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Split Incentives and Energy Efficiency in Canadian Multi-Family Dwellings

Author

Listed:
  • 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.

Suggested Citation

  • Young, Denise & Maruejols, Lucie, 2010. "Split Incentives and Energy Efficiency in Canadian Multi-Family Dwellings," Working Papers 2010-18, University of Alberta, Department of Economics.
  • Handle: RePEc:ris:albaec:2010_018
    Note: energy efficiency; agency effects; household behaviour
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    File URL: https://sites.ualberta.ca/~econwps/2010/wp2010-18.pdf
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    References listed on IDEAS

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    Cited by:

    1. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    2. Rehmatulla, Nishatabbas & Smith, Tristan, 2015. "Barriers to energy efficiency in shipping: A triangulated approach to investigate the principal agent problem," Energy Policy, Elsevier, vol. 84(C), pages 44-57.
    3. Kahn, Matthew E. & Walsh, Randall, 2015. "Cities and the Environment," Handbook of Regional and Urban Economics, Elsevier.
    4. Broberg, Thomas & Berg, Charlotte & Samakovlis, Eva, 2014. "The economy-wide rebound effect from improved energy efficiency in Swedish industries – A general equilibrium analysis," CERE Working Papers 2014:8, CERE - the Center for Environmental and Resource Economics.
    5. repec:eee:enepol:v:115:y:2018:i:c:p:342-352 is not listed on IDEAS
    6. Mahlia, T.M.I. & Tohno, S. & Tezuka, T., 2013. "International experience on incentive program in support of fuel economy standards and labelling for motor vehicle: A comprehensive review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 18-33.
    7. Anna Risch & Claire Salmon, 2017. "What matters in residential energy consumption: evidence from France," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 40(1/2), pages 79-116.
    8. Ana Ramos & Xavier Labandeira & Andreas Löschel, 2016. "Pro-environmental Households and Energy Efficiency in Spain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 367-393, February.
    9. Hellman Miller, Kelly & Colantuoni, Francesca & Lasco Crago, Christine, 2014. "An Empirical Analysis of Residential Energy Efficiency Adoption by Housing Types and Occupancy," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170533, Agricultural and Applied Economics Association.
    10. Ramos, A. & Gago, A. & Labandeira, X. & Linares, P., 2015. "The role of information for energy efficiency in the residential sector," Energy Economics, Elsevier, vol. 52(S1), pages 17-29.
    11. repec:eee:appene:v:205:y:2017:i:c:p:486-498 is not listed on IDEAS
    12. Louis-Gaëtan Giraudet & Sébastien Houde & Joseph Maher, 2016. "Moral Hazard and the Energy Efficiency Gap: Theory and Evidence," CIRED Working Papers hal-01420872, HAL.
    13. Chandra Kiran B. Krishnamurthy and Bengt Kriström, 2015. "How large is the Owner-Renter Divide in Energy Efficient Technology? Evidence from an OECD cross-section," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    14. Louis-Gaëtan Giraudet, 2018. "Energy efficiency as a credence good: A review of informational barriers to building energy savings," Policy Papers 2018.04, FAERE - French Association of Environmental and Resource Economists.
    15. Louis-Gaëtan Giraudet, 2018. "Energy efficiency as a credence good: A review of informational barriers to building energy savings," Working Papers 2018.07, FAERE - French Association of Environmental and Resource Economists.
    16. Oseni, Musiliu O., 2015. "Assessing the consumers’ willingness to adopt a prepayment metering system in Nigeria," Energy Policy, Elsevier, vol. 86(C), pages 154-165.
    17. Cristina Cattaneo, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," Working Papers 2018.08, Fondazione Eni Enrico Mattei.
    18. Xavier Labandeira & Ana Ramos, 2012. "Household Environmental Attitudes and Energy Efficiency in Buildings: Evidence from Spanish Data," Working Papers fa08-2012, Economics for Energy.
    19. Koirala, Binod Prasad & Koliou, Elta & Friege, Jonas & Hakvoort, Rudi A. & Herder, Paulien M., 2016. "Energetic communities for community energy: A review of key issues and trends shaping integrated community energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 722-744.
    20. 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.
    21. Tsvetan Tsvetanov & Kathleen Segerson, 2014. "The Welfare Effects of Energy Efficiency Standards When Choice Sets Matter," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(1), pages 233-271.
    22. Ana Ramos & Xavier Labandeira & Andreas Lšschel, 2015. "Pro-Environmental Households and Energy Efficiency in Spain," Working Papers 01-2015, Economics for Energy.

    More about this item

    Keywords

    energy efficiency; agency effects; household behaviour;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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