The split incentives problem is one that nags climate advocates who are pushing for energy efficiency improvements in buildings. What it boils down to is this: why would a landlord pay to make energy efficiency improvements (think insulation) if the tenant benefits, not the landlord, through savings on utility bills? The split incentive problem persists despite the fact that these efficiency improvements are commonly regarded as the low-hanging fruit, because it’s easy to demonstrate the overall payback (landlord+tenant) in a short period of time.
Today, I participated in a sub-committee meeting of Somerville’s Commission on Energy Use and Climate Change focused on renters initiatives that could begin to break down the split incentives problem. There are no magic bullets out there, but we at least came up with a few ideas to address renters and landlords separately.