This study uses a three-step approach to estimate the impact of global warming on U.S. energy expenditures for space heating and cooling in residential and commercial buildings. First, average results from six different global circulation models are used to estimate the change in heating and cooling degree days in five U.S. climate zones associated with a 1° centigrade (C) global warming. Second, the change in degree days is mapped into a corresponding change in U.S. energy use for space conditioning, taking account of differences in population and baseline space conditioning intensity levels across regions, under the assumption that desired indoor temperature is unaffected by climate change. Finally, we estimate the associated change in energy expenditures. We find that a global warming of 1ଌ would reduce projected U.S. energy expenditures in 2010 by $5.5 billion (1991 dollars). This contrasts with earlier studies which have suggested modest global warming would increase U.S. expenditures on space conditioning energy.

Omitting substitute prices from a travel cost model is shown to cause a significant bias in consumer surplus estimates. Three sets of travel cost models are developed from a common data base representing 60,000 day‐users of U.S. Army Corps of Engineer reservoirs in Kansas and Missouri. The firct set of models omitted substitute prices; the latter two sets included them. An analysis of variance test showed that consumer surplus estimates from the first set of models were significantly higher than the other two (F = 26.2 with 2, 20 degrees of freedom). The theoretical and practical implications of these findings are discussed.

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