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Split Incentives in Emerging Countries

Author

Listed:
  • Hector H. Sandovalâ“¡
  • Pedro I. Hancevicâ“¡

Abstract

In this paper, we provide empirical evidence of the energy-efficiency gap between homeowners and renters and quantify the magnitude of the split incentives problem in an emerging economy by studying Mexican households. Using micro-level data from the first National Survey on Energy Consumption in Private Homes (ENCEVI-2018) and a regression framework, we show that underinvestment problems occur in multiple categories of residential energy efficiency. Concretely, our results show that renters have significantly less insulation and energy-efficient equipment, that they tend to use some of their equipment more frequently, and that they pay higher utility bills than homeowners. In addition, renters are less aware of government programs that can reduce their energy expenditure and are also less likely to take advantage of them. Finally, a substantial reduction in carbon emissions could be achieved if renters were equally energy efficient as homeowners. JEL classification: D12; Q15; Q40; Q53

Suggested Citation

  • Hector H. Sandovalâ“¡ & Pedro I. Hancevicâ“¡, 2024. "Split Incentives in Emerging Countries," The Energy Journal, , vol. 45(4), pages 135-158, July.
    • Handle: RePEc:sae:enejou:v:45:y:2024:i:4:p:135-158
    DOI: 10.1177/01956574241281107
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    References listed on IDEAS

    as
    1. Pedro I. Hancevic & Hector M. Nunez & Juan Rosellon, 2022. "Electricity Tariff Rebalancing in Emerging Countries: The Efficiency-equity Tradeoff and Its Impact on Photovoltaic Distributed Generation," The Energy Journal, , vol. 43(4), pages 69-93, May.
    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.
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    More about this item

    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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