Pub Date : 2026-01-20DOI: 10.1016/j.jeem.2026.103285
Ding Ma , Min Wang , Shuo Li , Xiumei Yu
This paper examines how extreme temperatures shape firm entry decisions and industrial geography. Leveraging comprehensive firm registration data from China, we identify an inverted U-shaped relationship between temperature and firm entry, while firm exit remains largely unresponsive. Mechanism analyses reveal that temperature shocks disproportionately reduce entry in labor-intensive industries within tradable sectors. This effect operates through temperature-induced labor productivity losses, whereas entry in non-tradable sectors, such as services, declines indirectly through reduced local demand from downstream industrial clients. Firms also adapt by shifting equity investments toward new firm establishments in regions with milder climates. Climate projections indicate that continued warming will substantially reshape industrial geography. These findings highlight firm location choice as a critical channel of climate adaptation and underscore the role of temperature risk in driving long-term spatial economic change.
{"title":"Hot and cold choices: The role of extreme temperatures in shaping industrial geographical distribution","authors":"Ding Ma , Min Wang , Shuo Li , Xiumei Yu","doi":"10.1016/j.jeem.2026.103285","DOIUrl":"10.1016/j.jeem.2026.103285","url":null,"abstract":"<div><div>This paper examines how extreme temperatures shape firm entry decisions and industrial geography. Leveraging comprehensive firm registration data from China, we identify an inverted U-shaped relationship between temperature and firm entry, while firm exit remains largely unresponsive. Mechanism analyses reveal that temperature shocks disproportionately reduce entry in labor-intensive industries within tradable sectors. This effect operates through temperature-induced labor productivity losses, whereas entry in non-tradable sectors, such as services, declines indirectly through reduced local demand from downstream industrial clients. Firms also adapt by shifting equity investments toward new firm establishments in regions with milder climates. Climate projections indicate that continued warming will substantially reshape industrial geography. These findings highlight firm location choice as a critical channel of climate adaptation and underscore the role of temperature risk in driving long-term spatial economic change.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103285"},"PeriodicalIF":5.9,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146073604","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-19DOI: 10.1016/j.jeem.2025.103278
Bhavya Srivastava , Kibrom Tafere , A. Patrick Behrer
What is the impact of high temperatures on human capital accumulation in Sub-Saharan Africa? Rising temperatures, due to climate change, and the role of human capital in driving development make answering this question imperative to understand the long-term impacts of climate change in the world’s most climate vulnerable region. We use data from 2003–2019 for 2.47 million test takers of a national high-stakes high-school leaving exam in Ethiopia to study the impacts of temperature on learning outcomes. We find that high temperatures during the school year leading up to the exam reduce test scores, controlling for temperatures during the exam. Female students appear slightly less affected by heat compared to their male counterparts. We do not find evidence to reject the hypothesis that these effects are driven primarily by within-classroom temperatures rather than indirect effects on agriculture.
{"title":"High temperature and learning outcomes: Evidence from Ethiopia","authors":"Bhavya Srivastava , Kibrom Tafere , A. Patrick Behrer","doi":"10.1016/j.jeem.2025.103278","DOIUrl":"10.1016/j.jeem.2025.103278","url":null,"abstract":"<div><div>What is the impact of high temperatures on human capital accumulation in Sub-Saharan Africa? Rising temperatures, due to climate change, and the role of human capital in driving development make answering this question imperative to understand the long-term impacts of climate change in the world’s most climate vulnerable region. We use data from 2003–2019 for 2.47 million test takers of a national high-stakes high-school leaving exam in Ethiopia to study the impacts of temperature on learning outcomes. We find that high temperatures during the school year leading up to the exam reduce test scores, controlling for temperatures during the exam. Female students appear slightly less affected by heat compared to their male counterparts. We do not find evidence to reject the hypothesis that these effects are driven primarily by within-classroom temperatures rather than indirect effects on agriculture.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103278"},"PeriodicalIF":5.9,"publicationDate":"2026-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146073603","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-19DOI: 10.1016/j.jeem.2026.103284
Jeffrey Hadachek , Pierre Mérel , Scott Somerville
Nitrate pollution threatens human health and ecosystems in many regions of the world. Although scientists agree that nitrogen compounds from human activity, notably agriculture, enter groundwater systems, empirical estimates of the impacts of land use on nitrate concentrations in well water are still lacking. We provide evidence on such impacts by combining nitrate measurements from 6016 groundwater wells with remotely sensed California land use data from 2007–2023. We categorize agricultural land uses according to crops’ propensities to leach nitrogen and further consider urban development, in addition to undeveloped land—the default land use. Results show that a 10 percentage point increase in the share of land used to grow high-nitrogen crops within 500 m of a well is associated with an 11.6% increase in nitrate concentrations a decade later, while the same increase in urban developments contributes about a 10% increase. When conditioning on initial nitrate measurements, the impact of nearby land use attenuates while initial concentrations explain a large share of future variation in concentrations, demonstrating the persistent nature of nitrates in groundwater. A calculation based on our regression estimates implies that replacing high-nitrogen with low-nitrogen crops around sample wells would achieve a 4.6% reduction in nitrate concentrations, saving municipal water systems $25 million annually. We evaluate the opportunity cost of such crop substitution to be large; however, targeting only the crops with the highest propensity to leach nitrates easily passes a cost-benefit test.
{"title":"The impact of land use on water quality: Evidence from California wells","authors":"Jeffrey Hadachek , Pierre Mérel , Scott Somerville","doi":"10.1016/j.jeem.2026.103284","DOIUrl":"10.1016/j.jeem.2026.103284","url":null,"abstract":"<div><div>Nitrate pollution threatens human health and ecosystems in many regions of the world. Although scientists agree that nitrogen compounds from human activity, notably agriculture, enter groundwater systems, empirical estimates of the impacts of land use on nitrate concentrations in well water are still lacking. We provide evidence on such impacts by combining nitrate measurements from 6016 groundwater wells with remotely sensed California land use data from 2007–2023. We categorize agricultural land uses according to crops’ propensities to leach nitrogen and further consider urban development, in addition to undeveloped land—the default land use. Results show that a 10 percentage point increase in the share of land used to grow high-nitrogen crops within 500 m of a well is associated with an 11.6% increase in nitrate concentrations a decade later, while the same increase in urban developments contributes about a 10% increase. When conditioning on initial nitrate measurements, the impact of nearby land use attenuates while initial concentrations explain a large share of future variation in concentrations, demonstrating the persistent nature of nitrates in groundwater. A calculation based on our regression estimates implies that replacing high-nitrogen with low-nitrogen crops around sample wells would achieve a 4.6% reduction in nitrate concentrations, saving municipal water systems $25 million annually. We evaluate the opportunity cost of such crop substitution to be large; however, targeting only the crops with the highest propensity to leach nitrates easily passes a cost-benefit test.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103284"},"PeriodicalIF":5.9,"publicationDate":"2026-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146034871","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-08DOI: 10.1016/j.jeem.2026.103281
Corinne Langinier , Amrita RayChaudhuri
We analyze the impact of patent policies and emission taxes on green innovation. We allow for strategic interactions of firms in a duopolistic market in the presence of green-conscious consumers. We identify a paradoxical effect of increasing emission taxes beyond a certain threshold, which results in an increase in emissions. Decreasing patenting costs mitigates this paradox while the impact of tightening patentability requirements is more complex. Moreover, we show that the greater the proportion of green-conscious consumers, the less likely firms are totcilate license a green patent, which results in higher emissions levels at low tax levels. For an intermediate range of taxes, licensing does occur in equilibrium which lowers emissions. Finally, we find that while tax increases lead to a switch from overinvestment to underinvestment in the absence of green-conscious consumers, when the proportion of green-conscious consumers is sufficiently large, there is underinvestment at all tax levels.
{"title":"Green patents in an oligopolistic market with green consumers","authors":"Corinne Langinier , Amrita RayChaudhuri","doi":"10.1016/j.jeem.2026.103281","DOIUrl":"10.1016/j.jeem.2026.103281","url":null,"abstract":"<div><div>We analyze the impact of patent policies and emission taxes on green innovation. We allow for strategic interactions of firms in a duopolistic market in the presence of green-conscious consumers. We identify a paradoxical effect of increasing emission taxes beyond a certain threshold, which results in an increase in emissions. Decreasing patenting costs mitigates this paradox while the impact of tightening patentability requirements is more complex. Moreover, we show that the greater the proportion of green-conscious consumers, the less likely firms are totcilate license a green patent, which results in higher emissions levels at low tax levels. For an intermediate range of taxes, licensing does occur in equilibrium which lowers emissions. Finally, we find that while tax increases lead to a switch from overinvestment to underinvestment in the absence of green-conscious consumers, when the proportion of green-conscious consumers is sufficiently large, there is underinvestment at all tax levels.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103281"},"PeriodicalIF":5.9,"publicationDate":"2026-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145979359","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-08DOI: 10.1016/j.jeem.2026.103282
Holger Strulik , Timo Trimborn
It is widely believed that population growth has a negative impact on global warming. Here, we set up an integrated assessment model (a simplified DICE model) and derive analytically a condition under which a higher world population causally leads to a lower long-run temperature increase under optimal carbon taxation. The condition is easily fulfilled for standard IAM parameters and is independent of the discount rate, the degree of utilitarianism in the objective function, the calibration of the emission and abatement technologies, and other economic parameters. We also show that at the steady state, a larger population implies higher social and individual welfare. We also investigate a refinement of the DICE approach that could mitigate or reverse the predicted negative effect of population growth on climate change.
{"title":"Climate change and population growth: A reassessment","authors":"Holger Strulik , Timo Trimborn","doi":"10.1016/j.jeem.2026.103282","DOIUrl":"10.1016/j.jeem.2026.103282","url":null,"abstract":"<div><div>It is widely believed that population growth has a negative impact on global warming. Here, we set up an integrated assessment model (a simplified DICE model) and derive analytically a condition under which a higher world population causally leads to a lower long-run temperature increase under optimal carbon taxation. The condition is easily fulfilled for standard IAM parameters and is independent of the discount rate, the degree of utilitarianism in the objective function, the calibration of the emission and abatement technologies, and other economic parameters. We also show that at the steady state, a larger population implies higher social and individual welfare. We also investigate a refinement of the DICE approach that could mitigate or reverse the predicted negative effect of population growth on climate change.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103282"},"PeriodicalIF":5.9,"publicationDate":"2026-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145979358","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-06DOI: 10.1016/j.jeem.2026.103283
Becka Brolinson , William M. Doerner , Arne Johan Pollestad , Michael J. Seiler
This paper investigates how the 2021–2022 European energy crisis, a major macro-financial shock, affected the relative valuation of energy-efficient homes in Norway. Leveraging the country’s electricity market—characterized by five distinct regions with varying exposure to European power prices—we analyze how energy price shocks influence housing market dynamics with a triple difference-in-differences regression framework. We find that home prices fell significantly in regions affected by the shock, with average value losses ranging from 1.2% to 3.6%. Energy-efficient homes experienced smaller price declines, particularly in the single-family home segment, indicating a differential price response during the shock. Moreover, the negative price effects persist despite the introduction of electricity price subsidies. These findings highlight the complex relations among energy costs, real estate market valuations, and housing characteristic heterogeneity by offering generalizable insights into the resilience of housing markets to unanticipated shocks and the role of policy interventions in mitigating their effects.
{"title":"European energy crisis: Did electricity prices shock real estate markets?","authors":"Becka Brolinson , William M. Doerner , Arne Johan Pollestad , Michael J. Seiler","doi":"10.1016/j.jeem.2026.103283","DOIUrl":"10.1016/j.jeem.2026.103283","url":null,"abstract":"<div><div>This paper investigates how the 2021–2022 European energy crisis, a major macro-financial shock, affected the relative valuation of energy-efficient homes in Norway. Leveraging the country’s electricity market—characterized by five distinct regions with varying exposure to European power prices—we analyze how energy price shocks influence housing market dynamics with a triple difference-in-differences regression framework. We find that home prices fell significantly in regions affected by the shock, with average value losses ranging from 1.2% to 3.6%. Energy-efficient homes experienced smaller price declines, particularly in the single-family home segment, indicating a differential price response during the shock. Moreover, the negative price effects persist despite the introduction of electricity price subsidies. These findings highlight the complex relations among energy costs, real estate market valuations, and housing characteristic heterogeneity by offering generalizable insights into the resilience of housing markets to unanticipated shocks and the role of policy interventions in mitigating their effects.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103283"},"PeriodicalIF":5.9,"publicationDate":"2026-01-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145940304","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-31DOI: 10.1016/j.jeem.2025.103280
Karol Kempa
This paper analyses how physical climate risk affects the pricing of loans. Using a global dataset of almost 86,000 syndicated bank loans, we find that a higher climate vulnerability of a firm’s host country leads to higher costs of borrowing. The effects of physical climate risk on loan pricing are particularly large if loans have long maturities and if borrowing firms are in financial distress. In addition to loan pricing, banks also adjust other loan terms, such as loan size, collateral requirements, or fees, to manage their exposure to their borrowers’ physical climate risk. As climate risk may also directly affect loan pricing, e.g., via general updates of credit risk models due to observed changes in climate risk, we extend the analysis to firm-level credit risk ratings. The results show that physical climate risk negatively affects long-term credit risk ratings, while it does not play a role in short-term credit risk, and hence support the proposed channel that physical climate risk affects loan pricing via its effect on firms’ default probabilities.
{"title":"Physical climate risk and the pricing of bank loans","authors":"Karol Kempa","doi":"10.1016/j.jeem.2025.103280","DOIUrl":"10.1016/j.jeem.2025.103280","url":null,"abstract":"<div><div>This paper analyses how physical climate risk affects the pricing of loans. Using a global dataset of almost 86,000 syndicated bank loans, we find that a higher climate vulnerability of a firm’s host country leads to higher costs of borrowing. The effects of physical climate risk on loan pricing are particularly large if loans have long maturities and if borrowing firms are in financial distress. In addition to loan pricing, banks also adjust other loan terms, such as loan size, collateral requirements, or fees, to manage their exposure to their borrowers’ physical climate risk. As climate risk may also directly affect loan pricing, e.g., via general updates of credit risk models due to observed changes in climate risk, we extend the analysis to firm-level credit risk ratings. The results show that physical climate risk negatively affects long-term credit risk ratings, while it does not play a role in short-term credit risk, and hence support the proposed channel that physical climate risk affects loan pricing via its effect on firms’ default probabilities.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103280"},"PeriodicalIF":5.9,"publicationDate":"2025-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145940301","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the long-term effects of air pollution on firms’ human capital accumulation and the adaptive strategies they adopt in response. Leveraging a spatial regression discontinuity (RD) design based on China’s Huai River heating policy and utilizing a novel dataset with detailed firm-level human capital information, we show that air pollution significantly reduces the share of R&D staff with advanced degrees, particularly PhD and master’s degrees. To offset these challenges, firms in more polluted regions increasingly turn to external strategies, such as acquiring technology and collaborating with universities, as well as internal measures, including expanding welfare subsidies for R&D staff and investing in experimental instruments. However, despite these adaptive efforts, firms in polluted areas still generate fewer innovations than their counterparts in cleaner regions. Overall, our findings highlight the role of internal human capital in sustaining innovative capacity.
{"title":"How air pollution makes firms less innovative: Human capital and adaptive strategies","authors":"Tiago Cavalcanti , Kamiar Mohaddes , Hongyu Nian , Haitao Yin","doi":"10.1016/j.jeem.2025.103279","DOIUrl":"10.1016/j.jeem.2025.103279","url":null,"abstract":"<div><div>This paper studies the long-term effects of air pollution on firms’ human capital accumulation and the adaptive strategies they adopt in response. Leveraging a spatial regression discontinuity (RD) design based on China’s Huai River heating policy and utilizing a novel dataset with detailed firm-level human capital information, we show that air pollution significantly reduces the share of R&D staff with advanced degrees, particularly PhD and master’s degrees. To offset these challenges, firms in more polluted regions increasingly turn to external strategies, such as acquiring technology and collaborating with universities, as well as internal measures, including expanding welfare subsidies for R&D staff and investing in experimental instruments. However, despite these adaptive efforts, firms in polluted areas still generate fewer innovations than their counterparts in cleaner regions. Overall, our findings highlight the role of internal human capital in sustaining innovative capacity.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103279"},"PeriodicalIF":5.9,"publicationDate":"2025-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145883848","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-27DOI: 10.1016/j.jeem.2025.103276
Pao-Li Chang , Fan Zheng
This paper compiles high-resolution geospatial inundation areas of China for the period 2000–2009 based on satellite imagery repositories filtered by the Global Flood Database (GFD). In parallel, we geocode a comprehensive firm-level dataset of China and combine these two sets of geospatial data to identify the set of inundated firms in each year of flood events, as well as the distances of all non-inundated firms from the inundated areas. Given the high-resolution inundation data, we adopt a generalized dynamic-panel specification to estimate dynamic and spatial spillover effects of floods on firm-level production activities (including outputs, capital and labor inputs, and productivities). We find negative and persistent effects of floods on firm-level performance measures, and negative but short-run spillover effects on non-inundated firms in nearby neighborhoods. In contrast, non-inundated firms located 6–12 km away from the inundated area expanded their production in the long run, suggesting reallocation of production activities/facilities away from the inundation area toward the outer rings of the neighborhood. We conduct various robustness checks and extended analyses, identify moderating/aggravating factors of inundation impacts, assess the aggregate effects at the economy-wide, province, and sector levels, and quantify the propagation of flood exposures via the input–output linkages.
{"title":"Using satellite-observed geospatial inundation data to identify the impacts of floods on firm-level performance: The case of China during 2000–2009","authors":"Pao-Li Chang , Fan Zheng","doi":"10.1016/j.jeem.2025.103276","DOIUrl":"10.1016/j.jeem.2025.103276","url":null,"abstract":"<div><div>This paper compiles high-resolution geospatial inundation areas of China for the period 2000–2009 based on satellite imagery repositories filtered by the Global Flood Database (GFD). In parallel, we geocode a comprehensive firm-level dataset of China and combine these two sets of geospatial data to identify the set of inundated firms in each year of flood events, as well as the distances of all non-inundated firms from the inundated areas. Given the high-resolution inundation data, we adopt a generalized dynamic-panel specification to estimate dynamic and spatial spillover effects of floods on firm-level production activities (including outputs, capital and labor inputs, and productivities). We find negative and persistent effects of floods on firm-level performance measures, and negative but short-run spillover effects on non-inundated firms in nearby neighborhoods. In contrast, non-inundated firms located 6–12 km away from the inundated area expanded their production in the long run, suggesting reallocation of production activities/facilities away from the inundation area toward the outer rings of the neighborhood. We conduct various robustness checks and extended analyses, identify moderating/aggravating factors of inundation impacts, assess the aggregate effects at the economy-wide, province, and sector levels, and quantify the propagation of flood exposures via the input–output linkages.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103276"},"PeriodicalIF":5.9,"publicationDate":"2025-12-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145940302","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Investments in energy efficiency in the built environment play a crucial role in global efforts to combat climate change. However, a significant obstacle to these investments arises from the differing incentives between landlords and tenants in the housing market. Landlords, who are typically not responsible for utility costs, may choose to invest less in energy efficiency improvements if these investments are not adequately reflected in rents. Our study provides empirical evidence of this market distortion, drawing on a comprehensive panel dataset from the Dutch housing market covering 3.8 million homes. We implement a quasi-experimental event study design that exploits transitions from rental to owner-occupied status while holding both the dwelling and the household constant. This identification strategy enables us to isolate changes in energy use attributable to tenure status. Our findings indicate a gradual decline in natural gas consumption following the transition to home-ownership, with an average reduction of about 2% that increases to as much as 5% nine years after the transition. In electricity consumption, split incentives are less important, given that tenants control the use and stock of their appliances, and we find no effect of changes in tenure status. Together, these findings provide empirical support for the relevance of tenure-based incentives in shaping energy-related decisions and can inform the design of targeted policies aimed at improving the energy performance of the rental housing stock.
{"title":"Split incentives and energy efficiency investment: Evidence from the housing market","authors":"Erdal Aydin , Piet Eichholtz , Rogier Holtermans , Santiago Bohórquez Correa","doi":"10.1016/j.jeem.2025.103277","DOIUrl":"10.1016/j.jeem.2025.103277","url":null,"abstract":"<div><div>Investments in energy efficiency in the built environment play a crucial role in global efforts to combat climate change. However, a significant obstacle to these investments arises from the differing incentives between landlords and tenants in the housing market. Landlords, who are typically not responsible for utility costs, may choose to invest less in energy efficiency improvements if these investments are not adequately reflected in rents. Our study provides empirical evidence of this market distortion, drawing on a comprehensive panel dataset from the Dutch housing market covering 3.8 million homes. We implement a quasi-experimental event study design that exploits transitions from rental to owner-occupied status while holding both the dwelling and the household constant. This identification strategy enables us to isolate changes in energy use attributable to tenure status. Our findings indicate a gradual decline in natural gas consumption following the transition to home-ownership, with an average reduction of about 2% that increases to as much as 5% nine years after the transition. In electricity consumption, split incentives are less important, given that tenants control the use and stock of their appliances, and we find no effect of changes in tenure status. Together, these findings provide empirical support for the relevance of tenure-based incentives in shaping energy-related decisions and can inform the design of targeted policies aimed at improving the energy performance of the rental housing stock.</div></div>","PeriodicalId":15763,"journal":{"name":"Journal of Environmental Economics and Management","volume":"137 ","pages":"Article 103277"},"PeriodicalIF":5.9,"publicationDate":"2025-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145979357","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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