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Willingness to Pay for Energy-Saving Measures in Residential Buildings

Author

Listed:
  • Silvia Banfi

    () (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Mehdi Farsi

    () (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Massimo Filippini

    () (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Martin Jakob

    () (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

Abstract

This paper uses a choice experiment to evaluate the consumers’ willingness to pay for energysaving measures in residential buildings. These measures include air renewal systems as well as thermal insulation of windows and facades. In addition to considerable savings in energy consumption, these systems incur other “private” benefits such as thermal comfort, air quality and protection against noise. The extremely low rates of usage of these systems in Switzerland’s residential buildings is generally explained by consumers’ lack of information and/or the insignificance of private benefits, which have led the Swiss authorities to adopt a promotion policy through direct subsidies and information campaigns. The valuation of private benefits of energy-saving measures has been estimated using hypothetical choice experiments performed on two samples consisting respectively of 163 tenants living in apartment buildings and 142 residents of single-family houses. The respondents were repeatedly asked to choose between their status quo and an alternative situation characterized by different attributes and prices. The estimation method is based on a fixed effect logit model. The results suggest a significant willingness to pay for energy-saving attributes.

Suggested Citation

  • Silvia Banfi & Mehdi Farsi & Massimo Filippini & Martin Jakob, 2005. "Willingness to Pay for Energy-Saving Measures in Residential Buildings," CEPE Working paper series 05-41, CEPE Center for Energy Policy and Economics, ETH Zurich.
  • Handle: RePEc:cee:wpcepe:05-41
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    File URL: http://www.cepe.ethz.ch/publications/workingPapers/CEPE_WP41.pdf
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    References listed on IDEAS

    as
    1. Franses, Ph.H.B.F. & Verhoef, P.C., 2002. "On combining revealed and stated preferences to forecast customer behaviour: three case studies," Econometric Institute Research Papers EI 2002-04, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
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    More about this item

    Keywords

    energy efficiency; choice experiment; conjoint analysis; discrete choice; housing;

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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