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Is energy efficiency capitalized into home prices? Evidence from three U.S. cities

Margaret Walls, Todd Gerarden, Karen Palmer and Xian Fang Bak

Journal of Environmental Economics and Management, 2017, vol. 82, issue C, 104-124

Abstract: We test for evidence that energy efficiency features are capitalized into home prices in three U.S. metropolitan areas. Using hedonic regressions and multiple matching procedures, we find that Energy Star certification is associated with higher sales prices in two of the markets: the Research Triangle region of North Carolina and Portland, Oregon. We find that local “green” certifications in Portland and in Austin, Texas, are also associated with higher prices and that the estimated price impacts are larger than those from Energy Star. Matching on observables proves to be important in some cases, reducing the estimated impacts compared with models without matching. We calculate the implied energy savings from the estimated premiums and find that, in the Research Triangle market, the Energy Star premiums approximately equal the savings that program is designed to achieve, but in Portland, the premiums are slightly greater than the program's savings due to low energy costs in the region.

Keywords: Energy efficiency; Energy Star; Green certifications; Housing markets; Propensity score matching; Hedonic model (search for similar items in EconPapers)
JEL-codes: L94 L95 Q40 (search for similar items in EconPapers)
Date: 2017
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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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