The behavior of the building and real estate sectors are quite important in matters of environmental sustainability. It is reported, for example, that buildings account for approximately forty percent of the consumption of raw materials and energy. In addition, 55 percent of the wood that is not used for fuel is consumed in construction. Overall, buildings and their associated construction activity account for at least 30 percent of world greenhouse gas emissions (Royal Institute of Chartered Surveyors, RICS, 2005).

a b s t r a c tEnergy consumption in the residential sector offers an important opportunity for conserving resources. However, much of the current debate regarding energy efficiency in the housing market focuses on the physical and technical determinants of energy consumption, neglecting the role of the economic behavior of resident households. In this paper, we analyze the extent to which the use of gas and electricity is determined by the technical specifications of the dwelling as compared to the demographic characteristics of the residents. Our analysis is based on a sample of more than 300,000 Dutch homes and their occupants. The results indicate that residential gas consumption is determined principally by structural dwelling characteristics, such as the vintage, building type, and characteristics of the dwelling, while electricity consumption varies more directly with household composition, in particular income and family composition. Combining these results with projections on future economic and demographic trends, we find that, even absent price increases for residential energy, the aging of the population and their increasing wealth will roughly offset improvements in the energy efficiency of the building stock resulting from policy interventions and natural revitalization.

The residential housing market can play an important role in the reduction of global carbon emissions. This paper reports the first evidence on the market adoption and economic implications of energy performance certificates implemented by the European Union. The results show that adoption rates are low and declining over time, coinciding with negative sentiment regarding the label in the popular media. Labels are clustered among smaller, post-war homes in neighborhoods with more difficult selling conditions. We also document that the adoption rates of energy labels have a positive relation to the number of "green" voters during the 2006 national elections. Within the sample of labeled homes, the energy label creates transparency in the energy performance of dwellings. Our analysis shows that consumers capitalize this information into the price of their prospective homes. JEL codes: D12, Q51, R21

Research on climate change suggests that small improvements in the "sustainability" of buildings can have large effects on greenhouse gas emissions and on energy efficiency in the economy. This paper analyzes the economics of "green" building. First, we analyze a panel of office buildings certified by independent rating agencies, finding that large recent increases in the supply of green buildings and the unprecedented volatility in property markets have not significantly affected the relative returns to green buildings. Second, we analyze a large cross section of office buildings, demonstrating that economic premiums in rent and asset values of buildings certified for energy efficiency are substantial. Third, we relate the economic premiums for green buildings to their relative efficiency in energy use, documenting that the attributes rated for both thermal efficiency and sustainability contribute to premiums in rents and asset values. Even among green buildings, increased energy efficiency is fully capitalized into rents and asset values.