficiency along the distribution of prices is assessed at the unit level using various aggregations of the EPC scale, it offers a much detailed analysis than the one provided by Liao and Zhao (2019), which draws its conclusions from information taken from a dichotomous energy efficiency evaluation system designed for green buildings. Secondly, the paper presents a wide range of results that investigate the potential heterogeneity of energy efficiency partial effects not only across the distribution of prices, but also according to dwelling type (apartment, house, new and existing), throughout time and in the main regions of Portugal.…”

Spatial unconditional quantile regression: application to Japanese parking price data

“…In other words, UQR can capture an estimate of the marginal effect on the "unconditional" quantile of a small increase in a certain characteristic (Fournier and Koske, 2013), not on the conditional quantile of the CQR. Liao and Zhao (2019) compared CQR and UQR in terms of a hedonic regression. They noted that CQR is more useful to policy makers, whereas CQR is more informative to developers who ultimately concern optimization of their own real-estate production.…”