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What is the information value of energy efficiency certificates in buildings?

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  • Mense, Andreas

Abstract

I study the information value of energy efficiency certificates. By using data on repeatedly observed buildings, I separate the rent premium for certified energy efficiency from the premium for readily observable energy efficiency. The buildings were observed before, in-between and after two consecutive law changes that first made certification compulsory and then introduced fines for non-compliers. The strategy allows to control for time-fixed effects of the buildings and for changes in energy efficiency premia over time. I find a precisely measured, but economically and statistically insignificant effect of certification. Supplementary analysis suggests that consumers do value energy efficiency per se, and that energy cost savings translate into higher rents 1-by-1. Further, in a simple theoretical framework, I study the channels through which certification of buildings affects energy consumption. One implication from theory is that compulsory certification is unlikely to be welfare-increasing, even if certificates carry additional information. Given the empirical results of this paper, it is almost certainly welfare-decreasing.

Suggested Citation

  • Mense, Andreas, 2018. "What is the information value of energy efficiency certificates in buildings?," FAU Discussion Papers in Economics 10/2018, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    • Handle: RePEc:zbw:iwqwdp:102018
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    References listed on IDEAS

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    1. Piet Eichholtz & Nils Kok & John M. Quigley, 2013. "The Economics of Green Building," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 50-63, March.
    2. Andreas Mense, 2018. "The Value of Energy Efficiency and the Role of Expected Heating Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 671-701, November.
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    6. Meredith Fowlie & Michael Greenstone & Catherine Wolfram, 2018. "Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1597-1644.
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    Cited by:

    1. Lu Zhang & Lennart Stangenberg & Sjors van Wickeren, 2020. "The information value of energy labels: Evidence from the Dutch residential housing market," CPB Discussion Paper 413, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Lu Zhang & Lennart Stangenberg & Sjors van Wickeren, 2020. "The information value of energy labels: Evidence from the Dutch residential housing market," CPB Discussion Paper 413.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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    Keywords

    certification; energy efficiency; information asymmetry; value of information;
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