Abstract
Awareness of global warming and the extent of greenhouse gas emissions have focused more attention upon energy efficiency in building. Moreover, the inventory of “green” office space in the United States has increased dramatically since the introduction of rating schemes that attest to the energy efficiency or sustainability of commercial buildings. In some metropolitan areas, the supply of certified office buildings has more than doubled in the last decade, and there are a few metropolitan areas where “green” office space now accounts for more than a quarter of the total office stock. In this paper, we analyze the diffusion of buildings certified for energy efficiency across US property markets. Using a panel of 48 metropolitan areas observed over the last fifteen years, we trace the diffusion of green building practices across the country. We then model the geographic patterns and dynamics of building certification, relating industry composition, changes in economic conditions, characteristics of the local commercial property market, and the presence of human capital, to the cross-sectional variation in energy-efficient building technologies and the diffusion of those technologies over time. Understanding the determinants and the rate at which energy-efficient building practices diffuse over space and time is important for designing policies to affect resource consumption in the built environment.
Similar content being viewed by others
References
Alcott H, Mullainathan S (2010) Behavior and energy policy. Science 327: 1204–1205
Arellano M, Bond S (1991) Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev Econ Stud 58(2): 277–297
Bauer TN, Aiman-Smith L (1996) Green career choices: the influences of ecological stance on recruiting. J Bus Psychol 10(3): 445–458
Brounen D, Kok N, Quigley JM (2011) Residential energy use and conservation: economics and demographics. Eur Econ Rev (forthcoming)
Costa DL, Kahn ME (2010a) Energy conservation ‘Nudges’ environmentalist ideology: evidence from a randomized residential electricity field experiment. NBER Working Paper #15939
Costa DL, Kahn ME (2010b) Why Has California’s electricity consumption been so flat since the 1980s? A microeconometric approach. NBER Working Paper #15978
DeCanio SJ, Watkins WE (1998) Investment in energy efficiency: do the characteristics of firms matter?. Rev Econ Stat 80(1): 95–107
Eichholtz PMA, Kok N, Quigley JM (2010a) Doing well by doing good: green office buildings. Am Econ Rev 100(5): 2494–2511
Eichholtz PMA, Kok N, Quigley JM (2010b) Who rents green? Ecological responsiveness and corporate real estate. Working Paper. UC Berkeley, Berkeley
Eichholtz PMA, Kok N, Quigley JM (2013) The economics of green building. Rev Econ Stat (forthcoming)
Elliott E, Seldon BJ, Regens JL (1997) Political and economic determinants of individuals’ support for environmental spending. J Environ Manag 57: 15–27
Fuerst F, McAllister P (2009) New evidence on the green building rent and price premium. Working Paper. University of Reading
Fuerst F, McAllister P (2011) Green noise or green value? Measuring the effects of environmental certification on office values. Real Estate Econ 39(1): 45–69
Griliches Z (1957) Hybrid corn: an exploration in the economics of technical change. Econometrica 25(4): 501–522
Hall BH (2004) Innovation and diffusion. In: Fagenberg J, Mowray D, Nelson RR (eds) Handbook of innovation. Oxford University Press, Oxford, pp 459–485
Hausman JA (1979) Individual discount rates and the purchase and utilization of energy-using durables. Bell J Econ 10: 33–54
Jaffe AB, Palmer K (1997) Environmental regulation and innovation: a panel data study. Rev Econ Stat 79(4): 610–619
Jaffe AB, Stavins RN (1994) The energy paradox and the diffusion of conservation technology. Resour Energy Econ 16: 91–122
Kahn ME (2007) Do greens drive hummers or hybrids? Environmental ideology as a determinant of consumer choice. J Environ Econ Manag 54: 129–145
Kahn ME, Kotchen MJ (2010) Environmental concern and the business cycle: the chilling effect of recession. NBER Working Paper #16241
Keller W (2004) International technology diffusion. J Econ Lit 42(3): 752–782
Menanteau P, Lefebvre H (2000) Competing technologies and the diffusion of innovations: the emergence of energy-efficient lamps in the residential sector. Res Policy 29(3): 375–389
Metcalf GE, Hassett KA (1999) Measuring the savings from home improvement investments: evidence from monthly billing data. Rev Econ Stat 81(3): 516–528
Newsham GR, Mancici S, Birt B (2009) Do LEED-certified buildings save energy? Yes, but…. Energy Build 41: 897–905
Oster SM, Quigley JM (1977) Regulatory barriers to the diffusion of innovation: some evidence from building codes. Bell J Econ 8(2): 361–377
Reiss PC, White MW (2008) What changes energy consumption? Prices and public pressures. RAND J Econ 39(3): 636–663
Roe B, Teisl MF, Levy A, Russell M (2001) Us consumers’ willingness to pay for green electricity. Energy Policy 29(11): 917–925
Rose NL, Joskow PL (1990) The diffusion of new technologies: evidence from the electric utility industry. RAND J Econ 21(3): 354–373
Rosenberg N (1976) Perspectives on technology. Cambridge University Press, Cambridge
Royal Institute of Chartered Surveyors (2005) Green value. RICS, London
Scofield JH (2009) Do LEED-certified buildings save energy? Not really…. Energy Build 41: 1386–1390
Snyder LD, Miller NH, Stavins RN (2003) The effects of environmental regulation on technology diffusion: the case of chlorine manufacturing. Am Econ Rev 93(2): 431–435
Stern N (2008) The economics of climate change. Am Econ Rev 98(2): 1–37
Zingales L (2000) In search of new foundations. J Finance 55(4): 1623–1653
Author information
Authors and Affiliations
Corresponding author
Additional information
Financial support for this research was provided by the Royal Institute of Chartered Surveyors, the European Center for Corporate Engagement, and the University of California Energy Institute. We are grateful to William Wheaton and also to Jon Southard of CBRE Econometric Advisors for facilitating access to some of the data used in this analysis. A much condensed version of this paper appears in the Papers and Proceedings of the American Economic Association, 2011(2), 77–82. The present work appears with permission from the American Economic Association.
Rights and permissions
About this article
Cite this article
Kok, N., McGraw, M. & Quigley, J.M. The diffusion over time and space of energy efficiency in building. Ann Reg Sci 48, 541–564 (2012). https://doi.org/10.1007/s00168-011-0494-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00168-011-0494-9