New Zealand houses are cold, damp, and poorly insulated by international standards. Our substandard housing stock has negative effects on health, quality of life, productivity, winter air quality, energy use and transmission. Investment in home energy efficiency is below the socially optimal level due to information asymmetries, bounded rationality and to some degree, non-excludability. Uptake of government grants for insulation has been very low in some communities, especially by owners of private rental properties. This study examines consumer preferences and perceptions of home energy efficiency technologies for residents of the Waikato region. We use a choice experiment approach to determine willingness to pay by owner-occupiers, landlords and tenants. Owner-occupiers are willing to pay significantly more than landlords for all features except for double-glazing. Tenants score their homes lower in terms of warmth and comfort than the landlord, and are willing to pay higher rent for improved insulation. However, the majority of tenants don’t know what insulation their home already has. Solving this information asymmetry problem with home energy ratings may be a more efficient way to increase investment than larger subsidies for landlords.
