Heavy subsidization reduces free-ridership: Evidence from an econometric study of the French dwelling insulation tax credit

Marie-Laure Nauleau
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Marie-Laure Nauleau: CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique

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Abstract: This econometric study assesses the efficiency of the tax credit implemented in France in 2005 on dwelling retrofitting investments. A before-after estimation is performed at the extensive and intensive margins on micro data over 2001-2011, focusing on insulation measures (windows, walls, roofs, floor, ceilings). After 2-years of latency with no significant effect, the tax credit has had an increasing significant positive effect at both margins between 2007 and 2010, with a decrease in 2011, in line with the tax credit rate evolutions. Focusing on opaque surfaces insulation, the positive effect only started in 2009, when a reform included labor cost in the tax credit base for these retrofitting measures. The percentage of subsidized households that would have invested even in the absence of the subsidy decreases from 79% in 2007 to 43% in 2010. The annual additional private investment in retrofitting generated by 1€ of public expenses was estimated at 3.4€ on average (standard deviation : 2.4) between 2007 and 2010.

Keywords: Energy conservation; residential sector; thermal insulation; tax credit; free-ridership; before/after estimation; France; Rénovation énergétique; secteur résidentiel; isolation thermique; crédit d'impôt; effet d'aubaine; estimateur avant/après (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-acc, nep-eur and nep-pbe
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