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Setting the Standard: Commercial Electricity Consumption Responses to Energy Codes

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Abstract

While green-labeled buildings have been found to sell at a premium compared to nearby controls with similar observable characteristics, the voluntary nature of the labeling decision implies green-labeled buildings may have different unmeasured characteristics that may account for at least a portion of the premium. Therefore, it is unclear whether green-labeled building premiums are a causal effect of the labels. I use data on repeat sales transactions and detailed hedonic characteristics to test whether green-labeled office buildings were selling at a premium before they were labeled, and combine these results with post-labeling price premium estimates to identify realized cost-benefit ratios for green-labeling policies. The data suggest the causal net benefits of green labels range from $11.50-$19.95 per square foot. The estimated net benefits are smaller than previous estimates that have focused solely on the benefits and ignored the potential biases from nonrandom selection.

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  • Maya M. Papineau, 2015. "Setting the Standard: Commercial Electricity Consumption Responses to Energy Codes," Carleton Economic Papers 15-05, Carleton University, Department of Economics.
    • Handle: RePEc:car:carecp:15-05
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    More about this item

    Keywords

    Green Labels; Nonresidential Real Estate; Cost-Benefit Analysis;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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