Sunday, December 18, 2016

Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain

Shale gas has grown to become a major new source of energy in countries around the globe. While its importance for energy supply is well recognized, there has also been public concern over potential risks such as damage to buildings and contamination of water supplies caused by geological disturbance from the hydraulic fracturing (‘fracking’) extraction process. Although commercial development has not yet taken place in the UK, licenses for drilling were issued in 2008 implying potential future development. This paper examines whether public fears about fracking are evident in changes in house prices in areas that have been licensed for shale gas exploration. Our estimates suggest differentiated effects. Licensing did not affect house prices but fracking the first well in 2011, which caused two minor earthquakes, did. We find a 2.7-4.1 percent house price decrease in the area where the earthquakes occurred. Robustness checks confirm our findings.

by Steve Gibbons, Stephan Heblich, Esther Lho and Christopher Timmins
National Bureau of Economic Research (NBER)
NBER Working Paper No. 22859l Issued in November 2016

Planning for green infrastructure: The spatial effects of parks, forests, and fields on Helsinki's apartment prices

• Spatial effects of forests, parks, and fields on apartment prices are estimated.
• Forests generate indirect benefits in the urban core and direct in the urban fringe.
• Parks generate direct and indirect benefits in the urban core.
• Fields generate direct benefits in the urban fringe and no indirect spillovers.
• Successful green interventions are location-, benefit-, and goal-sensitive.

As the importance of urban green spaces is increasingly recognised, so does the need for their systematic placement in a broader array of socioeconomic objectives. From an urban planning and economics perspective, this represents a spatial task: if more land is allocated to various types of green, how do the economic effects propagate throughout urban space? This paper focuses on the spatial marginal effects of forests, parks, and fields and estimates spatial hedonic models on a sample of apartment transactions in Helsinki, Finland. The results indicate that the capitalization of urban green in apartment prices depends on the type of green, but also interacts with distance to the city centre. Additionally, the effects contain variable pure and spatial spillover impacts, also conditional on type and location, the separation of which highlights aspects not commonly accounted for. The planning of green infrastructure will therefore benefit from parameterizing interventions according to location, green type, and character of spatial impacts.
The full-sample estimation explained 78% of price variation and returned the expected signs for all hedonic coefficients, except for that of distance to a forest. An increase in the debt and maintenance costs and a decrease in the condition of the property decreases price/m2. Additional rooms have a negative effect, reflecting the diminishing marginal utility of additional units of space. Increase in the property's age decreases price until historical status becomes relevant and price increases again. The yearly dummy variables are significant, indicating a drop in the average level of selling price/m2 from 2000 to 2001, followed by an increase from 2002 onwards. Increased distance to the city centre and coastline decrease price, whereas lot size is not significantly different from zero. The coefficients of the proxies for noise and air pollution disamenities are significant; a 100-meter increase in distance to rails increases average m2 price by 0.15%, while the corresponding increase for over-ground metro line is 0.19% and for major road is 0.36%.
Kuva: Roy Koto/ Viherosasto

The estimation supported the assumption of a CBD gradient in the marginal effects of parks and fields. Increased distance to a park decreases prices in the city centre, or, conversely decreasing the distance of a downtown property to a park increases its price, with the effect gradually declining as distance to the CBD increases. The maximum effect is estimated to a decrease of 1.5% in the m2 price when distance to a park increases 100 m, which is in the same range to the effect of recreational forests in the study of Tyrväinen (1997) that reports a corresponding increase of 0.5% (after currency conversion and average price normalization).... Increased distance to fields decreases price in the urban fringe, or conversely, decreasing the distance of a suburban property to fields increases its price. The maximum effect along this gradient is a decrease of 1.1% in m2 price when distance to a field increases by 100 m.

Going to the Woods Is Going Home: Recreational Benefits of a Larger Urban Forest Site — A Travel Cost Analysis for Berlin, Germany

• The travel cost method (TCM) is applied to an urban forest site in Berlin, Germany.
• The study strongly suggests the feasibility of the TCM for urban forest sites.
• Recreational demand is less elastic for Berlin residents than for non-residents.
• Online survey participants show a more elastic demand than those sampled on-site.
• An overall consumer surplus of 14.95 € per visit is estimated for the whole sample.

We present an application of the travel cost method to a large urban forest site in Berlin, Germany. The analysis is based on a large onsite survey and the same survey administered online. Although such applications are rare in an urban context, applying a seasonal demand model to the case of Grunewald is possible because the distances travelled are relatively large, the majority of the respondents use motorized or public transport, and Grunewald is a large and unique urban forest site with very few substitutes. The main results are the following: (1) The demand for visits to Grunewald is less elastic if only Berlin residents are taken into account compared to when residents from the entire larger urban area of Berlin are considered. (2) Estimated consumer surpluses are therefore greater if only Berlin residents are taken into consideration. (3) In addition, demand is more elastic for the internet sample than for the on-site sample. (4) Results suggest a lower bound overall consumer surplus of 14.95 € per visit. The results indicate that despite its inherent limitations, non-market economic valuation through the travel cost method can provide administrations with a powerful tool to monetize the benefits of urban forest recreation to increase public funding and redirect resources to address intensified use....

Saturday, December 17, 2016

A Global Survey and Review of the Determinants of Transaction Costs of Forestry Carbon Projects

• We measured transaction costs incurred by project developers of forestry carbon in monetary and non-monetary terms.
• We tested if the transaction costs depend on characteristics of the transaction, transactor, and institutional design.
• TCs are found to be significantly influenced by various factors, especially market type.
• CDM-market-related projects face significantly higher TCs than non-CDM-related projects.

Reducing carbon emissions in the forestry sector by means of market-based schemes is considered a cost-effective measure for tackling climate change impacts. However, the transaction costs (TCs) involved are typically unknown or unquantified and therefore often neglected. In this study three types of TCs (search, design and negotiation costs) were measured in person-days and monetary terms based on a global survey of forestry carbon projects implemented across Latin-America, Asia and Africa. Cost estimates vary between zero and 1.201/tCO2 for person-days and from zero to US$ 1.738/tCO2 for monetary costs. Key drivers of TCs are identified based on the characteristics of the project in general, the transaction, the transactors involved and institutional design. The latter type of characteristic is shown to have a particularly large impact on TCs.

by Thu-Ha Dang Phan 1 and 2, Roy Brouwer 2 and Marc David Davidson 1 
1. Institute for Biodiversity and Ecosystem Dynamics, University of Amsterdam, P.O. Box 94248, 1090 GE Amsterdam, The Netherlands
2. Department of Economics, University of Waterloo 200 University Avenue West, Waterloo, ON, N2L 3G1, Canada
Ecological Economics via Elsevier Science Direct
Volume 133; March, 2017; Pages 1–10
Available online 24 November 2016
Keywords: Transaction costs; Institutional design; Forestry carbon; REDD; CDM; Carbon market

Thursday, December 15, 2016

Energy efficiency and economic value in affordable housing

• Dutch affordable housing suppliers recoup sustainability investment by selling dwellings.
• Energy-efficient affordable dwellings sell at a premium.
• A-labeled dwellings are 6.3% – 9,300 euros – more valuable than C-labeled ones.
• The combined value effect of refurbishing an affordable housing dwelling, including improving the energy efficiency, of 20% would more than pay for the retrofit.

Strong rental protection in the affordable housing market often prohibits landlords from charging rental premiums for energy-efficient dwellings. This may impede (re)development of energy efficient affordable housing. In the Netherlands, affordable housing institutions regularly sell dwellings from their housing stock to individual households. If they can sell energy efficient dwellings at a premium, this may stimulate investments in the environmental performance of homes.

We analyze the value effects of energy efficiency in the affordable housing market, by using a sample of 17,835 homes sold by Dutch affordable housing institutions in the period between 2008 and 2013. We use Energy Performance Certificates to determine the value of energy efficiency in these transactions. We document that dwellings with high energy efficiency sell for 2.0–6.3% more compared to otherwise similar dwellings with low energy efficiency. This implies a premium of some EUR 3,000 to EUR 9,700 for highly energy efficient affordable housing.
by Andrea Chegut 1, Piet Eichholtz 2 and Rogier Holtermans 2 
1. MIT, Cambridge, MA, United States
2. Maastricht University, Department of Finance, PO Box 616, 6200 MD Maastricht, The NetherlandsThe Netherlands
Volume 97, October 2016, Pages 39–49
Keywords: Affordable housing; Energy efficiency; Energy performance certificates
A free version of the paper is currently available free of charge via the MIT Centre for Real Estate at

Thursday, December 1, 2016

New Association of Environmental and Resource Economists (AERE) Website

The new AERE website at offers up-to-date information about conferences, job opportunities, and all AERE news, as well as improved functionality! 

The site will be your portal for: 
  • Access to every issue of JAERE and REEP and the AERE Newsletter;
  • Registration for AERE events;
  • Abstract submission for the AERE Summer Conference;
  • Abstract submission for the five regional and national meetings at which AERE sponsors sessions each year;
  • Announcements for conferences and jobs; and
  • Information on how to nominate someone for AERE honors and awards.

The site will enable all in the organization to communicate more efficiently and seamlessly about opportunities in environmental and natural resource economics.  Tthe online payment system will make membership payment and registering for events much easier

Click here for the newly designed website's homepage.

Upcoming AERE events include:
  • AERE sessions and luncheon at the 2017 ASSA meeting in Chicago. Steve Polasky of the University of Minnesota will be giving the AERE Fellows Talk at the luncheon on January 7th. Reservation deadline is December 21st
  • The AERE Summer Conference in Pittsburgh, Pennsylvania (May 31-June 2, 2017). The Call for Papers will open on December 1st and close on January 18, 2017;
  • AERE sessions at a variety of national and regional meetings.
See the November AERE Newsletter for details on all these events.

Tuesday, November 29, 2016

Unit of Colas SA designed solar panels that embed into roads - Work progressing on larger test site in northern France - Solar-Panel Roads to Be Built on Four Continents Next Year

... [Wattway] has designed rugged solar panels, capable of [withstanding] the weight of an 18-wheeler truck.... They’re constructing 100 outdoor test sites and plan to commercialize the technology in early 2018.
As solar costs plummet, panels are being increasingly integrated into everyday materials. Last month Tesla Motors Inc. [unveiled] roof shingles that double as solar panels. Other companies are integrating photovoltaics into building facades. Wattway joins groups including Sweden’s Scania and Solar Roadways in the U.S. seeking to integrate panels onto pavement.

A kilometer-sized testing site began construction last month in the French village of Tourouvre in Normandy. The 2,800 square meters of solar panels are expected to generate 280 kilowatts at peak, with the installation generating enough to power all the public lighting in a town of 5,000 for a year, according to the company.

For now, the cost of the materials makes only demonstration projects sensible. A square meter of the solar road currently costs 2,000 ($2,126) and 2,500 euros. That includes monitoring, data collection and installation costs. Wattway says it can make the price competitive with traditional solar farms by 2020.
The next two sites will be in Calgary in Canada and in the U.S. state of Georgia.
For more information go to

by Anna Hirtenstein
November 23, 2016

Willingness to Pay for a Highland Agricultural Restriction Policy to Improve Water Quality in South Korea: Correcting Anomalous Preference in Contingent Valuation Method

Abstract: This study examines the willingness to pay (WTP) for the highland agriculture restriction policy which aims to stabilize the water quality in the Han River basin, South Korea. To estimate the WTP, we use a double-bounded contingent valuation method and a random-effects interval-data regression. We extend contingent valuation studies by dealing with the potential preference anomalies (shift, anchoring, and inconsistent response effects). The result indicates that after the preference anomalies are corrected, the statistical precision of parameter estimates is improved. After correcting the potential preference anomalies, estimated welfare gains are on average South Korean currency (KRW) 2,861 per month per household. Based on the WTP estimate, the total benefits from the land use restriction policy are around KRW 297.73 billion and the total costs are around KRW 129.44 billion. The net benefit is, thus, around KRW 168.29 billion. This study suggests several practical solutions that would be useful for the water management. First, a priority should be given to the valid compensation for the highland farmers’ expected income loss. Second, it is necessary to increase in the unit cost of the highland purchase. Third, wasted or inefficiently used costs (e.g., overinvestment in waste treatment facilities, and temporary upstream community support) should be transferred to the program associated with high mountainous agriculture field purchase. Results of our analysis support South Korean legislators and land use policy makers with useful information for the approval and operationalization of the policy.
by Ik-Chang Choi 1, Hyun No Kim 2, Hio-Jung Shin 3,*, John Tenhunen 1 and Trung Thanh Nguyen 4
1 Bayreuth Center of Ecology and Environmental Research, University of Bayreuth, 95440 Bayreuth, Germany
2 Environmental Policy Research Group, Korea Environment Institute, 30147 Sejong, Korea
3 Department of Agricultural and Resource Economics, Kangwon National University, 24341 Chuncheon, Korea
4 Institute for Environmental Economics and Word Trade, University of Hannover, 30167 Hannover, Germany
* Correspondence: Tel.: +82-33-250-8667
2016, Volume 8, Issue 11; Received: 29 August 2016 / Accepted: 14 November 2016 / Published: 23 November 2016
Keywords: double-bounded contingent valuation method; willingness to pay; random-effects interval-data regression; potential preference anomalies; benefit-cost analysis

Monday, November 28, 2016

New Report Finds that Preserving Quad Cities and Clinton Nuclear Plants will Save Illinois Businesses and Consumers over $3 Billion in Electricity Costs over Next 10 Years

Without the Quad Cities and Clinton nuclear plants in Illinois, consumers would pay $364 million more annually and over $3.1 billion more over the next ten years (on a present value basis) in electricity costs.  Annually, this equates to $115 million in savings for residential customers and $249 million in savings for commercial and industrial customers, according to a new study conducted by economists at global consulting firm The Brattle Group.

The study was sponsored by leading Illinois business organizations, including the Illinois Retail Merchants Association (IRMA), the Illinois Hispanic Chamber of Commerce and the Chicagoland Chamber of Commerce.

The report also finds that Quad Cities and Clinton nuclear plants:

  • Avoid 15 million tons of CO2 emissions annually over the next five years, valued at $657 million per year.  This is the equivalent of taking 3.2 million cars off the road.
  • Avoid significant amounts of criteria pollutants annually, valued at $109 million per year over the next five years.
  • Create a broader benefit to the Illinois economy.  By keeping electricity prices lower, these nuclear plants leave residential, commercial, and industrial consumers with more money to spend on other goods and services, which boosts overall economic activity in Illinois, including jobs, GDP, and tax revenues.

Clinton power station pano.jpg
The bill would also bring a number of additional benefits to businesses in Illinois, including:

  • Increasing funding for energy assessments, cash incentives for retrofits and new equipment, technical services and whole-building solutions, helping more than 60,000 medium and large businesses every year.
  • Dedicating 6 percent of all efficiency funding to an emerging technology fund that powers innovation in delivering efficiency products & services, allowing Illinois to invest in the next generation of energy efficiency technology and setting the stage for future businesses to grow.

Illinois Retail Merchants Association 
Press Release dated November 28, 2016
via PRNewswire

Trade Costs, CO2, and the Environment

This paper quantifies how international trade affects CO2 emissions and analyzes the welfare consequences of regulating the CO2 emissions from shipping. To this end, the paper describes a model of trade and the environment, compiles new data on the CO2 emissions from shipping, and estimates key parameters using panel data regressions. Results show that the benefits of international trade exceed trade's environmental costs due to CO2 emissions by two orders of magnitude. While proposed regional carbon taxes on the CO2 emissions from shipping would increase global welfare and increase the implementing region's GDP, they would also harm poor countries.
All three counterfactual policies increase social welfare globally, albeit by small amounts. In each case, the gains from trade fall slightly, but the environmental costs of trade due to CO2 fall even more. In total, social welfare increases by about $1 billion over a decade for the EU policy, $7 billion for the US policy, and $10 billion for a global policy. While these effects are positive, they are small in magnitude and do not exceed two tenths of a basis point relative to baseline levels of global income. While the median country is actually harmed by the regional policies ... the positive benefits to GDP in the implementing region more than offset these losses elsewhere.
Regulations benefit wealthy countries but actually decrease welfare in poor countries.... The richest third, which had 2007 GDP per capita above $14,000; the middle third, which had 2007 GDP per capita of $2,400 to $14,000; and the bottom third, which had 2007 GDP per capita below $2,400. The global policy increases welfare in the richest third of countries by half a basis point, decreases welfare in the middle third of countries by three quarters of a basis point, and decreases welfare in the poorest third of countries by 1.3 basis points. The EU and US counterfactual policies generate similar patterns but with smaller magnitude effects
by Joseph S. Shapiro
American Economic Journal: Economic Policy
Volume 8, Number 4; November, 2016; pages 220-254
The full article is currently available free of charge at

Sunday, November 27, 2016

The Mortality and Medical Costs of Air Pollution: Evidence from Changes in Wind Direction

We estimate the effect of acute air pollution exposure on mortality, life-years lost, and health care utilization among the US elderly. We address endogeneity and measurement error using a novel instrument for air pollution that strongly predicts changes in fine particulate matter (PM 2.5) concentrations: changes in the local wind direction. Using detailed administrative data on the universe of Medicare beneficiaries, we find that an increase in daily PM 2.5 concentrations increases three-day county-level mortality, hospitalizations, and inpatient spending, and that these effects are not explained by co-transported pollutants like ozone and carbon monoxide. We then develop a new methodology to estimate the number of life-years lost due to PM 2.5. Our estimate is much smaller than one calculated using traditional methods, which do not adequately account for the relatively low life expectancy of those killed by pollution. Heterogeneity analysis reveals that life-years lost due to PM 2.5 varies inversely with individual life expectancy, indicating that unhealthy individuals are disproportionately vulnerable to air pollution. However, the largest aggregate burden is borne by those with medium life expectancy, who are both vulnerable and comprise a large share of the elderly population.
[In the first Ordinary Least Squares (OLS) estimate presented] each 1-μg/m3 increase in daily PM 2.5 exposure is associated with 0.098 additional deaths per million elderly over the following three days, or a 0.025 percent increase relative to the average 3-day mortality rate.... Those aged 70-79 experiencing lower (and insignificant) increases in death rates than those aged 64-69 despite having higher mean death rates.... The Instrumental Variables (IV) estimates are about five times larger than the corresponding [OLS] estimates in Panel A, suggesting that OLS estimation suffers from significant bias. The IV estimates imply that each 1-μg/m3 increase in daily PM 2.5 exposure corresponds to 0.605 additional deaths per million elderly over the following three days, or a 0.15 percent increase relative to the average 3-day mortality rate. The corresponding estimate for a one standard deviation increase in daily PM 2.5 is a 1.1 percent increase in 3-day mortality. Columns (2)-(6) show a largely monotonic relationship between the mortality effect of PM 2.5 and age, with each 1-μg/m3 increase in daily PM 2.5 causing 0.263 additional deaths per million among the 65-69 population but 2.050 additional deaths per million among the 85 and over population. However because the average mortality rate is also much higher for the older elderly, the relative mortality effects across age groups follow a U-shaped pattern: each 1-μg/m3 increase in daily PM 2.5 exposure increases 3-day mortality by 0.20 percent among ages 65-69, by 0.10 percent among ages 75-79, and by 0.18 percent among ages 85 and over. This pattern is somewhat unexpected, since, if sicker individuals are more vulnerable to pollution shocks, and if age is a good proxy for health, then we would expect relative mortality to increase monotonically with age. ...

...The association between PM 2.5, hospitalization, and medical spending is mixed: each 1-μg/mincrease in daily PM 2.5 exposure is associated with significantly less inpatient spending and fewer hospital admissions, is not associated with spending on ER admissions, and is associated with significantly more ER admissions and visits. A more consistent story emerges from our IV approach (Panel B), which shows that increases in daily PM 2.5 increase both hospitalizations and inpatient spending, driven primarily by encounters that originate in the ER. The IV estimates imply that each 1-μg/m3 increase in daily PM 2.5 causes a highly significant increase in ER inpatient spending of over $15 thousand per million beneficiaries (relative to a mean of $13.7 million).... The overall admissions rate increases by 2.03 per million beneficiaries, an increase which also can be almost entirely explained by the 1.96 additional admissions originating through the ER. Finally, we estimate that PM 2.5 increases total ER visits, including visits that do not result in a hospital admission, by 2.29 per million beneficiaries. 
A simple numerical exercise helps to illustrate the policy implications of our results. The average level of PM 2.5 decreased by 3.65-μg/m3 nationwide between 1999 and 2011.... The estimate reported in Column (5) of Table 4 implies that such a decrease saved 147,098 life-years annually among the 41 million Medicare beneficiaries alive in 2011.26 If we assign each life year a standard value of $100,000 each, the mortality reduction benefits of this decrease added up to about $15 billion in 2011. The EPA's calculation of the annual costs of meeting the 1990 Clean Air Act Amendment air quality standard increased from $19.9 billion to $43.9 billion between 2000 and 2010 (EPA 2011). Thus, the estimated $15 billion in annual mortality benefits represents a large fraction of the estimated annual costs of complying with air pollution standards during this period. By contrast, the reduction in hospitalization costs implied by our estimates is an order of magnitude smaller – about $0.93 billion annually.
Kris Krug/Flickr  Fort McMurray, Alberta hub of Canada's oil sands industry
... Table 4 displays estimates of equation (1) when the outcome variable is the estimated 3-day life-years lost per million beneficiaries... Column (2) displays results when every decedent’s counterfactual life expectancy is set equal to the mean for the 2-year FFS population (11.6 years). This estimate implies that each 1-μg/m3 increase in 2 daily PM 2.5 increases life-years lost by 8.6 years per million beneficiaries. This same effect can also be obtained directly by multiplying the mortality effect of 0.746 in Column (1) by the mean life expectancy of 11.6.... Accounting for decedents’ age and sex reduces the estimated impact of PM 2.5 on life-years lost by 31 percent, to 5.9 life-years per million beneficiaries.... The estimate decreases by another 40 percent when the counterfactual life-years estimates account for previously diagnosed chronic conditions.... Finally, we estimate counterfactual life expectancy using the LASSO machine learning algorithm, which allows us to optimally incorporate over 1,000 additional predictors, as described earlier. This final estimate, ... is 24 percent smaller than estimates that account only for age, sex, and chronic conditions and implies that each 1-μg/m3 increase in daily PM 2.5 increases life-years lost by 2.7 years per million beneficiaries.... This final estimate may be close to the true value.

... Adding additional predictors when estimating life expectancy can substantially reduce the estimate of life-years lost due to pollution. This reduction can occur for two reasons. First, better survival models should predict lower remaining life expectancy for decedents on average....The mean life-years lost per decedent (“LYL per decedent”) decreases from 11.56 in the model with no predictors to 4.86 in the LASSO model. Second, a better survival model should also predict a more accurate distribution of predicted life expectancies among decedents. This matters if air pollution selectively kills individuals in this population who are systematically healthier (or sicker) than the average decedent. Indeed,...  This second channel also plays a role in reducing the estimated life-years lost from improved survival modeling. While the average LYL per decedent decreases by only 0.43 per million when moving from LYL estimates based on age, sex, and chronic conditions to those based on the LASSO model, the estimated effect of PM 2.5 on LYL drops by nearly twice as much (0.85 per million). This indicates that the mortality effects of PM 2.5 tend to be larger among individuals with characteristics that LASSO associates with lower life expectancy, even after conditioning on age, sex, and chronic conditions.

The estimates... can also be used to describe the estimated counterfactual life-years lost among “compliers”: those individuals who died because of increases in wind-driven PM 2.5. This estimate can be compared to the average life-years lost among all decedents to shed light on whether those dying from increased pollution appear to be differentially healthy or frail compared to those who die on a typical day. The LYL per complier is calculated by dividing the estimated effect of increased PM 2.5 on life-years lost by the estimated mortality effect (the coefficient reported in Column 1).25 When life expectancy is modeled as a function of age and sex alone, those dying from pollution appear to have slightly longer life expectancies (7.9 years) compared to the average decedent (7.8 years). However, estimates that rely on chronic conditions or the LASSO model show the opposite pattern. In Column (5), those dying from pollution appear to have somewhat shorter life expectancies (3.6 years) compared to the average decedent (4.9 years).
The mortality rate effect of PM 2.5 decreases monotonically with life expectancy. A 1-μg/m3 increase in daily PM 2.5 increases deaths among those with life expectancy of less than one year by 18.9 per million. By contrast, the effect on those with life expectancies of 5-10 years is only 0.53 deaths per million, and the mortality rate effect for those with life expectancies exceeding 10 years is even smaller and not statistically different from zero.... Relative mortality also decreases monotonically with life expectancy, which is consistent with the notion that the sickest individuals are most vulnerable to pollution shocks....

Although beneficiaries with a life expectancy of less than one year are the most likely to be killed by air pollution, beneficiaries with a life expectancy of up to 10 years are also vulnerable.

Although beneficiaries in Column (1) have less than one year of life expectancy, their high mortality rate causes their number of life-years lost due to pollution to exceed that of any other group: 11.3 life years per million beneficiaries....  By contrast, among beneficiaries with a life expectancy of 5-10 years..., the life-years lost from pollution is only equal to 3.7. Although their life expectancy is high relative to those in Column (1), their mortality rate is much lower, resulting in a smaller loss of life years. Those with 1-2 or 2-5 years of life expectancy (Columns 2 and 3) fall somewhere in between, losing 8.2 and 6.7 life years per million beneficiaries, respectively, when PM 2.5 increases by 1 μg/m3.

Weighting the life-years lost coefficients from Table 5 by the respective sizes of the groups, we see
that the largest portion of the social cost of pollution is borne by those with a life expectancy of 5-10 years (30 percent of sample, 43 percent of burden), followed by those with a life expectancy of 2-5 years (12.7 percent of sample, 33 percent of burden). While the per capita burden is highest for those with the lowest life expectancy, the majority of the aggregate social burden falls on those with intermediate life expectancy (2 to 10 additional years).
by Tatyana Deryugina, Garth Heutel, Nolan H. Miller, David Molitor and Julian Reif
National Bureau of Economic Research (NBER)
NBER Working Paper No. 22796; Issued in November 2016

Saturday, November 26, 2016

Rising Sea Levels and Sinking Property Values: the Effects of Hurricane Sandy on New York’s Housing Market

Are coastal cities adjusting to rising sea levels? This paper argues that large-scale events have the potential to ignite the process. We examine the effects of hurricane Sandy on the New York City housing market. We assemble a large plot-level dataset with rich geographic data on housing sales in New York City for the period 2003-2015, along with information on which building structures were damaged by the hurricane, and to what degree. Our difference-in-difference estimates provide robust evidence of a negative impact on the price trajectories of houses that were directly affected by Sandy. Interestingly, this is also the case for houses that were not damaged but face high risk of coastal flooding. Our results suggest that Sandy has increased the perceived risk of living in those neighborhoods. We also show that the negative effects on housing prices appear to be highly persistent.
Far Rockaway boardwalk, six weeks after Hurricane Sandy in 2012. (Photo by cgc76, Creative Commons license)

These point estimates suggest an initial 18 log point price reduction in year 2013, with a partial recovery amounting to an 8 log point reduction in year 2014, and stabilizing at an 11 log point drop in value in year 2015. This pattern is illustrated in Figure 6, which plots the point estimates and the 95% confidence interval.... The Figures clearly show that the price reduction for units in HEZ12 took place precisely in the first quarter of 2013, providing strong confirmation in favor of identifying hurricane Sandy as the event responsible for the structural break. Furthermore, we learn that prices initially over-reacted and fell by close to 20 log points in the year immediately after Sandy.62 In the following years sale prices partially recovered but even in 2015 the Sandy price penalty appears to be around 10 log points.

To gain a deeper understanding, we turn to the estimation of Equation (6), reported in columns 2 through 4 of Table 11. In all three columns we notice the same pattern: small and non-significant estimates for all years with the exception of the large and statistically significant estimates for the post-Sandy years 2013-2015. The estimates suggest a similar pattern for units located in HEZ12 that were undamaged (identified by Dam0) or lightly damaged (Dam1): a large initial drop of about 17 log points, followed by a partial recovery so that in 2015 the price penalty is around 10 log points. In contrast the price penalty for severely damaged properties (Dam2) is large and fairly constant over time at about 25 log points throughout the post-Sandy period in our sample (2013-2015).

Friday, November 25, 2016

Q&A: Autocase and the next generation of triple bottom line analysis

The U.S. Green Building Council USGBC, along with Autodesk and Impact Infrastructure, has unveiled a new platform to identify the triple bottom-line impacts of design alternatives.

This past Greenbuild in October 2016 USGBC joined Autodesk and Impact Infrastructure to unveil a new platform called Autocase for Sustainable Buildings, which provides real insights by identifying the triple bottom-line impacts of design alternatives, measured in both quantities and dollars. USGBC recently introduced a new pilot credit called “Informing Design Using Triple Bottom Line Analysis” that rewards projects one point toward certification for conducting a triple bottom-line benefit-cost analysis on at least six LEED credits. Project teams can use Autocase to determine solutions that create optimal returns.
The USGBC caught up with Emma Stewart, head of sustainability solutions at Autodesk, John Williams, CEO of Impact Infrastructure and creator of Autocase, and Theresa Backhus, Sites Technical Specialist at USGBC, to get their insight on how the pilot credit will enhance the certification process and the role of data within design strategy at large.

Tell us about this pilot credit. What went into the decision behind its creation?

Emma: The biggest obstacle to scaling green buildings is the hard dollar cost of investing in greater levels of sustainability. Is it worth the risk? What’s in it for me? Who gains the most? What are the social and environmental impacts to these up-front investments?

Consider that 82 percent of facility executives say “reducing costs” was the top reason they’re bothering to upgrade their buildings to be more energy-efficient (according to the 2016 Johnson Controls Energy Efficiency Indictor Survey). Every single one of those executives needs a life cycle cost analysis to ensure those upgrades are the right ones to do and collectively pay them back many times over.

We know that LEED-certified buildings have been shown to increase rental and resale rates and boost worker productivity. Greener buildings can also have spin-off benefits to neighbors and the global community by prioritizing locations close to transit, capturing and storing rainwater and sourcing materials regionally. But decision makers also need to understand how these benefits can apply to their buildings in a particular location, and just how much those benefits are worth in dollars.

Autocase for Sustainable Buildings aims to answer those questions, automatically and as part of the design process. Once these analyses became democratized (i.e., feasible at 1 percent of the cost of a custom study and by non-experts) we were happy to hear that USGBC wanted to encourage this type of analysis through a LEED pilot credit.

Theresa: The new pilot credit is open to all rating systems (under BD+C, ID+C, O+M, ND and Homes) for both LEED 2009 and v4. Thus, almost all current and future LEED projects can take advantage of it, which is very exciting. This has the potential to impact a lot of buildings.

The latest version of LEED places emphasis on understanding the life cycle impacts, benefits and tradeoffs of different design decisions. How can integrated analysis tools like Autocase benefit LEED users?

John: By using Autocase, LEED project teams can conduct a benefit cost analysis in advance of project completion to determine what design solutions will create optimal returns and produce a business case on the overall design while earning a point toward LEED certification. This allows project teams and buildings owners to cost-justify green design, communicate the value of enhanced designs to stakeholders and fine-tune designs to build more cost-effective and impactful buildings.

U.S. Green Building Coouncil
Published on 7 November 2016
Written by Amanda Sawit

Why Investments in Sustainability Pay Off in the Long Run

... A unique study based on compelling data from investment advisory firm Bentall Kennedy reveals surprising reasons why developing sustainable properties is a good investment—including more long-term and happier tenants.
Compared to traditional buildings, rents for sustainable properties, also known as green buildings, were on average 3.7 percent higher, the study found. Rents can be even higher for specifically LEED-certified properties. Additionally, occupancy levels for green buildings were 4 percent higher, while tenant renewal probabilities for these buildings were roughly 6 percent higher.

“The research to date well supports a rental rate premium … in the 2 percent to 9 percent range. The offsetting benefits come in decreased expense variance (lower operating risk) and decreased human capital expenses associated with happier and healthier employees. There is also new evidence of increased retail sales in certified space,”...
BP Centre 240 4 Ave SW, Calgary, Alberta
by Alexandra Pacurar
Commercial Property Executive
July 20, 2016

The study, which was published in the ... Journal of Portfolio Management, was conducted by Dr. Nils Kok of Maastricht University in The Netherlands and Dr. Avis Devine of the University of Guelph in Canada. The research analyzes 10 years of financial performance data across a Bentall Kennedy-managed office portfolio totaling 58 million square feet, (34 million square feet in the U.S., 24 million square feet in Canada). Overall, the results provide compelling evidence that buildings with sustainable certification outperform similar non-green buildings in terms of rental rates, occupancy levels, tenant satisfaction scores, and the probability of lease renewals.
"Previous studies have suggested similar correlations but none of these looked at in-depth, diverse metrics across a large portfolio for as long as 10 years," said Giselle Gagnon, Senior Vice President, Strategic Resources Group at Bentall Kennedy. "Investors want evidence to support the economic merits of investing in sustainable buildings, and this new academic research provides exactly that."

Deeper data sets show positive results for sustainable buildings

The study (available here) of nearly 300 office properties across North America included lease-level data such as rents, rent concessions and lease renewal rates, as well as building-level information such as occupancy rates, tenant satisfaction scores, energy and water consumption, and green building certifications.  Highlights ... include:
  • Net effective rents, including the cost of tenant incentives, average 3.7 percent higher in LEED certified properties in the U.S. than in similar non-certified buildings.
  • Rent concessions, for LEED and BOMA BEST buildings in Canada are on average 4% lower than in similar non-certified buildings.
  • Occupancy rates during the period were 18.7 percent higher in Canadian buildings having both LEED and BOMA BEST certification, and 9.5 percent higher in U.S. buildings with ENERGY STAR certification, than in buildings without certifications.
  • Tenant renewal rates were 5.6 percent higher in Canadian buildings with BOMA BESt Level 3 certification than in buildings with no BOMA BESt certification.
  • Tenant satisfaction scores were 7 percent higher in Canadian buildings with BOMA BESt level 3 and 4 certification than in non-certified buildings.
  • Energy consumption per square foot was 14 percent lower in U.S. LEED certified properties than in buildings without certification....

Thursday, November 24, 2016

Green Roof Cost-Benefit Analysis: Special Emphasis on Scenic Benefits

This article presents a green roof cost-benefit analysis (CBA). Green roofs are roofs which are partially or completely covered by vegetation. We discuss the benefits and costs of light self-sustaining vegetated roofs. The benefits of the ecosystem services (ES) provided by green roofs can be classified into private and public benefits. We apply the selected valuation methods first in Helsinki, Finland and subsequently explain how results can be transferred to other urban locations. Past research and this study show that private benefits are usually not high enough to justify the expensive investment for a private decision maker. However, when the public benefits are added to the private benefits, social benefits are higher than the costs of green roofs in most cases.

Past research quantified most types of the benefits, excluding scenic and biodiversity benefits. Scenic benefits denote the intangible benefits that people derive from the presence of green space, including at least aesthetic and psychological ones. In this article, special emphasis is placed on the valuation of the scenic benefits; these are among the most challenging benefits to valuate in monetary terms. We employ hedonic pricing theory, implemented via spatial regression models, and green roof implementation scenarios in order to estimate the aggregate willingness to pay for a “unit” of green roof. The results show that the scenic benefits can be a significant attribute in cost-benefit calculations. Yet, the amount of benefits strongly depends on the green roof design....
First, we estimated the value of any urban park, regardless of its size, within 30, 50 and 70 m of a building.... The value of a presence of urban green is significant in all of the tested distances. The average marginal value is highest for buildings within the 30 m radius from a park and decreases when increasing the allowed distance from the park. The average values for the respective distances are 134, 122 and 94 per m2 of living space. It has been empirically shown (Crompton, 2001) that the incremental of value attributable to the park significantly  increases with the size of the park; for instance, in an early study by Coughlin and Kawasima (1973) it was found that a 5-acre park (2 ha) had almost five times the increase in the price of a dwelling unit than a 1-acre park (0.4 ha) and it was also found that the incremental value attributable to a small park decreased more quickly as the distance to the park increased. Our findings were similar regarding the effects of park size. The value of a big park for buildings within 30 m from the park was in average 200 per square meter while the value of a small park was 130. However, when increasing the distance radius including also buildings within 50 m from the parks, the average value of a big park was almost 250 while the average value of a small park was around 50....

Legrand Employees Drastically Cut Energy Use, Reduce CO2 Emissions, and Save $79k with Energy Marathon 2.0

Legrand North America, [a] global specialist in electrical and digital building infrastructures, recently concluded its Energy Marathon 2.0, a company-wide, internal competition designed to save energy through ready-to-implement technology and process changes, and to reshape energy usage behaviors. This year's Energy Marathon saw increased employee participation and innovation....

... Based on the idea that a marathon is 26.2 miles, the Legrand Energy Marathons bring energy efficiency to the forefront for a focused, 26.2-day period. The Energy Marathon 2.0 ran from October 3rd to the 28th.

This year's 22 competing sites saved a total of 722,941 kWh and $79,725 over the course of the near-month-long event. This level of electricity savings equates to 508 metric tons of CO2 emissions. Overall, Legrand North America reduced its electricity use by 15.9% during the event, compared to a September 2016 baseline. This was a significant results increase over Energy Marathon 2014, which, with 18 participating corporate sites, had a total savings of 588,540 kWh and $46,732.00 on electric bills.

Thursday, November 17, 2016

New Canada Green Building Council report shows green building can cut 19.4 million tonnes of GHGs while boosting economy by $32.5 billion

A Canada Green Building Council report released September 28, 2016 is demonstrating how a greener built environment can combat climate change and stimulate economic growth. The report, titled Building Solutions to Climate Change: How Green Buildings Can Help Meet Canada’s 2030 Emissions Targets outlines the CaGBC’s response to the Vancouver Declaration on Clean Growth and Climate Change, which committed Canada to meeting or exceeding the federal government’s 2030 target of a 30 per cent reduction below 2005 levels of greenhouse gas (GHG) emissions.

The report makes four key recommendations aimed at meeting Canada’s climate change targets while fueling the growth of Canada’s sustainable building industry. Targeting existing buildings with measures that improve energy efficiency and reduce GHG emissions, along with innovation toward net zero carbon buildings are key in achieving national emission targets. The recommendations are substantiated by research from WSP Group and Acton White Associates, commissioned to examine the carbon savings potential of existing buildings and net zero buildings, and also to analyze the required investment and economic benefits.

The four key recommendations in the report are:

  1. Meet Canada’s climate change targets by investing in and providing incentives for energy efficiency improvements (including recommissioning, deep retrofits, renewable onsite energy systems, and switching fuel sources to renewable options) in existing buildings commercial, institutional and high-rise residential buildings over 25,000 sq.ft. The report finds that if such measures are taken by 2030, Canada will reduce GHG emissions by 19.4 million CO2e tonnes (or 44 per cent) from the 2005 baseline, with energy-related cost savings of $6.2 billion and direct and indirect GDP impacts of $32.5 billion.
  2. Strengthen building performance by advancing building energy benchmarking, reporting and disclosure initiatives – including expanding the ENERGY STAR Portfolio Manager Program. To date, over 13,000 buildings have used Portfolio Manager, but investment is needed to expand this service to support a wider range of buildings types, and provide more dynamic reporting capabilities to help the industry and government advance energy conservation efforts.
  3. Invest in net zero buildings by supporting a National Net Zero Building Initiative to create a Canadian standard to guide the industry. The report finds that if all new buildings above 25,000 sq. ft. were built to be net zero carbon between now and 2030, GHG emissions for this sector would be 17 percent lower than those in 2005, equal to a 7.5 megatonnes GHG emissions reduction.
  4. Reduce the Government’s GHG Emissions by adopting advanced high-performance green building measures for federal building renovations, new construction and leased properties, and, where appropriate, net zero demonstration projects for new construction. Implementing energy efficiency programs for federally-owned buildings over 25,000 sq.ft, which account for three to five per cent of building sector emissions, will result in 480,000 tonnes of GHG emissions reductions and cost savings of approximately $170 million, annually.

“Building on a culture of innovation in Canada’s green building sector, this report demonstrates how we can achieve real results in the battle against climate change by investing in the building sector,” says Thomas Mueller, President and CEO of the CaGBC. “Buildings represent the most cost-effective way to reduce GHG emissions, generate positive returns on investment, and stimulate the economy. Now is the time for governments at all levels to show leadership and commit to policy initiatives that meet stringent high performance standards, while engaging and supporting broader uptake of lower carbon measures across the existing building sector.”

As a result of the adoption of green building upgrades, the report says that 16 sectors across the supply chain in Canada would be stimulated through the creation of jobs and the development of green expertise. They include: manufacturing, professional services, trade, real estate, construction and telecommunications sectors. The resulting employment gains from these initiatives would average 260,741 equivalent full-time jobs annually, with labour income peaks in 2030 at $26.8 billion (in current dollars). Additionally, construction activity in 2030 alone would generate $5.2 billion in taxes accruing to the federal, provincial and municipal orders of government, and the social cost of the GHG emissions avoided would be $960 million (in 2030 dollars, $729 million in 2016 dollars)..
To download the Building Solutions to Climate Change report and to read about CaGBC’s ongoing Advocacy work, visit The Executive Summary is free to the public, and the full 59-page report is available to CaGBC Members. To join CaGBC as a member, visit our website.

According to an economic analysis commissioned by CaGBC10, the estimated net present value of all GDP impacts of these activities will be $261 billion. Implementing this initiative will result in direct and indirect GDP impacts of $32.5 billion in 2030, reaching $42.9 billion inclusive of induced impacts.
A 2014 CaGBCMcGraw Hill Construction study demonstrated that LEED-certifed buildings yield savings in energy and water costs, and increased employment well-being and productivity, with a significant return on investment over the lifecycle of a building. The study also found that the majority of building owners who retrofitted their properties to a LEED standard in Canada expected to recoup the cost of their renovation within just three to fve years. Respondents also expected to see a decrease in operating costs for their retroftted building of 3-10% within the frst year, and up to a 32% decrease within five years.
A four-storey stone building with a curved front, broad on the right and narrow on the left, seen from across a street. Its windows are set in darker bands of stone and it has red trim. The first storey is faced in rusticated stone; the ones above are smooth. On the front is the word "Canada" with a miniature Canadian flag on the right, between the third and fourth storeys. In front small deciduous trees are planted, and several flags including the Canadian flag fly from poles in front of the main entrance near the junction of the two curves. Two cars are parked along the street in front.
Canadian Green Building Council
Press Release dated September 28, 2016

Fossil fuel subsidies undermine carbon pricing in Canada, new study shows

On November 14, 2019, four prominent Canadian environmental groups released a study that shows how billions of taxpayer dollars in federal and provincial subsidies for oil and gas companies greatly undermine climate action in Canada.

Fossil fuel subsidies to oil and gas producers in Canada total $3.3 billion annually. This amounts to paying polluters $19/tonne CO2 to pollute. These subsidies drastically undercut the goal of the pan-Canadian carbon price that Prime Minister Justin Trudeau will introduce in 2018. Unless these subsidies are eliminated, more money will flow annually from government to oil and gas companies in Canada than the money collected through carbon pricing between now and 2020.

“This system is like taxing consumers when they buy cigarettes while giving massive tax breaks to tobacco companies that encourage them to produce more cigarettes. It doesn’t make sense,” said Alex Doukas of Oil Change International.

“Unless Canada phases out massive subsidies to oil and gas companies, Trudeau’s carbon price will do little to encourage polluters to cut carbon emissions,” said Dale Marshall of Environmental Defence. “The three billion dollars in annual subsidies could be put to much better use by investing in climate action, healthcare, or other initiatives.”

Canada and other G20 countries committed to phasing out fossil fuel subsidies back in 2009. This commitment was reiterated by Prime Minister Trudeau at the G7 meeting last March and through a commitment in Finance Minister Bill Morneau’s mandate letter.
“In light of Minister McKenna’s participation in the Carbon Pricing Leadership Coalition at the COP22 meeting in Marrakech, we take the opportunity to remind Canada that leadership requires coherent fiscal policies” stated Annie Bérubé, Director of Government Relations at Équiterre. “Finance Minister Bill Morneau must announce a predictable phase-out of all remaining preferential tax treatment to the oil and gas sector starting in Budget 2017.”

Environmental Defence, Oil Change International, Équiterre, and Climate Action Network Canada, who released today’s study, urge the Canadian government to finally complete the phase-out of all federal subsidies to oil and gas producers by 2020, not 2025 as currently planned.

Tesla Seals $2 Billion SolarCity Deal

Deal overcame mixed recommendations by advisory firms

Tesla Motors Inc. and SolarCity Corp. shareholders approved the electric-car maker’s purchase of the solar installer....

More than 85 percent of Tesla shares voted in favor of the deal.... The deal, valued at about $2 billion, integrates the maker of Model S and upcoming Model 3 sedans with the installer of rooftop solar panels.

Shareholders are signing off on Musk’s plan to combine and more efficiently run two companies that have a track record for fleeting profits and frequent fundraising needs. Tesla has lost about $4.8 billion in market capitalization since its initial offer to buy SolarCity on June 21, while the latter company’s value declined by about $86 million.

Tesla has forecast SolarCity will add $1 billion in revenue to the combined company next year and $500 million in cash to its balance sheet over the next three years. Joining Tesla’s retail network with SolarCity’s installers and consolidating the two companies’ supply chains may result in an estimated $150 million in cost synergies within a year.

Musk owns 21 percent of Tesla and 22 percent of SolarCity, making him the largest shareholder of both companies.... The all-stock deal is worth $20.23 per share, a premium of 2 percent based on SolarCity’s closing price Wednesday. The premium was about 35 percent when first announced.

Tesla rose 2.6 percent to $188.66 at the close Thursday, while SolarCity gained 2.9 percent to $20.40.
The quarterly profit Tesla reported last month was the first for the ... company in eight quarters. SolarCity has recorded losses in six of the last eight quarters....

Investor Jim Chanos ... has been highly critical of the merger in part because of the $2.89 billion in SolarCity debt Tesla will be taking on.

by Dana Hull danahull and Chris Martin cleantechchris
Press Release dated November 17, 2016

Sunday, November 13, 2016

Willingness to pay for product ecological footprint: Organic vs non-organic consumers

The problem of environmental degradation is large and widespread, with consumption of food being a major contributor to a households' ecological impact. The Product Ecological Footprint (PEF) is a new information management process of “self-improving” accuracy that enables producers to quantify product environmental impact. This study addresses two key questions; consumer willingness to pay and application readiness for PEF. We use choice experiments to identify the value consumers place on PEF as a label. We then examine data availability, information processing systems and accreditation protocols that would be required to support a market-wide application of PEF. Findings highlight an opportunity to influence the behaviour of the larger market segment of conventional (non-organic) consumers. Further research is required into the interaction between PEF and organics, PEF and origin, marketing and branding of the label, for market wide applications to be considered. A key question emerges as to whether PEF requires a different application platform than a voluntary eco-label scheme to instigate behavioural change.

• Organic purchasers have no significant value for PEF information.
• In the presence of PEF, non-organic purchasers are willing to pay for lower PEF.
• The value of PEF is likely to be higher when normalising PEF values.
• Valuations of holistic eco-labels should consider organic halo effects.
The marginal WTP [Willingness-To-Pay] value associated with receiving quantitative PEF information relates to valuations that are insignificant for organic purchasers and significant for non-organic purchasers. The latter respondents are estimated at a significance level of 10%, to pay a premium for a decrease in the PEF (premium of 13.3 cents per 0.1 ha/tn decrease). Non-organic purchasers place a positive value on apples that do not display any PEF label. There is a significant value associated with organic apples held by both organic purchasers and, within the nonorganic group, those who are not aware of environmental labels. Organic purchasers are willing to pay over 3 times the premium estimated for the non-organic purchasers, confirming the difference in importance as mentioned earlier. Those who are not regular purchasers of organic apples, and who are aware of environmental labels have a zero WTP for the organic attribute.
Ecological Footprint Challenge image

Quantifying the value of investing in distributed natural gas and renewable electricity systems as complements: Applications of discounted cash flow and real options analysis with stochastic inputs

One energy policy objective in the United States is to promote the adoption of technologies that provide consumers with stable, secure, and clean energy. Recent work provides anecdotal evidence of natural gas (NG) and renewable electricity (RE) synergies in the power sector, however few studies quantify the value of investing in NG and RE systems together as complements. This paper uses discounted cash flow analysis and real options analysis to value hybrid NG-RE systems in distributed applications, focusing on residential and commercial projects assumed to be located in the states of New York and Texas. Technology performance and operational risk profiles are modeled at the hourly level to capture variable RE output and NG prices are modeled stochastically as geometric Ornstein-Uhlenbeck (OU) stochastic processes to capture NG price uncertainty. The findings consistently suggest that NG-RE hybrid distributed systems are more favorable investments in the applications studied relative to their single-technology alternatives when incentives for renewables are available. In some cases, NG-only systems are the favorable investments. Understanding the value of investing in NG-RE hybrid systems provides insights into one avenue towards reducing greenhouse gas emissions, given the important role of NG and RE in the power sector.

• Natural gas and renewable electricity can be viewed as complements.
• We model hybrid natural gas and renewable electricity systems at the hourly level.
• We incorporate variable renewable power output and uncertain natural gas prices.
• Hybrid natural gas and renewable electricity systems can be valuable investments.
Under standard electricity rates and without incentives for solar, the hybrid NG-RE investment would take 14.46 years to payoff (or 6.45 years with incentives). These figures are 12.6 and 4.27, respectively, under a TOU (Time of Use) electricity rate structure and when net metering is available.

Similarly, for the case of a hospital located in Suffolk County, NY, the hybrid NG-RE systems consistently produce positive NPVs (Net Present Values) and ROVs (and generally more favorable outcomes than the single technology alternatives), and the payback periods are much lower than the residential applications given the scale of the investment.... Investing in a hybrid NG-RE system pays off in 4.98 years without incentives (3.25 years with incentives) under a standard electricity rate structure, and respectively, 4.54 years without incentives (and 2.96 years with incentives) under TOU rates and net metering. On the other hand, while the hybrid NG-RE systems are more attractive than their single-technology alternatives with solar incentives, the NG-only system is more attractive when incentives are unavailable. Again, all DG (Distributed Generation) systems are economically favorable relative to BAU, and the same patterns comparing the findings under high NG price volatility relative to low NG price volatility unfold.