Sustain Our Earth

Crowned with three gables and painted in hues of gray and white, the suburban home in Lake Forest doesn't look much like the domicile of the future.

But as summer heat radiates off the fresh asphalt outside, the home runs comfortably at full tilt indoors. Recessed lights shine, radios blare and air-conditioned splendor greets hot skin. Despite all systems going, the property is producing more electricity than it can consume on a warm summer day — and that's the goal.

A new study shows that businesses that adopt green practices have more productive employees than non-green businesses.

On average, employees at companies that observe eco-friendly practices were 16 percent more productive than average employees.

"Adopting green practices isn't just good for the environment," said Magali Delmas, co-author of the study. "It's good for your employees and it's good for your bottom line. Employees in such green firms are more motivated, receive more training and benefit from better interpersonal relationships. The employees at green companies are therefore more productive than employees in more conventional firms."

A large share of total U.S. energy consumption—40 percent—occurs in homes and buildings. Homes and buildings are less energy efficient than they would be if people could assess the value of energy savings more easily and correctly, and if energy prices provided them with stronger incentives to do so. This paper identifies three reasons why people undervalue energy savings: misperceived energy prices, imperfect information about energy efficiency, and biased reasoning about energy savings. The paper then examines four types of policy options for addressing those underlying market imperfections: prices that reflect the social costs of energy use, financial incentives, energy-efficiency standards, and better information about energy efficiency.