Low energy efficiency in rental properties: Asymmetric information or low willingness-to-pay?

Carroll, James; Aravena, Claudia; Denny, Eleanor

doi:10.1016/j.enpol.2016.06.019

Cited by 52 publications

(33 citation statements)

References 36 publications

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“…To be precise, Amecke [43] and Murphy [69] conducted surveys in Germany and the Netherlands, respectively, concluding that the effectiveness of the EPC is limited. Similarly, a discrete choice experiment conducted in Ireland found that consumers are only willing to pay for energy efficiency improvements on the lower end of the spectrum [70]. From 'B' and above, on the contrary, willingness-to-pay is insignificant or even negative.…”

Section: Stated Preference Methods Do Not Show a Clear Premiummentioning

confidence: 99%

Can green labels become the new normal?

et al. 2019

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This study sought to review the effectiveness of green labels on the residential real estate market. As past studies revealed, green labels increased property prices, which motivated developers to build more green certified buildings. However, contradictory studies revealed that many developers did not use green labels due to a lack of consumer demand. Therefore, what impact do green labels have on the residential housing market? A meta-analysis of 36 articles presenting 52 different studies, published between 2008-2018, suggests that the price premium charged for green labels may have been systematically overestimated. Consumers’ willingness-to-pay (derived from correlating green labels with purchase price) does not necessarily represent the average consumer but green consumers. The conclusion that follows from this analysis is that full market transformation via green labels is unlikely to take place because only a fraction of the population is willing to pay the premium. Therefore, full adoption is unlikely without other market “interventions”.

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Section: Stated Preference Methods Do Not Show a Clear Premiummentioning

confidence: 99%

Can green labels become the new normal?

et al. 2019

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“…Although many studies have focused on building energy performance and related policies, only a few studies have attempted to analyze consumer perceptions of energy-efficient buildings [20,21,[39][40][41][42][43]. Hoffman and Henn (2008) [39] and Yau (2012) [40] demonstrate that consumers are affected by several factors when deciding to move into energy-efficient buildings, such as economic or/and psychological reasons.…”

Section: Literature Reviewmentioning

confidence: 99%

“…For example, some attributes such as the annual energy consumption and monthly management fees in Chau et al (2010) [20] are actually unknown, unless the information is given to the tenant/buyer directly. Likewise, Carroll et al (2016) [21] include the building energy rating as an attribute in residential choices to estimate the consumers' willingness to pay. However, it is difficult to define that they have confirmed the effect on energy efficiency information itself since the efficient-rating information is assumed to be provided to consumers.…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, it is difficult to define that they have confirmed the effect on energy efficiency information itself since the efficient-rating information is assumed to be provided to consumers. As Carroll et al (2016) [21] suggested, asymmetric information regarding energy efficiency would lead consumers to make suboptimal decisions.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The simulation result shows that choice probabilities with EPC information increase by approximately 10% for higher-efficiency buildings and they decrease by approximately 22% for lower-efficiency buildings compared when there is no EPC information. As Carroll et al (2016) [21] suggested, asymmetrical information regarding energy efficiency would lead consumers to make a suboptimal decision. This result has numerically proved the effect of EPC information on mitigating suboptimality by simulating the change in choice probability, and has emphasized the positive effectiveness of EPC information.…”

Section: The Effect Of Epc Information On the Residential Marketmentioning

confidence: 99%

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Do Consumers Care about the Energy Efficiency of Buildings? Understanding Residential Choice Based on Energy Performance Certificates

Lee

Lim

2018

Sustainability

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Disclosing the energy performance information for buildings has been expected to become an important policy for controlling energy demand and reducing CO2 emissions, but its effectiveness remains controversial. This study investigates the effect of energy performance information on consumer residential choice by using a discrete choice experiment in South Korea. The estimation results confirmed that the energy efficiency level of the given housing has a significant effect on consumer residential choice when the related information is actually delivered. Combined with evidence from the simulation study, we suggest that obligating the owners to provide energy performance information to potential buyers/tenants would be necessary for enhancing the use of the information during the consumer decision-making process. Additionally, the simulation result implies that the effectiveness of the policy can be underestimated by the price premium related to energy efficiency. Therefore, we suggest that the government should control the price premium for high-efficiency buildings at the early stage so that the policy related to disclosing the energy performance can be on track.

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Do Policy Incentives to Buildings Energy Retrofit Encourage Homeowners’ Free-Rider Behavior?

D’Alpaos

2020

Green Energy and Technology

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Low energy efficiency in rental properties: Asymmetric information or low willingness-to-pay?

Cited by 52 publications

References 36 publications

Can green labels become the new normal?

Can green labels become the new normal?

Do Consumers Care about the Energy Efficiency of Buildings? Understanding Residential Choice Based on Energy Performance Certificates

Do Policy Incentives to Buildings Energy Retrofit Encourage Homeowners’ Free-Rider Behavior?

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