Discussion on: Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances? Lucas W. Davis By Yves Zenou

Aims and objectives This study compares appliance ownership patterns between homeowners and renters. Household-level data from a nationally- representative survey, the Residential Energy Consumption Survey (RECS). Cross section: 2005

Results Renters are significantly less likely to have energy efficient refrigerators, clothes washers and dishwashers than homeowners.

Questions Residential Energy Consumption Survey (RECS) is a nationally-representative in- home survey conducted approximately every five years by the Department of Energy. Why not using the panel (or quasi-panel: 1997, 2001, 2005)? Fixed effects.

Questions There is a clear simultaneity problem. Here: Prob Having Energy Star Appliance = f (Dummy Renter) What about the reverse? Dummy Renter = f (Prob Having Energy Star Appliance)

Questions What about selection? Apart from observables (income, etc.), homeowners have unobservables that are different than renters. Maybe you are capturing the effects of these unobservables on the Prob Having Energy Star Appliance rather than that of homeownership. Instruments?

Mechanisms Homeowners maximize long-term investments whereas renter don’t. General consensus in the literature: homeowners are better at maintaining and improving their dwelling than renters (Dietz and Haurin, JUE 2003)

Policy implications Clear principal-agent problem. Homeownership received a favorable treatment in tax laws (especially US). What kind of incentives can we give to tenants or landlords to have energy efficient appliances? More favorable treatments for landlords who rent but obligation of having energy efficient appliances?

Discussion on: Market Mechanisms for Financing Green Real Estate Investments by Dwight Jaffee and Nancy Wallace

Main Question Private market failures are contributing to the underinvestment in U.S. building energy efficiency.

Main Question(s) Apart from taxing, what mechanisms can reduce U.S. energy consumption? Three mechanisms (1) Expanded building codes (2) Disclosure certificates (3) Direct subsidies to stimulate energy efficient investments by government agencies and public utilities.

Main Question(s) These three mechanisms are limited This paper focuses on loan market frictions as a market failure that raises the cost and limits the availability of mortgage funding for energy-efficient investments. Here, the authors propose mechanisms to eliminate the frictions that inhibit energy retrofits in existing structures.

Solutions Three steps that must occur if building owners are to invest voluntarily in energy saving equipment: (1) Identification of worthwhile investments; (2) Computation of the true non-negative net present value (NPV); (3) Identification and removal of financial frictions.

Questions Difficult to evaluate since the Monte Carlo simulations are not provided. What not writting an explicit search model with frictions and then estimate or simulate it?

Frictions What are the loan market frictions? “Frictions in the lending market raise the discount rate and lower the NPV computations” “Frictions that currently constrain both owner-lender mortgage contracts and owner-tenant lease contracts.”

Frictions Wasmer and Weil (AER 2004) Credit market imperfections Agents are imperfectly aware of economic opportunities. Blanchflower and Oswald (JOLE 1998) report that raising capital constitutes the principal difficulty encountered by potential entrepreneurs. For instance, 20 percent of the respondents of the 1987 U.K. National Survey of the Self-Employed report that where to get finance was the biggest obstacle to self- employment.