Does energy efficiency matter to real estate-consumers? Survey evidence on willingness to pay from a cost-optimal analysis in the context of a developing country

Abstract

In most countries, energy efficiency at the residential level has been largely delegated to the dynamics of realestate markets after setting a minimum level. This regulatory definition is in certain cases supplemented by energy performance certificates, such as in the case of the European Union. This approach is based on the understanding that avoided energy-consumption costs positively affect the willingness to pay for them, thus leading to higher prices capable of offsetting production costs and thereby encouraging developers. The case of the private housing market in Santiago de Chile was selected as a reference for a developing country in which energy performance certificates, although they exist as an instrument, are not required to be applied in property transactions. However, unlike most of the research performed in developed countries, it is difficult to analyse price formation using methods based on observed preferences in areas in which there are few energy-certified buildings. Using the technique of contingent valuation, such as the method based on stated preferences, enables one to overcome this difficulty. This article investigates willingness to pay for improvements in the energy efficiency of buyers for new homes based on a representative investment/operation cost analysis. This approach has been addressed to open the debate on the convenience of modify the national construction code and rethink the energy certification scheme as well as an exploratory study to undercover further research lines to support the aforementioned debate. The results suggests that there is a number of potential home buyers ready to pay for energy efficiency when they are informed on the cost savings associated to structural modifications and the cost of providing such improvements and such willingness to pay is not monolithic across the respondents, but seems to be influenced by the education level plausibly associated to the purchase power.Peer Reviewe