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Split Incentives and Energy Efficiency in Canadian Multi-Family Dwellings

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  • Young, Denise

    ()
    (University of Alberta, Department of Economics)

  • Maruejols, Lucie

    ()
    (University of Alberta, Department of Economics)

Abstract

This paper examines the energy-related behaviour of occupants and owners of multi-family dwellings in Canada, some of whom do not pay directly for electricity or heat, but instead have these costs included in their rent or condo fees. Using data from the 2003 Survey of Household Energy Use, we look at the extent to which split incentives that result from bill-paying arrangements effect a variety of activities including the setting of temperatures at various times of the day and the use of eco-friendly options in basic household tasks. Findings suggest that these split incentives do indeed impact some aspects of occupant behaviour, with households who do not pay directly for their heat opting for increased thermal comfort and being less sensitive to whether or not somebody is at home and the severity of the climate when deciding on temperature settings. Regardless of who pays for utilities, Canadian households who live in multi-family dwellings are generally unresponsive to fuel prices. Our empirical results suggest that the possibility of environmental benefits from policies aimed at improving energy-efficiency in this sector, especially if targeted at reducing the impacts of the behaviour of those who do not pay directly for energy use.

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File URL: http://www.economics.ualberta.ca/~/media/economics/FacultyAndStaff/WPs/WP2010-18-Young.pdf
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Bibliographic Info

Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2010-18.

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Length: 50 pages
Date of creation: 01 Nov 2010
Date of revision:
Handle: RePEc:ris:albaec:2010_018

Note: energy efficiency; agency effects; household behaviour
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Keywords: energy efficiency; agency effects; household behaviour;

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  1. Laquatra, Joseph, 1992. "Rural landlords and rental housing energy efficiency," Energy Policy, Elsevier, vol. 20(9), pages 815-824, September.
  2. Levinson, Arik & Niemann, Scott, 2004. "Energy use by apartment tenants when landlords pay for utilities," Resource and Energy Economics, Elsevier, vol. 26(1), pages 51-75, March.
  3. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
  4. Lucas W. Davis, 2010. "Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances?," NBER Working Papers 16114, National Bureau of Economic Research, Inc.
  5. Brown, Marilyn A., 2001. "Market failures and barriers as a basis for clean energy policies," Energy Policy, Elsevier, vol. 29(14), pages 1197-1207, November.
  6. Sorrell, Steve & Dimitropoulos, John, 2008. "The rebound effect: Microeconomic definitions, limitations and extensions," Ecological Economics, Elsevier, vol. 65(3), pages 636-649, April.
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Cited by:
  1. Xavier Labandeira & Ana Ramos, 2012. "Household Environmental Attitudes and Energy Efficiency in Buildings: Evidence from Spanish Data," Working Papers fa08-2012, Economics for Energy.
  2. Kiran Krishnamurthy, Chandra & Kriström, Bengt, 2013. "How large is the Owner-Renter Divide? Evidence from an OECD cross-section," CERE Working Papers 2013:8, CERE - the Center for Environmental and Resource Economics.
  3. repec:hhs:slucer:2014_008 is not listed on IDEAS

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