Friday, April 28, 2017

The Effect of the Nengda Incineration Plant on Residential Property Values in Hangzhou, China

Incineration plants and derelict industrial sites can have a number of adverse effects on the local environment and social welfare, including diminution of property values. Although many incineration plants exist in China, there has been relatively little research done to estimate the negative externality affects there. In this paper, we examine the effects of the Nengda municipal incineration plant in Hangzhou city on residential property values. We employ a hedonic pricing model to examine the sales of over 500 residential condominium units in over 20 multifamily buildings within ten kilometers of the incineration plants over a one-year-period including 2014. The results show that proximate properties show decreases in initial listing price of up to 25.9%, declining monotonically until the effect is gone at three kilometers from the incinerator. These results are comparable to similar situations in the United States and Canada.
by Qinna Zhao 1, Robert A. Simons 2, Fan Li-jun 1, Zhong Fen 1
1. Hefei University of Technology, Hefei, Anhui, China 230009 
2. Cleveland State University, Cleveland State University, Cleveland, OH 44115 or
Journal of Real Estate Literature
Volume 24, Number 1; 2016; pages 85-102

Tuesday, April 11, 2017

New York Hospitals Tackle Zero-waste Goal with Help from EnviroPure Systems

EnviroPure, a self-contained food waste disposal system, is helping Montefiore Medical Center in New York reach its zero-waste goal by diverting more than 125 tons of food waste from landfills in less than two years, converting it instead into safe gray water.

Montefiore New Rochelle Hospital, a 242-bed facility located in New Rochelle, NY, installed the medical system’s first EnviroPure unit in September 2014 in order to handle 4,200 pounds of food waste produced each week.
After determining that the New Rochelle installation was successful in reducing costs and the environmental impact associated with food waste, Montefiore added a second unit at its Wakefield Campus, located in the Bronx, in 2015.

Within less than two years of installation, the New Rochelle unit alone has processed 250,000 pounds of food waste, resulting in 233,000 fewer pounds of carbon emissions and $15,000 in savings from waste hauling fees. Additional labor savings were realized over previous food waste management practices.
Image result for Enviropure Food Waste Montefiore NEw Rochelle
“EnviroPure has been a tremendous success for Montefiore. The system is simple to use for our staff, and data from the remote monitoring system shows us the impact we’re making on the environment and our bottom line,” Jeff Hogan, Montefiore Medical Center’s energy and sustainability manager said....

The EPA estimates more food reaches landfills and incinerators than any other single material in everyday trash and constitutes more than 20 percent of discarded municipal solid waste. Food waste in landfills produces environmentally damaging methane gas.

EnviroPure breaks down food waste in 24 hours through a combination of mechanical processing and aerobic decomposition and produces a gray water byproduct that meets or exceeds municipal wastewater requirements. A 100 percent natural micronutrient additive accelerates the digestive process with no intrusive odors, no invasive pests and no damaging carbon footprint.

For more information on EnviroPure, including an inside look at how the system works, visit

Press Release dated December 9, 2016
Health Care Facilities Today

Saturday, April 8, 2017

Study: Information On Peers, Not Money, Saves Energy

To reduce emissions that lead to pollution and climate change, policymakers around the world rely on energy efficiency policies. Yet, by far the greatest share of future energy consumption will come from the developing world. Identifying ways to encourage conservation is therefore an urgent policy priority. Which policies could best encourage households to save? That has been a trial-and-error exercise for policymakers for years. Now, a new analysis using India as a case study suggests one approach that might be both successful and easily implemented.

“With three hundred million people lacking access to reliable electricity in India, finding a way to conserve electricity is an essential policy objective,” says Anant Sudarshan, the author of the study and director of the Energy Policy Institute at the University of Chicago’s India office (EPIC-India). “This study demonstrates significant impacts via an approach that relies on simply telling households how they compare with their peers, and thus ‘nudging’ them to make the right choices. But it also shows how complicated human behavior can be. We provide new evidence showing that mixing monetary rewards and behavioral cues can turn into something that is less, not more, than the sum of 
its parts”.

Sudarshan used an experiment where one group of households received report cards comparing their electricity usage to that of their peers and providing tips for ways to save. A second group received the same report cards, but were also enrolled in a financial rewards program where they received money (or lost money) for reducing (or increasing) their electricity consumption in comparison to their peers.

The study found that the households that received informational “nudges” to save reduced their electricity use by 7 percent, and duplicating the effect of the "nudges" would require a tariff increase as high as 12.5 percent. But, contrary to what one might think, when monetary incentives were added, households no longer reduced consumption. 

“When money is thrown in to sweeten the deal, households react by asking themselves ‘Why is a utility paying me? What’s in it for them?’ And, is it going to cost me in the end?’” Sudarshan says. “This reflects a distrust that undermines the policy, making this distrust a problem not just for utilities but also for policymakers as they work to create effective policies.”

Do The Effects of Social Nudges Persist? Theory and Evidence from 38 Natural Field Experiments

This study examines the mechanisms underlying long-run reductions in energy consumption caused by a widely studied social nudge. Our investigation considers two channels: physical capital in the home and habit formation in the household. Using data from 38 natural field experiments, we isolate the role of physical capital by comparing treatment and control homes after the original household moves, which ends treatment. We find 35 to 55 percent of the reductions persist once treatment ends and show this is consonant with the physical capital channel. Methodologically, our findings have important implications for the design and assessment of behavioral interventions.
12-2 can products - chart
Panel B of Table 6 presents the results of this exercise for the treatment and premove period. Consistent with Alcott and Rogers 2014 (AR), we start by assuming the direct cost of administering the Home Energy Report (HER) to one household is $1 per report. Following the standard approach in the literature, we simply compare this direct cost to savings achieved by the HER as estimated in Column 1 of Table 2 (-24.98 kWh) (No Technology). To also account for the indirect costs of the HER, we use a lower-bound estimate of the cost of capital per kWh of electricity saved in Allcott and Greenstone (2012, pp. 17).37 With this cost estimate, we convert savings achieved by capital investment—as a proportion of total savings using our estimates of persistence in the first row—into dollars. Applying this conversion, we see that the Home Energy HER induces an indirect cost that ranges from $0.74 to $1.15 per report and household. The resulting cost-effectiveness is reported in the last row for all three subsamples (Technology)

Comparing the two approaches to estimating cost-effectiveness in Panel B of Table 6, we see that incorporating the indirect cost of investments in capital more than doubles the cost per kWh in two out of three cases. From this perspective, after accounting for direct and indirect costs of technology adoption, alternative programs to the HER discussed in Allcott and Mullainathan (2010) and Allcott and Greenstone (2012) appear much more attractive. 

by Alec Brandon, Paul J. Ferraro, John A. List, Robert D. Metcalfe, Michael K. Price and Florian Rundhammer
National Bureau of Economic Research (NBER)
NBER Working Paper No. 23277; Issued in March 2017

Better Buildings Showcase Project: Historic Auburn Courthouse

The Placer County Historic Courthouse, also known as the Auburn Courthouse, was built in 1898 and is listed on the National Register of Historic Places. This grand, three-story Classic Revival structure is topped by a bracketed cornice and simple Renaissance Revival-inspired dome. Over the years, the County made improvements, adding water fountains, fire escapes, and an elevator, which was installed in 1948. In 1990, the building underwent an extensive restoration effort. Since 2010 Placer County has implemented an energy efficiency retrofit to the Courthouse to reduce energy costs and improve occupant comfort.

Energy efficiency upgrades to the historic brick and stone building presented unique challenges due to the complex electrical wiring and the need to integrate new and old energy system components. Further complicating the process was the importance of completing the work while minimizing disruption to Court and museum operations, which continued throughout the upgrades.

From 2010 to 2016, the County upgraded major energy components at the Courthouse. The most significant energy savings retrofit measures, prioritized by energy saved, included:

  • Lighting retrofits: Aging and inefficient T-12 fluorescent linear systems were changed out to more efficient T-8 fluorescents, incandescent lamps in historic fixtures were changed to CFL, and interior sconce high-intensity discharge (HID) systems in courtrooms were retrofitted to CFL.
  • Central plant retrofits: An antiquated, 80-ton dual-reciprocating compressor chiller (Trane CGWC806RDNJJ432P, located in a separate building adjacent to the Courthouse) was replaced with an 80-ton high-efficiency scroll compressor chiller (York YCWL0084HE). The plant’s chilled water and condenser water pumps (and their associated motors) as well as the cooling tower fan motor were replaced. Variable speed drives were installed on the chilled water pump motors, condenser water pump motors, and the cooling tower fan motor. A water-side economizer was also installed to provide free cooling during periods when the ambient temperature drops below 65 F.
  • New high-efficiency boiler: The space-heating boiler at the Courthouse was replaced with a 92 percent efficient boiler. The old boiler was well beyond its remaining useful life. The pumping equipment (motors included) was also replaced and variable speed pump controls were implemented.
  • Window sashes, casings, and sills were updated and glazing was replaced with glass/polycarbonate laminate.
Auburn Courthouse aerial
Location: Auburn, California
Project Size: 25,000 square feet.

Annual Energy Use 
Baseline (2009): 252 kBtu/sq. ft.
Actual (2016): 177 kBtu/sq. ft.
Energy Savings: 30%
Annual Energy Cost
Baseline (2009): $89,000
Actual (2016): $76,000
Cost Savings: $13,000

Friday, April 7, 2017

Measuring the Welfare Effects of Residential Energy Efficiency Programs

This paper sets out a framework to evaluate the welfare impacts of residential energy efficiency programs in the presence of imperfect information, behavioral biases, and externalities, and then estimates key parameters using a 100,000-household field experiment. Several results run counter to conventional wisdom: we find no evidence of informational or behavioral failures thought to reduce program participation; there are large unobserved benefits and costs that traditional evaluations miss; and realized energy savings are only 58 percent of predictions. In the context of the model, the two programs we study reduce social welfare by $0.18 per subsidy dollar spent, both because subsidies are not well-calibrated to currently-estimated externality damages and because of self-selection induced by subsidies that attract households whose participation generates low social value. However, the model predicts that perfectly-calibrated subsidies would increase welfare by $2.53 per subsidy dollar, revealing the potential of energy efficiency programs....
From 2010 to 2013, the Better Buildings Neighborhood Program helped more than 40 competitively selected state and local governments develop sustainable programs to upgrade the energy efficiency of homes and buildings. These leading communities used innovation and investment in energy efficiency to expand the building improvement industry, test program delivery business models, create jobs, and save consumers hundreds of millions of dollars.
Even before quantifying welfare effects, the program evaluation process generates several important empirical results. First, in the randomized experiment, there is no evidence of the hypothesized informational or behavioral failures. Within the letter variations, only price mattered: while a $100 audit subsidy increased takeup by 32 percent relative to control, all six informational and behavioral variations had statistically and economically insignificant effects. 
Non-experimental investment takeup estimates imply that households that had audits were willing to pay an average of $330 for the unobserved attributes of a recommended investment, perhaps due to "warm glow" from contributing to externality reduction or from the improved comfort of a weatherized home. Furthermore, post-audit investment takeup was remarkably inelastic to monetary benefits and costs: consumers did not take up 40 percent of investments with private internal rates of return (IRRs) greater than 20 percent, and they did take up 36 percent of investments with negative private IRRs. This inelasticity implies that consumers perceive a wide dispersion in unobserved benefits and costs. These results highlight the importance of using revealed preference approaches to welfare analyses, instead of conventional accounting approaches that consider only observed monetary factors
We estimate that realized energy savings fell well short of predictions. Specifically, the programs’ simulation models predicted that the average household that had an audit made investments that would save $153 per year at retail prices, or about 8.5 percent of baseline energy expenditures. In contrast, we estimate an average savings of $89 per year, implying a "realization rate" of 58 percent. The shortfall cannot be explained by temporary weather patterns and is far too large to be caused by a "rebound effect" (i.e. increased utilization in response to the decreased cost of energy services).
The social internal rate of return (including externality reductions) of investments made through the programs is negative 4.1 percent using the empirical estimates of energy savings. To help address the question of whether these results generalize outside the two Wisconsin programs, Appendix E presents a parallel analysis using data from 37 Better Buildings program sites nationwide. We find that the national programs had slightly worse IRRs than the Wisconsin programs.
The full paper is currently available free of charge at:

by Hunt Allcott and Michael Greenstone
University of Chicago Department of Economics Becker Freidman Institue
April 4, 2017