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Effects of Construction Activities on Residential Electricity Consumption: Evidence from Singapore's Public Housing Estates

37 Pages Posted: 25 Dec 2013 Last revised: 24 Nov 2015

Sumit Agarwal

Georgetown University - Department of Finance

Satyanarain Rengarajan

National University of Singapore

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

Derek Vollmer

Future Cities Laboratory

Date Written: November 24, 2015

Abstract

This study aims to empirically test the effects of negative environmental externalities (i.e. noise pollution) due to construction activities within half to one kilometer (km) radius and how households react to such externalities by increasing the use of air-conditioners to mitigate noise from the construction work. We use a unique dataset of electricity consumption by public housing residents in Singapore measured at the building level and merge it with the dataset of construction sites for the periods from 2009 to 2011. Using a difference-in-differences approach, we find that electricity consumption by the households living close to the construction sites increases by 6% compared to the households who are not affected by noises from construction sites during the construction periods, after controlling for building and month of the year fixed effects. The results remain robust after controlling for spatial autocorrelated lag and error terms. The economic cost of the construction externalities for each household amounts to approximately S$98 per annum. We also find that the increases in electricity consumption of the affected households were persistent, and the electricity consumption of the affected households did not revert to the pre-construction levels, after the removal of the negative externality.

Keywords: Electricity Consumption, Negative Externalities, Construction Activities, Public Housing, Demand for Comfort

JEL Classification: D10, Q40, R10

Suggested Citation

Agarwal, Sumit and Rengarajan, Satyanarain and Sing, Tien Foo and Vollmer, Derek, Effects of Construction Activities on Residential Electricity Consumption: Evidence from Singapore's Public Housing Estates (November 24, 2015). Available at SSRN: https://ssrn.com/abstract=2371314 or http://dx.doi.org/10.2139/ssrn.2371314

Sumit Agarwal

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-8207 (Phone)

HOME PAGE: http://www.ushakrisna.com

Satyanarain Rengarajan

National University of Singapore ( email )

4 Architecture Drive
Singapore 117566
Singapore

Tien Foo Sing (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Derek Vollmer

Future Cities Laboratory ( email )

Singapore-ETH Centre
1 CREATE Way
138602
Singapore

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