From Efficiency to Excess: The Unintended Consequences of Green Premiums on Utility Use

Abstract

Green building certification plays a key role in reducing carbon emissions in the real estate sector, which contributes to over one-third of global carbon output. However, using nationwide data in Singapore, we find that green certification leads to higher household utility consumption. This increase is driven by rising post-certification housing prices, after ruling out household efficiency improvements, behavioral rebounds, moral licensing, and water source substitution. We further show that enhancing household-level efficiency and implementing stricter certification criteria could mitigate the increase in utility consumption. These insights are particularly relevant amid the rapid global expansion of green buildings. (JEL D83, D91, Q25, Q48, Q51, R21)