Grantham Workshop | Charles Palmer 'On the impact of land use regulations on domestic energy consumption: panel data evidence for England'

Charles Palmer, Assistant Professor of Environment and Development at the London School of Economics, will be the speaker for this seminar.

Urban development associated with ‘compact cities’ is synonymous with sustainability. Land use and transportation policies and regulations that influence the trajectory of urban development are thus expected to affect energy consumption patterns and associated carbon footprints. Yet, few empirical studies examined the relationship between land use regulations and domestic energy consumption and none that examined it, did so over time. In this paper, we empirically estimate the effects of land use regulations on domestic energy consumption in England, between 2005 and 2013. In contrast to previous work, we consider a broad range of land use regulations: planning consents, building regulations, and preservation policies. We examine the proposition that certain types of land use regulation reduce the ability of households to respond to energy price increases by making long-run investments in energy saving technologies and/or increase the cost of such investments in response to energy price increases. Increasing regulatory restrictiveness is found to condition the response of households to changes in the energy price; tighter regulations reduce the price elasticity of demand for energy. Conservation Areas and Listed Buildings have a small but statistically significant negative effect on the energy price elasticity, arguably through limiting the uptake of home energy efficiency installations. Green Belts have no impact. Our results can be used to simulate the impacts of a hypothetical carbon tax on domestic energy consumption and points to the importance of land use regulations for such simulations.