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The Distributional Effects of Building Energy Codes

In: Energy Policy Tradeoffs between Economic Efficiency and Distributional Equity

Author

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  • Chris Bruegge
  • Tatyana Deryugina
  • Erica Myers

Abstract

We evaluate the distributional consequences of building energy codes for home characteristics, energy use, and home value. We exploit spatial variation in California’s code strictness created by building climate zones, combined with information on over 350,000 homes located within 3 kilometers of climate zone borders. Our key findings are that stricter codes create a nontrivial reduction in homes’ square footage and the number of bedrooms at the lower end of the income distribution. On a per-dwelling basis, we observe energy use reductions only in the second lowest income quintile, driven by decreases in square footage. Energy use per square foot actually increases in the bottom quintile. Home values of lower-income households fall, while those of high-income households rise, suggesting that building energy codes result in more undesirable distortions for lower-income households.
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Suggested Citation

  • Chris Bruegge & Tatyana Deryugina & Erica Myers, 2016. "The Distributional Effects of Building Energy Codes," NBER Chapters, in: Energy Policy Tradeoffs between Economic Efficiency and Distributional Equity, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14216
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    Cited by:

    1. Lucas W. Davis, 2024. "The Economic Determinants of Heat Pump Adoption," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 5(1), pages 162-199.
    2. Don Fullerton & Erich Muehlegger, 2019. "Who Bears the Economic Burdens of Environmental Regulations?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(1), pages 62-82.
    3. Christensen, Peter & Francisco, Paul & Myers, Erica & Shao, Hansen & Souza, Mateus, 2024. "Energy efficiency can deliver for climate policy: Evidence from machine learning-based targeting," Journal of Public Economics, Elsevier, vol. 234(C).
    4. Ohler, Adrienne M. & Loomis, David G. & Ilves, Kadi, 2020. "A study of electricity savings from energy star appliances using household survey data," Energy Policy, Elsevier, vol. 144(C).
    5. Germeshausen, Robert & von Graevenitz, Kathrine & Achtnicht, Martin, 2022. "Does the stick make the carrot more attractive? State mandates and uptake of renewable heating technologies," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    6. O'Donoghue, Cathal & Immervoll, Herwig & Gizem, Zeynep & Linden, Jules & Sologon, Denisa, 2024. "The distributional impact of carbon pricing and energy related taxation in Ireland," Papers BP2025/3, Economic and Social Research Institute (ESRI).
    7. Tovar Reaños, Miguel & Lynch, Muireann Á., 2020. "Are energy poverty metrics fit for purpose? An assessment using behavioural microsimulation," Papers WP665, Economic and Social Research Institute (ESRI).
    8. Heilmann, Kilian & Kahn, Matthew E. & Tang, Cheng Keat, 2021. "The urban crime and heat gradient in high and low poverty areas," Journal of Public Economics, Elsevier, vol. 197(C).
    9. Singhal, Puja & Pahle, Michael & Kalkuhl, Matthias & Levesque, Antoine & Sommer, Stephan & Berneiser, Jessica, 2022. "Beyond good faith: Why evidence-based policy is necessary to decarbonize buildings cost-effectively in Germany," Energy Policy, Elsevier, vol. 169(C).
    10. Edenhofer, Ottmar & Flachsland, Christian & Kalkuhl, Matthias & Knopf, Brigitte & Pahle, Michael, 2019. "Optionen für eine CO2-Preisreform," Working Papers 04/2019, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    11. Metcalf, Gilbert E., 2019. "The distributional impacts of U.S. energy policy," Energy Policy, Elsevier, vol. 129(C), pages 926-929.
    12. Moritz A. Drupp & Ulrike Kornek & Jasper N. Meya & Lutz Sager, 2021. "Inequality and the Environment: The Economics of a Two-Headed Hydra," CESifo Working Paper Series 9447, CESifo.
    13. Matthew J. Holian, 2023. "Methods in open policy analysis: An application to California's building energy codes," Contemporary Economic Policy, Western Economic Association International, vol. 41(4), pages 613-628, October.
    14. Berger, Johannes & Strohner, Ludwig & Thomas, Tobias, 2020. "Klimainstrumente im Vergleich: Herausforderungen in Hinblick auf ökologische, ökonomische und soziale Nachhaltigkeit," Policy Notes 39, EcoAustria – Institute for Economic Research.
    15. Aydin, Erdal, 2024. "Heterogeneous impacts of building codes on residential energy demand," Energy Economics, Elsevier, vol. 131(C).
    16. Don Fullerton & Erich Muehlegger, 2017. "Who Bears the Economic Costs of Environmental Regulations?," CESifo Working Paper Series 6596, CESifo.
    17. Jacobsen, Grant D., 2024. "Race, ethnicity, and the distribution of energy efficiency incentives," Energy Economics, Elsevier, vol. 130(C).
    18. Myers, Erica, 2020. "Asymmetric information in residential rental markets: Implications for the energy efficiency gap," Journal of Public Economics, Elsevier, vol. 190(C).
    19. Singhal, Puja & Hobbs, Andrew, 2021. "The Distribution of Energy Efficiency and Regional Inequality," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242343, Verein für Socialpolitik / German Economic Association.
    20. Becka Brolinson, 2019. "Does Increasing Block Pricing Decrease Energy Use? Evidence from the Residential Electricity Market," Working Papers gueconwpa~19-19-06, Georgetown University, Department of Economics.

    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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