Quantifying the Housing Supply, Energy Savings, and Climate Resilience Effects from Energy and Building Codes

• In Event: Production and Provision: New Evidence on Federal, State, and Local Housing Policies

Abstract

The growing interest in improving housing affordability by loosening constraints on housing production is sometimes placed at odds with the development of energy efficient and climate resilient housing. Building and energy codes, despite their empirically demonstrated capacity to reduce energy expenditure and disaster damage costs (Simmons et al., 2018; Grant & Kotchen, 2013), have been identified as potential impediments to growing housing supply by increasing the regulatory costs for builders. Specifically, several empirical studies have suggested that energy and building codes may reduce building permit counts and decrease the square footage of units at the lower end of the income distribution (Muzio et al., 2025; Bruegge et al., 2019).  

In this research, we study the causal relationship between model building and energy code adoption and outcomes such as housing supply, utility costs, electricity usage, and disaster-related property damage. Our research expands on past research by focusing specifically on a multi-state comparison of model building codes, expanding the time horizon of analysis to 2006-2024, and directly contrasting between key housing supply costs and climate hazard savings effects.  

We focus on the International Code Council’s (ICC) (1) International Energy Conservation Code (IECC), and (2) its single and multi-family model building codes, including the International Residential Code (IRC) and the International Building Code. We construct a multi-year household level panel data set of US states across sources including US Census microdata, US Census Building Permits Survey (BPS), the Department of Energy (DOE) Building Energy Codes Program, and the Federal Emergency Management Agency (FEMA) Building Code Adoption Tracker. Using the staggered policy adoption of model energy and building codes across various states as an identification strategy, we analyze the effects of model code adoption across states in the US through a differences-in-differences (DID) event study. The analysis explores heterogeneous effects across various income markets, types of housing (single- and multi-family), and climate zones, and effects on energy and climate damage savings.  The research directly informs policy design by clarifying specific tradeoffs that policymakers must consider in structuring federal and local incentive programs for promoting energy efficient, climate resilient, and affordable housing, including DOE’s Energy Efficiency and Conservation Block Grant, FEMA’s Building Resilient Infrastructure and Communities (BRIC) grant program, and state government stretch codes.

Author

• Sonia Torres Rodríguez, Massachusetts Institute of Technology
  Presenting Author