Essays on the Economics of Energy and the Environment
- Author(s): Papineau-Koritar, Maya
- Advisor(s): Berck, Peter
- et al.
This dissertation explores two aspects of environmental economics and the evaluation of energy policies in the buildings sector. The first chapter focuses on energy standards, and the second chapter focuses on green labels.
The first chapter assesses whether commercial real estate market participants are willing to pay a premium for an energy efficient building that has not received a green label. I utilize a unique dataset of detailed building-level observations and a spatial semiparametric matching framework that exploits quasi experimental state-by-year variation in the implementation of mandatory building energy codes, to estimate selling price and rent premiums for a more stringent code. I find that buildings constructed under a more stringent energy code are associated with rent and selling price premiums of approximately 2.7% and 10%, respectively, compared to buildings constructed just before the code came into effect. When tenants pay directly for utilities, buildings constructed under an energy code are associated with 5.7% higher rents. While building energy codes have been promoted to address landlord-tenant informational asymmetries that would not be addressed by a carbon pricing strategy, these estimated premiums are consistent with complete capitalization of estimated building-level savings, and as such they cast doubt on the existence of an energy efficiency gap resulting from adverse selection between landlords and tenants.
In the second chapter, I assess whether nonrandom selection affects the frequently-touted benefits of green-labeling policies in the commercial building stock. While green-labeled buildings have been found to sell at a premium compared to nearby controls with similar
observable characteristics, the voluntary nature of the labeling decision implies green-labeled buildings may have different unmeasured characteristics that may account for at least a portion of the premium. Therefore, it is unclear whether green-labeled building premiums are a causal effect of the labels. I use data on repeat sales transactions and detailed hedonic characteristics to test whether green-labeled office buildings were selling at a premium before they were labeled, and combine these results with post-labeling price premium estimates to identify realized cost-benefit ratios for green-labeling policies. The data suggest the causal net benefits of green labels range from $11.50-$19.95 per square foot. The estimated net benefits are smaller than previous estimates that have focused solely on the benefits and ignored the potential biases from nonrandom selection.