On the Economics of Energy Labels in the Housing Market

31 Pages Posted: 19 May 2010

See all articles by Dirk Brounen

Dirk Brounen

Erasmus University Rotterdam (EUR) - Department of Financial Management; Erasmus Research Institute of Management (ERIM); Tinbergen Institute

Nils Kok

University of Maastricht - Limburg Institute of Financial Economics (LIFE)

Date Written: May 19, 2010

Abstract

The residential housing market can play an important role in the reduction of global carbon emissions, and the information conveyed by energy labels may help to encourage energy conservation among private consumers. This paper reports the first evidence on the market adoption and economic implications of energy performance certificates implemented under a large energy-labeling program in the European Union. The results show that adoption rates are low and declining over time. Labels are clustered among homes and neighborhoods where there is less competition among buyers. We also document that adoption rates of energy labels are positively related to the fraction of ”green” voters during national elections. The energy label seems to create transparency in the energy performance of dwellings and our analysis shows that consumers capitalize this information in the price of their prospective home. The size of the energy-efficiency increment is positively related to the label outcome.

Keywords: energy efficiency, housing, labels, environmentalism

JEL Classification: D12, Q51, R21

Suggested Citation

Brounen, Dirk and Kok, Nils, On the Economics of Energy Labels in the Housing Market (May 19, 2010). Available at SSRN: https://ssrn.com/abstract=1611988 or http://dx.doi.org/10.2139/ssrn.1611988

Dirk Brounen

Erasmus University Rotterdam (EUR) - Department of Financial Management ( email )

P.O. Box 1738
Room T09-53
3000 DR Rotterdam
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 1 0408 2371 (Phone)
+31 1 0408 9017 (Fax)

HOME PAGE: http://web.eur.nl/fbk/dep/dep5/faculty/dbrounen

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
120-551-3535 (Phone)

Nils Kok (Contact Author)

University of Maastricht - Limburg Institute of Financial Economics (LIFE) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

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