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Journal of Sustainable Real Estate

ISSN: (Print) (Online) Journal homepage: www.tandfonline.com/journals/rsre20

Segmenting the Construction Industry: A


Quantitative Study of Business Interest Groups in
a Low Salience Policy Setting

J. C. Martel

To cite this article: J. C. Martel (2021) Segmenting the Construction Industry: A Quantitative
Study of Business Interest Groups in a Low Salience Policy Setting, Journal of Sustainable Real
Estate, 13:1, 30-47, DOI: 10.1080/19498276.2021.2002504

To link to this article: https://doi.org/10.1080/19498276.2021.2002504

© 2022 The Author(s). Published with


license by Taylor & Francis Group, LLC

Published online: 10 Jan 2022.

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JOURNAL OF SUSTAINABLE REAL ESTATE
2021, VOL. 13, NO. 1, 30–47
https://doi.org/10.1080/19498276.2021.2002504 ARES
American Real Estate Society

Segmenting the Construction Industry: A Quantitative Study of Business


Interest Groups in a Low Salience Policy Setting
J. C. Martel
School of Public Affairs and Administration, University of Kansas, Lawrence, KS, USA

ABSTRACT KEYWORDS
The intent of this research is to detect if business interest group involvement in urban sus- Building codes; business
tainability policymaking increases or decreases the likelihood of policy adoption. Extant influence; microeconomics;
research reports both positive and negative effects with varying magnitude. This study seg- sustainability; urban policy
ments the construction industry into distinctive categories to explain conditions under
which types of business interest groups support or oppose building regulations drawing
from competing theoretical angles—private and public interest group theory. It analyzes the
effects of two groups—traditional construction and green building association members—
on the adoption of building energy codes, a low salience policy issue that attracts technical
experts more so than citizen groups. After applying web scraping algorithms, logistic regres-
sion explains the probability of code stringency given differences in the presence of trade
association members in cities while controlling for demographic, social, and political factors.
Findings suggest that this approach to operationalizing interest groups has merit. Despite
being from the same industrial category, the segmented business interest groups have
divergent effects on the local building policies with traditional construction interest groups
having a greater negative effect on the odds of a city’s energy code adoption compared to
the green builder interest group.

Introduction interest groups but tend to engage a narrowly


Commercial and residential buildings are respon- focused group of technical professionals, such as
sible for approximately 12% of the U.S. greenhouse industry associations (Jones & Baumgartner, 2005;
emissions portfolio (U.S. Environmental Protection Koski, 2010, p. 96). An issue often becomes low sali-
Agency, 2017). While the environmental impact of ence when the public does not directly experience
buildings is a central concern for urban sustainabil- the issue (Lachapelle et al., 2012; Leiserowitz, 2007;
ity (Garren & Brinkmann, 2018; Krause & Martel, Lowry & Joslyn, 2014, p. 156). Patterns of power,
2018), the buildings policy domain is rarely studied influence, and collusion of business interest groups
in political science and policy studies as it is often in low salience urban policy settings are distinct
considered low salience and researchers tend to from other issue arenas that attract widespread
focus on higher salience situations (Go, 2016; Koski,
attention appealing to personal beliefs, such as
2010; Lowry & Joslyn, 2014, p. 158). Low salience
immigration or gay rights. It is unknown how
policy issues are generally characterized by low lev-
insights from the body of interest group scholarship,
els of political participation, public attention, and
meaningful public opinion, empirically observed as focused mostly on national-level high salience
low levels of media attention or low rankings on issues, translate to low salience policy arenas at the
national polls (Cobb & Elder, 1972; Downs, 1972; local level. The extent to which firms assemble into
Gallup, 2021; Koski, 2010; Lowry & Joslyn, 2014; groups to pursue profit maximization or assemble
Wlezien, 2005). These issue arenas can attract to promote public interest—an interplay of classical

CONTACT J. C. Martel Jmartel701@hotmail.com School of Public Affairs and Administration, University of Kansas, 5737 Longleaf Drive, Lawrence,
KS 66049, USA.
ß 2022 The Author(s). Published with license by Taylor & Francis Group, LLC
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits
unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
JOURNAL OF SUSTAINABLE REAL ESTATE 31

economic theory and neocorporatism—may depend economic opportunities; ethical concerns; and regu-
on issue salience. latory compliance (Bansal & Roth, 2000; Devine,
This research explores this interplay by analyzing 2017). These firms often “float” the burden of added
the effects of two types of organized interest costs to construct buildings according to stringent
groups—traditional construction industry represen- environmental standards, meaning that the green
tatives and “green” business professionals—on construction firm absorbs the incremental cost dur-
building energy code adoptions at the local level. It ing the construction process and the extent to
asks, what are the effects of traditional and “green” which the consumer will absorb the cost is seem-
industry member associations on building energy code ingly uncertain (Ciochetti & McGowan, 2010; Dixon
policy adoption? It has been acknowledged that et al., 2014).
homebuilders are not a homogeneous group (Berry Segmenting actors within an industrial group—
& Portney, 2013; Somerville, 1999), yet how we the- such as traditional and “green” construction industry
oretically and empirically segment homebuilders actors—is intended to deepen the understanding of
into logical categories in order to understand their diverse business interest groups effects on urban
differences and effects of those differences on vari- sustainability policy adoption, an endeavor that has
ous phenomena is yet to be fully understood. In been requested in past research (e.g., Portney, 2009;
this research, a framework for segmentation is pro- Sharp et al., 2011, p. 438). Extant literature has rec-
vided, grounded in classical economic theories and ognized that business interest groups are not
newer theories of neocorporatism and corporate homogenous, including homebuilders (Somerville,
responsibility, as well as a way to empirically test 1999), and diversity of business interest groups has
the homebuilder segments. As Harrison (2017) been largely explored through surveys (e.g., Berry &
noted, “The notion that political ideology may Portney, 2013), yet business interest group diversity
materially influence real estate market outcomes is has not been tested much in a quantitative way.
not new” (p. 89). For the purposes of this study, the Many scholars tend to consider business interests
traditional developer community is associated with with respect to the environmental policy as always
a pro-development ideology justifying urban growth pursuing deregulation (e.g., Kamieniecki, 2006,
for personal gain (Logan & Molotch, 1988; p. 53), yet some industry professional groups might
Mohamed, 2006; Molotch, 1976), in line with the support regulations that are in the public interest,
classical economic viewpoint of the firm as a profit or in favor of their own market differentiation and
maximizer (Coase, 1937) and political-economic the- growth. Bringing more clarity and precision to
ory of how firms form political coalitions towards understanding this empowered group of stakehold-
the goal of resolving political conflicts (March, ers is important, accomplished by bridging micro-
1962). Interest group pluralism and behavioral eco- economic theories of firms, interest groups
nomics suggests that firms will compete with similar scholarship, and urban policy research. Analyzing
established groups within the same industry, such business groups in a single category, as typically
as green construction interest groups, and ultim- done in urban policy research, fails to discern the
ately oppose environmental regulation that imposes motivational spectrum that exists within and across
cost burdens, diffuse benefits, or economic uncer- interest groups. There is more complexity in interest
tainty to the firm (Mohamed, 2006; Scruggs, 2003). group composition than commonly realized, and it
Indeed, May and Koski (2007) found that “the stron- is important to understand how these diverse inter-
gest opposition to stronger [building energy] codes ests, albeit within the same economic or industrial
comes from the state homebuilder organizations” category, operate in an important policy area.
(p. 57). Contrastingly, green developers are associ- This study proceeds as follows. The theory section
ated with the neocorporatist theory that some firms explores conditions under which business interest
act in the public interest on behalf of the govern- groups are expected to support or oppose environ-
ment (Kraft & Kamieniecki, 2007; Scruggs, 2003) and mental regulations and review empirical findings from
the corporate environmental responsibility theory relevant extant research leading to three testable
that firms act in the public interest as a response to hypotheses. Next, background information on build-
stakeholder pressures and corporate image benefits; ing energy codes is provided to orient the reader to
32 J. C. MARTEL

the case selection. The research design section pro- the viewpoint for support of environmental regula-
vides descriptions of the variables and expectations tion in the interest of common welfare.
on how the variables relate to policy adoption, mostly
drawing from urban sustainability research. It also Private Interest Group Theory
notes technology used to carry out the research,
including Python packages, CenPy, Google, and With interest groups conceptualized as “any set of
Beautiful Soup for API integration and algorithmic data individuals with similar beliefs, identifications, or
collection; SQLite for data storage and querying; and R interests” (Baumgartner & Leech, 1998, p. 29), the
for statistical computing. Next, results from logistic traditional economic perspective proposes that eco-
regression modeling and exponentiation of the coeffi- nomically rational individuals seek to maximize their
cients into odds ratios are provided for easier inter- positions in society (Berry & Wilcox, 2009, p. 64).
pretation of the model. The study concludes with a Some individuals join interest groups as leverage to
discussion of the modeling results as it relates to improve their position. Economically rational and pol-
broader explanations of interest group activity and cit- itically strategic individuals will work to advance pol-
ies’ actions on policy adoption, ending with the icy alternatives where their benefits are concentrated
article’s contribution to urban sustainability literature. for self-interest and costs are diffused to other mem-
bers of society (Olson, 1965). Along this line of rea-
soning, energy-efficient building mandates are
Literature Review expected to foster opposition from the construction
Multiple theories generate expectations of how industry as the incremental construction costs are
business interest groups will act in policy adoption incurred by the construction professional (Deslatte &
settings. These theories commonly address the moti- Swann, 2016, p. 584; Wilms, 1982, p. 555). In the
vations of business interest groups and predict “split incentive” case when the builder incurs the
divergent outcomes in support or opposition of costs but others receive the benefits, the benefits of
environmental policy depending on the group’s energy codes are granted to the buildings’ buyers in
motivations (Table 1). The classical economic per- terms of lower building operating costs, tenants who
spective that businesses are comprised of executives enjoy increased building occupant comfort, and soci-
who are rational profit-maximizers underlies the ety at large who benefits from lesser environmental
idea that private firms will oppose environmental impacts (Sun et al., 2016, p. 3). Construction profes-
regulation because regulation is perceived to limit sionals are not expected to support such scenarios as
profits from industrial development (Ball, 2003; it would be financially disadvantageous to the
Kamieniecki, 2006; March, 1962; May, 2005). builder. Generally, construction professionals are
However, recent discussions have posed that many expected to collude within an interest group towards
private sector actors are irrational in an economic the common goal of supporting policies that favor
sense guided by the desire of individuals and growth and development and minimize financial
groups to act for the common good (e.g., May, losses to the business (Feiock et al., 2008; Gauthrie &
2005; Portney, 2013; Portney & Berry, 2016). These Wooldridge, 2012; Logan & Molotch, 1988; March,
divergent perspectives have been broadly labeled 1962; Molotch, 1976, p. 311; Mulligan et al., 2014).
as private and public interest group theories (see In a survey of building professionals, Mulligan
Jenner et al., 2012). Private interest group theory et al. (2014) found that increased costs were the
expects that industry-oriented interest groups will most important barrier to the firm deciding to build
oppose environmental regulation in the interest of green, followed by client resistance. Gauthrie and
personal gain while the public perspective offers Wooldridge (2012) also found no empirical evidence
that green building incentive programs had influ-
Table 1. Expected direction of coefficients in the energy code enced firms to voluntarily utilize green building
adoption model. practices, supporting the classical economic per-
Theory Policy position Direction of coefficient
spective that firms avoid economic uncertainty,
Private interest Oppositional Negative
Public interest Supportive Positive increased costs, and diffused benefits. Devine (2017)
Counterbalanced Negotiated No effect/null hypothesis expects that developers will be slow to adopt green
JOURNAL OF SUSTAINABLE REAL ESTATE 33

building technologies due to the economics and construction professionals might support new build-
financial viability of passing incremental costs to the ing codes to better provision public goods for their
consumer. Further, Harrison (2017) found that green clients and society in terms of cleaner air resulting
lease rate premiums vary systematically by political from energy use reduction in buildings and selec-
ideology in cities, indicating that there may be tion of cleaner fuel sources for buildings, aligned
some rationale for uncertainty in a homebuilder’s with environmental sustainability ideals (May &
ability to gain a premium for building to environ- Koski, 2007). While their motivations may partially
mentally sustainable standards. be self-interested in an attempt to secure business
May and Koski (2007) surveyed state homebuilder from clients who demand cleaner buildings, green
associations, national building code organizations, building construction professionals and their associ-
professional architect organizations, and other ated interest groups are still supporting codes that,
groups involved in building energy advocacy about in effect, protect common pool resources.
their influence, measured by asking whether they In the area of corporate environmental responsi-
supported, opposed, or were not involved in the bility asking why some firms embrace environmen-
policy adoption process for energy-efficient man- tal initiatives while others do not in, Bansal and
dates (May & Koski, 2007, p. 57). In the study, May Roth (2000) identify regulatory compliance, eco-
and Koski (2007) found that interest groups oppos- nomic opportunities, stakeholder pressures, and eth-
ing energy-efficient mandates—the homebuilder’s ical concerns as key motivations. Multiple studies
associations—had three times stronger influence find that stakeholder pressures are the most import-
than the environmental interest groups supporting ant determinant, as clients and investors call for
the mandates (p. 59). environmental protection (e.g., Darnall et al., 2009;
H1 (Oppositional): Higher numbers of traditional Gonzalez-Benito & Gonzalez-Benito, 2006). Firms can
construction industry interest group members per garner a positive reputation through their support
capita are likely to limit the probability of the
of environmental initiatives, creating a competitive
adoption of energy efficient mandates that apply to
privately-owned buildings and development projects.
edge for the company (Bansal & Roth, 2000, p. 724).
Mulligan et al. (2014) also found that company
Public Interest Group Theory vision/values were the most important motivation
for a firm’s decision to build green (39% of respond-
As economic rationality failed to explain cooper-
ents), while 0% were motivated by competition with
ation among actors in otherwise competitive envi-
other developers (p. 193). This line of reasoning sup-
ronments, behavioral theories of rational choice
ports that green building firms have a distinctive
emerged to argue that individuals within groups are
value set as a homebuilder segment. Determining
less economically rational than Olson (1965) and
which motivational factor is most prevalent in the
other interest group analysts had assumed (Berry
green construction industry is beyond the scope of
et al., 2006; Ostrom, 1990, 1998; Schattschneider,
this study, but we can assume that an interaction of
1975). Berry et al. (2006) express,
the aforementioned motivations, including market
… the initial theory, popularized by Mancur Olson, badly differentiation, stakeholder responsiveness, and eth-
underestimated the propensity of individuals to be, in
ical motivations, inspires construction firms to oper-
economists’ jargon, “irrational.” That is, Americans have
proven that they are all too willing to join organizations
ate in the green building market.
that command tangible costs, such as volunteer time or H2 (Supportive): Higher numbers of green construction
financial contributions, but offer ideological rather than industry interest group members per capita are likely
material rewards … their work tended to be more to increase the probability of the adoption of energy
ideological than self-interested (p. 11) efficient mandates that apply to privately-owned
buildings and development projects.
Along these lines, Ostrom (1990) had found that
in some situations, people naturally organize to
Counterbalanced Opposition and Support
manage common-pool resources in support of local
public goods. The extent to which this line of rea- Orthodox pluralism conceptualized urban policy-
soning applies to firms is unknown. Some making as engagement among diverse ethnic, racial,
34 J. C. MARTEL

cultural, and social groups. More recent neoplural- significant in selecting a bundle of energy policy
ism, as well as neocorporatism, has emphasized tools but many groups were not statistically signifi-
cooperation rather than conflict among diverse cant, such as chambers, the general public, environ-
groups (Berry, 2010; May & Koski, 2007; Scruggs, mental groups, developers or HOAs.
2003), as well as less participation of groups in pol- Effects seem to also depend on the type of pol-
icymaking than previously considered (Schumaker, icy, which is the dependent variable in the statistical
2013). The idea is that pluralist institutions are open models in the reviewed literature. For example,
to such a wide diversity of groups, the institution is when modeling green construction policies, land-
less likely to be dominated by a single group use decisions, and energy information separately,
(Scruggs, 2003). Some policy domains appear to be Deslatte and Swann (2016) found that environmental
“groupless” (Peterson, 1981, p. 116), meaning that groups were significant while developers were not.
organized groups are expected to influence policy- Regarding the strength of influence, May and Koski
making less than other factors such as economic (2007) found that homebuilder’s associations had
conditions or values held by politicians (Schumaker, the strongest opposition to building codes, with
2013, p. 263). Grouplessness may be a misinterpret- three times greater influence than advocacy groups
ation of the group consensus-building process that including energy code associations and conservation
occurs prior to proposing a policy recommendation groups (p. 57). Looking across extant research stud-
to elected officials, described as “board room” polit- ies, the significance of various types of interest
ics (Gormley, 1986). This phenomenon has been groups in environmental and sustainability policy
tested on green building mandates (May & Koski, adoptions has been inconclusive.
2007) and bipartisan agenda-setting for renewable In a study not in urban policy literature but
energy policy (Brown & Hess, 2016). These studies rather in energy policy studies, Jenner et al. (2012)
suggest that what is actually occurring is counterbal- examined interest group influence on renewable
ancing, a close relative to grouplessness, that occurs energy policy adoption. The interest groups were
when oppositional interest groups reach consensus operationalized by years of existence of state chap-
or their policy position is otherwise negotiated and ters of the International Solar Energy Association
shifted towards the middle. For example, Lubell et al. (ISEA) and National Nuclear Association (NNA). The
(2009) test the theory that “interest groups with pro- effect sizes for the solar chapters range from 1.33 to
environmental attitudes will counterbalance develop- 3.77 in relative odds of policy adoption and nuclear
ment interests.” Along this line of reasoning, the chapters range from 0.24 to 0.67. Overall, the
counterbalanced hypothesis is proposed: effects of interest groups on urban policy adoption
are varied across studies, from having no effect to
H3 (Counterbalanced): There is no difference in the
having a strong effect. The type of sustainability
likelihood to adopt energy efficient building mandates
based on the interaction of traditional and green
policy and type of interest group seems to matter
construction interest group members per capita. to the assessment of interest group effects on policy
adoption.
Extant research reports mixed findings regarding
the effects of interest groups on environmental and
sustainability policy adoption. Research findings Background on Building Energy Codes
seem to depend on the nature of the interest Building codes are an interactive set of technical
groups and the type of policies being studied. In policy statements that govern all aspects of build-
some studies, the inclusion of business groups in ings, including structural engineering, fire and life
policy deliberations had no statistically significant safety, electrical, mechanical, and fenestration. The
effect on sustainability policy adoption but environ- codes include thousands of individual policy state-
mental group involvement did have an effect (Berry ments that correspond with or are conditional on
& Portney, 2013; Portney & Berry, 2016). Deslatte other statements within the set of codes. Building
and Swann (2016) found a different breakdown of energy codes are the policies that govern the
interest group effects, discovering that neighbor- energy efficiency component of buildings (e.g.,
hood associations and corporations were statistically International Code Council, 2012). Building codes
JOURNAL OF SUSTAINABLE REAL ESTATE 35

are continually developed by a nonprofit, the adopted only two energy code versions over those
International Code Council (ICC) over the course of 30 years (Nelson, 2012, p. 186). More recently, there
3 years, and elected officials at every level of gov- has been a notable increase in governments’ adop-
ernment have the option to adopt the revised tion of energy codes. Many governments have
building codes in staggered 3 or 6 year cycles. adopted two or three new codes over the last dec-
The policies are administered by code officials ade. The American Recovery and Reinvestment Act
who are government staff or contractors and imple- of 2009 signed into law by President Obama required
mented by construction industry professionals during states to receive stimulus funding to meet or exceed
the building design and construction process. Across the 2009 International Energy Conservation Code or
the United States, the process of building is regu- its equivalent, ASHRAE Standard 90.1-2007 (U.S.
lated at the state and local levels, aside from federal Department of Energy, 2017). Thus, the 2009 energy
buildings which are regulated at the federal level. code version is considered the contemporary status
Plans for new construction must go through a state quo and previously dated codes are obsolete. Some
or local government permit process before building states accepted stimulus funding but refused to
begins and this process ensures that builders meet adopt the 2009 energy codes, arguing that the state
local codes. Throughout these steps, particularly dur- did not have authority over codes.
ing the code development and adoption processes, a Building energy codes are particularly interesting
network of construction industry professionals, envir- to study because energy codes represent a clear
onmental advocacy groups, code officials, and divergence between the traditional building codes
elected officials share information, develop policy that regulate structures, fire and life safety, and the
proposals, and compete for policy change (Building expanded scope of codes that also regulate energy
Codes Assistance Project, 2017). efficiency, causing a point of contention among
The expanded scope of codes to include energy industry professionals who fear that code advance-
efficiency was initiated as a result of the 1992 ment will cut into profits and create hardship for
Energy Policy and Conservation Act (EPCA) when their companies. A 2016 blog excerpt from the
commercial energy code adoption (but not enforce- environmental nonprofit advocacy group, National
ment) became mandated for states (Lee & Yik, 2004,
Resources Defense Council (NRDC) on the 2018
p. 482; Nelson, 2012, p. 183). However, mainly due
code development hearings captures typical contro-
to limited federal authority in mandating subna-
versies around energy codes:
tional codes due to the federalist structure in the
United States that grants power to the states, 15 Given how critical strong building energy codes are in
the fight against the dangers of climate change,
years later only 70% of states had some sort of
recent events in the residential energy code
energy code—mostly for commercial buildings and development process are very troubling. Code officials,
not residential buildings—and the codes have been builders, energy efficiency advocates, and others met
poorly enforced (Nelson, 2012, p. 183). State statu- last month in Louisville, KY for Technical Advisory
tory structures largely determine code adoption at Committee hearings for the development of the 2018
the local level. Some states require the local jurisdic- International Energy Conservation Code. Unfortunately
tions to meet or exceed the state code (e.g., for those of us who recognize energy efficiency as an
unequivocal win for both homeowners and the
California) while other states require local jurisdic-
environment, the advisory committee was beholden to
tions to not exceed state law (e.g., Utah). Some the desires of the building industry to stick with the
states have a home rule structure where local gov- status quo—or worse. Advisory committee members
ernments have the authority to adopt codes inde- not only rejected just about every proposal that would
pendent of the state code (e.g., Colorado, Arizona) increase the energy efficiency—and therefore, the
(International Code Council, 2017). Building energy important climate benefits—of the energy code, they
conservation codes are a key pillar when ranking also took steps to roll back its efficiency. (Natural
Resources Defense Council and Lauren Urbanek, 2016)
cities and states on energy efficiency and sustain-
ability (e.g., ACEEE, 2021). Indeed, adding energy to the model codes has
Nelson (2012) built a dataset of state-level code continuously caused backlash from the traditional
adoption from 1977 to 2006. On average, states had construction industry, including many builders and
36 J. C. MARTEL

code officials alike, who reject that mandatory build- Kansas, Missouri, North Dakota, South Dakota,
ing codes should be expanded from their central Wyoming) to understand cities’ actions when
focus on structural stability, fire, and life safety to granted autonomy by their state legislatures. The
also regulate environmental issues (Eisenberg & Yost, sample size is limited to cities whose energy code
2004). However, energy codes are arguably the most adoptions are tracked by national, state, or local
effective way to reduce energy consumption and organizations, including data collected from the
greenhouse gas emissions from the buildings sector International Code Council (ICC) and Building Codes
because this mandatory policy tool applies to all new Assistance Project (BCAP) as well as information from
construction and major renovation of existing build- city ordinances and webpages that is easily access-
ings, prompting environmental advocates to oppose ible using modern data collection tools, as explained
conservation industry professionals and code officials below. The ICC randomly collects code adoption
(Lee & Yik, 2004, p. 479). The 2012 energy code ver- information by allowing jurisdictions to self-report
sion was determined to achieve 30% more energy- adopted codes on the ICC website and by leveraging
efficient than buildings constructed to the 2006 local relationships to stay up-to-date on code
energy code version (U.S. Department of Energy, changes (International Code Council, 2017). BCAP, a
2014). Given the 50% growth rate in U.S. buildings program within the Alliance to Save Energy, has a
since 1980 and expected exponential growth over similar process for code tracking (Building Codes
the next few decades (U.S. Energy Information Assistance Project, 2018). In an attempt to collect
Administration, 2017), regulating new building con- additional data beyond what is available from ICC
struction is imperative to reaching governments’ cli- and BCAP, the Python package, Google was used to
mate, energy, and sustainability goals (Nelson, 2012). programmatically return a list of URLs from the
Google search string, “city of” [state name] adopts
international energy conservation code (Vilas, 2018).
Data Most web links pointed to a city’s building code or a
Case Selection and Dependent Variable city’s web page that lists the currently adopted build-
ing codes. Two of the weblinks pointed to databases
Historical code adoption data is not readily available
of local code adoptions maintained by the States of
at the local level. Rather, only current code statuses
Colorado and Kansas. Very few local code websites
are available for municipalities. The interest of this
were found in North Dakota, South Dakota, and
study is to examine the contemporary energy code
Wyoming. Each landing page was reviewed to add
policy arena rather than the historical trends when
to the data set of the adopted code version and the
codes were updated far less frequently. Thus, the
year of the last code update.
most recently adopted version of the energy code is
The dependent variable contains two ordered
used to construct the dependent variable.
categories: the base level represents municipalities
In-home rule states, energy code adoptions are
with outdated energy codes, ranging from no
typically tracked at the city levels whereas in non-
energy codes to the 2009 International Energy
home rule states codes are typically tracked at the
Conservation Code (IECC) version. The second cat-
state levels due to resource constraints of energy egory represents the most up-to-date energy codes,
code advocacy groups and government agencies including cities that have adopted the 2012 or 2015
that perform code tracking. Further, more variation IECC versions. Table 2 shows the fairly balanced dis-
of energy code versions exists across cities in home tribution of local policy adoptions in cities within
rule states compared to non-home rule states (Cort home rules states.
& Butner, 2012), providing optimal case selection. It
is unknown the extent to which the results are gen-
Focal Independent Variables
eralizable to the other 44 states, as the state-level
activity may attract different types of policy actors In this study, the interest group variable is con-
and interest groups. structed using counts of traditional construction
The study involves statistical modeling 221 cities industry association members and green building
within seven home rule states (Arizona, Colorado, association members normalized by population,
JOURNAL OF SUSTAINABLE REAL ESTATE 37

Table 2. Most recently adopted energy code in cities within the influences of interest groups compared to coun-
home rule states. cil-manager governments (Bae & Feiock, 2013;
State No Codes 2009 IECC 2012 IECC 2015 IECC
Hawkins et al., 2016; Sharp et al., 2011).
AZ 2 (4%) 16 (35%) 23 (50%) 5 (11%)
CO 0 21 (39%) 10 (19%) 23 (43%) Theoretically, the council-manager governments
KS 37 (61%) 8 (13%) 14 (23%) 2 (3%) enable sustainability departments to be somewhat
MO 22 (5%) 13 (32%) 9 (24%) 14 (37%)
ND 0 2 (29%) 0 5 (71%) insulated from political pressures and better able to
SD 5 (71%) 1 (14%) 1 (14%) 0
WY 1 (13%) 0 2 (25%) 5 (63%)
respond to policy issues with a relatively unbiased
Total 47 (21%) 61 (28%) 59 (27%) 54 (24%) long-term, technical approach that emphasizes
operational efficiencies compared to government
similar to the interest group variable construction in departments within mayoral forms of government
previous studies (e.g., Baumgartner & Leech, 1998; (Bae & Feiock, 2013; Daley et al., 2013; Krause &
Gilens & Page, 2014; Jenner et al., 2012; May & Koski, Douglas, 2005). Further, in a low salience, technical
2007). I also create an interaction variable to oper- policy arena such as building energy codes, the
ationalize the relational effects between traditional to council-manager institutional structure is expected
green interest group members per capita in a city. to be more likely to have government staff engage
The dues-paying trade association membership with technical experts to craft a building code pol-
represents interest group presence in a city. The icy that has better chances of being adopted than a
two most prominent trade associations that partici- code policy that does not include technical input
pate in local energy code policy processes across from building professionals prior to the policy hear-
U.S. cities are the US Green Building Council ing (Brown & Hess, 2016; Gormley, 1986; May &
(USGBC) with more than 12,000 members (U.S. Koski, 2007). The political institutions variable is
Green Building Council, 2017) and the National dichotomously coded as a mayor-council form of
Association of Homebuilders (NAHB) with more than government (1) or other forms of government (0).
140,000 members, one-third of which are builders
and remodelers (National Association of Climate Commitment
Homebuilders, 2017). Both groups have paid staff A measure of city support is whether they have
and local chapters that lobby locally and mobilize made a public commitment to climate protection,
their members to support their group’s policy goals. as indicated by mayoral signatories to the Climate
While it is not ideal to use member counts because Protection Agreement or if the city is a member of
not all members participate in local policy proc- ICLEI Local Governments for Sustainability. The
esses, some degree of member inactivity occurs in choice to construct this variable by combining data
both types of trade associations so the effect of on mayoral signatories and ICLEI members is
member inactivity is naturally occurring across the intended to capture preferences and constraints by
two types of groups. The USGBC member list is different types of local governments. ICLEI member-
available as an Excel download in its entirety, ship costs money and may be out of reach for
whereas the NAHB member list was created by some cities (Yi et al., 2017). Additionally, ICLEI mem-
examining member address locations from member bership supports a technocratic approach to city
directories hosted by local associations. The NAHB sustainability where technical resources are utilized
data was collected using the Python Beautiful Soup by the local governments (Krause et al., 2014, p.
program to programmatically read data from associ- 117). The variable construction is intended to cap-
ation webpages by accessing text associated with ture the variety of approaches that cities take to
HTML tags (Richardson, 2019). sustainability whether the efforts are led by the
mayor or city manager as directed by the city coun-
cil. It is dichotomously coded for cities that have
Political and Community Characteristics
made a climate commitment (1) or not (0).
(Control Variables)
Political Institutions Government and Industry Capacity
The conventional view is that mayor-council forms In most cities, the city planning and building
of government are expected to be more open to department relies on general revenue and/or
38 J. C. MARTEL

development permit fees to fund government staff and building permits to afford new code adoptions
to implement buildings policies. In the absence of a and do not want to deter builders from bringing
centralized data source for development permit jobs and capital into the community. Thus, code
fees, general revenue is used as a measure of gov- stringency can be seen as a privilege afforded by
ernment capacity for adopting new building poli- cities with wealthy, educated residents where sus-
cies, as cities with greater financial health are more tainability and advanced buildings policies are more
likely to adopt sustainability policies (Krause, 2011; likely to be supported (Hawkins et al., 2016; Lee &
Lubell et al., 2009; Sharp et al., 2011). General rev- Koski, 2012; Sharp et al., 2011). May and Koski also
enue per capita is used as a measure of government found that states with a larger construction sector
and industry capacity. were more likely to adopt green building mandates,
Secondly, a measure of government and industry insinuating that energy efficiency is more prevalent
capacity for advancing building codes is the number in booming construction markets where wealth is
of construction industry professionals in the com- more widespread. The percent of the population
munity, as this industry is expected to generate over age 25 that holds a Bachelor’s degree or
income for the government in terms of tax revenue higher operationalizes education and median house-
and building permit fees and the larger construction hold income for each city operationalizes income.
industry is more likely to have the technical expert-
The city population is included in the models in the
ise to contribute to shaping and implementing new
logged form.
building code policies. The Chief Building Official
with input from staff is typically responsible for pre- Problem Severity
senting building code proposals to the legislative Cities may be more likely to adopt new building
branch. When building and development in a com- codes when building-related problems in their com-
munity are low, then the planning/building depart- munities are heightened. Two measures of building-
ment has very limited capacity and is less likely to
related issues are urbanization pressures from high
propose code advancements because code
levels of new construction activity and electricity
advancements have transaction costs including
costs. Cities vary widely in levels of construction
training needed for government staff and industry
activity. Some cities are mostly built-out with some
members (Nelson, 2012). Governments are less likely
infill development but little to no land for new sub-
to impose added financial burdens on the construc-
divisions. Other cities have plentiful opportunities
tion industry when construction activity is low.
for new construction, either by demolishing existing
Further, some cities have vastly different quantities
buildings or using vacant land. Cities with high new
of construction activity than other cities, so code
construction activity have more opportunities to be
advancements could be a lower priority in cities
impacted by modern codes than cities with less
with little to no new construction. Population and
activity. The median housing age in the community
the number of construction workers in a city are
correlated variables, so the only population is accounts for this variation.
included in the model. When energy is costly, communities are more
likely to seek opportunities for energy savings, such
City Size and Socioeconomic Conditions: Population, as through energy codes. Cities with higher local
Income, and Education energy costs have more opportunities to gain costs
Cities with large populations are likely to experience savings from building operations achieved by mod-
urbanization pressures, such as limited land avail- ern energy code advancements (Nelson, 2012).
ability and high building density, which in turn puts Where energy is costlier, the payback period on
demands on energy and water resources. These energy efficiency improvements is lesser compared
pressures are likely to cause governments to adopt to places where energy is cheaper. It is expected
more stringent energy codes to control building that higher energy costs, measured by average elec-
growth and resource use (Cidell & Cope, 2014; tricity costs per county, are associated with a higher
Daley et al., 2013; Kontokosta, 2011; Saha, 2009). likelihood to adopt more stringent energy codes.
However, cities also need income from tax revenue Where county data is not available, the average
JOURNAL OF SUSTAINABLE REAL ESTATE 39

Table 3. Variables, descriptions, and data sources for energy codes model.
Variable Description
Dependent variables
Policy adoption or non-adoption Adoption of building energy codes by version (Outdated: No codes to 2009 IECC;
Modern: 2012–2015 IECC. Source: Databases publically available from ICC, BCAP, DOE;
city, state websites
Interest groups (focal predictors)
Green interest Number of USBGC members in each city normalized per capita (1000). Source: USGBC
member list, 2018
Traditional interest Number of BOMA and NAHB members in each city normalized per capita (1000). Source:
BOMA & NAHB member directories, 2018
Interest group interaction Interaction term for green and traditional business interest group members
Political and community characteristics (control variables)
Political institutions and climate commitment
Form of government Dichotomous variable for city that has a mayor-council form of government (1) or other
form of government (0). Source: ICMA Survey, 2011
Climate commitment Dichotomous variable for city that is a signatory of Climate Protection Agreement or
ICLEI member. Source: U.S. Conf. of Mayors, 2018; ICLEI, 2018
Government and industry capacity
General revenue Per capita general revenue for each city ($1000 s). Source: Census of Governments, 2012
City characteristics and socioeconomic conditions
Population Logged population of each city. Source: 2016 American Community Survey,
5 Year Estimates
Income Median household income ($1000 s). Source: 2016 American Community Survey,
5 Year Estimates
Education Percent of population over age 25 with Bachelor’s Degree or higher. Source: 2016
American Community Survey, 5 Year Estimates
Problem severity
Energy cost Average cost of electricity (kWh) in each county. Where county data is not available,
average cost in the state. Source: Energy Information Administration, 2017
Median housing age Median age of housing stock in the city. Source: 2016 American Community Survey,
5 Year Estimates

electricity cost for the state is used. Table 3 shows members, so we can expect the climate commit-
the descriptions and sources for all variables. ment variable to have a positive effect as well.
All Census variables are collected using the General revenue, population, household income,
Python program, CenPy, which enables the retrieval and education are all higher in cities with modern
of Census data tables into Python for data process- codes. The max median age of housing is lower in
ing (e.g., formatting, joining tables) using an API cities with modern codes than outdated codes, sug-
integration (Wolf, 2018). The Social Explorer Data gesting that higher levels of new construction activ-
Dictionary is used to navigate the American ity relative to the total building stock in these cities
Community Survey Tables to identify the unique are happening under outdated codes. This could
identifiers for the data tables (Social Explorer, 2019). signify the desire of cities to attract construction
The data is stored in an SQLite database that is eas- activity as a way to generate revenue and jobs by
ily transportable as a .db file into the R program for keeping old building codes that are more flexible
statistical computing (Hipp et al., 2015; R and less costly for construction workers to build.
Development Core Team, 2019). Surprisingly, the average and maximum unit costs
of energy are lower in cities with modern codes.
One could have expected the energy costs to be
Methodology
higher in these cities, and that they would use
Exploratory data analysis lends insights into how energy codes as a way to lower energy costs for
the data will perform in the regression model. As homeowners and tenants.
expected, far more USGBC members are present in
cities with modern codes than in cities with out-
Model Selection
dated codes, anticipating a positive coefficient on
the green interest group variable (Table 4). Further, The regression model includes 221 cities: 76 cities
far more cities with modern codes have commit- with outdated energy codes and 145 cities with
ments from political leadership as signatories of the modern energy codes. The number of observations
Mayor’s Climate Protection Agreement or ICLEI is limited to cities where code adoption information
40 J. C. MARTEL

Table 4. Descriptive statistics for energy codes model.


Outdated codes Modern codes
n ¼ 108 n ¼ 113
Statistic Mean Min. Max. Mean Min. Max.
Green interest group 0.13 0 2 0.31 0 3.54
Traditional interest group 0.87 0 13.4 0.73 0 8.92
Form of city government 0.21 0 1 0.23 0 1
Climate commitment 0.09 0 1 0.31 0 1
General revenue 2.38 0.5 109.91 2.99 0.4 136.66
Population 9.45 6.74 13.06 10.28 5.11 14.26
Income 53.65 19.38 119.52 66.58 27.4 246.53
Education 0.18 0.04 0.43 0.24 0.01 0.61
Energy cost 10.55 1.79 14.46 9.83 6.36 13.13
Housing age 1977 1939 2010 1981 1939 2005

is readily available and control variables matched Table 5. Logistic regression results from modeling energy
on city name and state. The dependent variable has code adoption.
two categories of building energy codes represent- Dependent variable:
Energy code outdated (0)
ing an increased level of code stringency, from out- or modern (1)
dated codes to modern codes. For this study, the Traditional interest group 0.29 (0.14)
Green interest group 0.12 (0.58)
outdated codes are grouped as the IECC 2009 and Interest group interaction 0.41 (0.37)
any code version published before the IECC 2009, Form of city government 0.64 (0.41)
Climate commitment 0.77 (0.46)
and modern codes are the 2012 and 2015 IECC. As General revenue 0.03 (0.01)
stated in the Background section, the 2009 IECC is Population 0.50 (0.14)
Income 0.01 (0.01)
considered status quo as it was required as a condi- Education 0.04 (0.03)
Energy cost 0.21 (0.09)
tion for subnational governments receiving stimulus Housing age 0.01 (0.01)
funding under the American Recovery and Observations 221
Log Likelihood 122.75
Reinvestment Act of 2009. Given the nature of the Akaike Inf. Crit. 268.14
dependent variable, logistic regression is used to R2 0.20 (McFadden)/
0.33 (Nagelkerke)/0.25 (CoxSnell)
estimate the effects of trade association members
Note: Standard errors in parentheses.
on code stringency in local jurisdictions while con- p < 0.1; p < 0.05; p < 0.01.
trolling for social, economic, and political factors.
The regression with logit link function estimates the
Table 6. Odds ratios for energy code adoption.
log-odds that the event occurs. The model esti- Dependent variable:
mates the coefficients corresponding to each focal Energy code outdated (0)
or modern (1)
predictor and control variables. Due to the lack of
Traditional interest group 0.75 (0.14)
interpretability of log odds, the logit coefficients are Green interest group 0.89 (0.58)
converted to odds ratios calculating the odds that Interest group interaction 1.50 (0.37)
Form of city government 1.89 (0.41)
the city has adopted modern codes given the vector Climate commitment 2.17 (0.46)
General revenue 1.03 (0.01)
of X values. The exponent of the coefficient is the Population 1.65 (0.14)
odds ratio. Income 1.01 (0.01)
Education 1.04 (0.03)
Energy cost 0.81 (0.09)
Housing age 1.01 (0.01)
Results and Discussion Observations 221
Log likelihood 122.75
Traditional industry association groups are hypothe- Akaike Inf. Crit. 268.14
sized to be less concerned about negative external- Note: Standard errors in parentheses.
p < 0.1; p < 0.05; p < 0.01.
ities associated with the environmental impacts from
buildings and more concerned with maximizing prof-
its, and therefore less likely to internalize incremental their means, a one standard deviation increase in
building costs. This theory is supported as traditional traditional members per 1000 people decreases the
industry association groups are associated with lower odds of modern energy code adoption by 16%.
levels of modern energy code adoption (Tables 5 Green building interests seek to gain profits
and 6). Holding all other independent variables at within the construction industry but may be willing
JOURNAL OF SUSTAINABLE REAL ESTATE 41

to internalize some of the incremental costs associ- code policy adoption when this scenario occurs. The
ated with building green, which is supported if the interaction variable is not showing statistical signifi-
green building interest group is associated with cance; thus the third hypothesis is affirmed.
higher levels of energy code adoption. This hypoth- Regarding the control variables, the form of gov-
esis is not supported by the model as the green ernment does not seem to matter when it comes to
interest group variable is not statistically significant. modern energy code adoption. Energy codes have
The effect of green interest groups is generally posi- advanced nearly equally in cities with council-man-
tive but the standard errors are too large to get a ager governments and mayor-council governments.
reliable estimate of the effects. The lack of signifi- This is surprising given the technical nature of
cance of the green interest group is explained by building codes and the tendency for governments
the lack of green interest group members in some with city managers to be more likely to collaborate
cities with high probabilities of policy adoption with community stakeholders on policy develop-
(Figure 1). In addition, green interest group mem- ment, presumably finding technical specifications
bers are less likely to be concerned with the strin- that work for local building practices. It could be
gency of building energy codes as these industry that the mayor-council governments are able to
professionals are building to above-code standards push building codes through the policy adoption
given their association with the green building pro- process with less engagement from the building
gram, Leadership in Energy and Environmental community. While the codes might get through the
Design (LEED). Their building expertise is already at adoption process, engagement with the building
an advanced level. community in designing the building codes could
The interaction between traditional and green make policy implementation more effective. The
industry association members attempts to capture adoption of modern building codes does not neces-
the stakeholder engagement process that com- sarily guarantee compliance by the industry, which
monly occurs within the energy code policy arena is expected to be improved when stakeholders are
where interest groups negotiate a code change engaged in the policy design. A commitment by
package that works for both sides described by the local executives to climate protection, indicated by
“counterbalanced” hypothesis1. Statistically speak- signing the Mayor’s Climate Protection Agreement
ing, this is the null hypothesis as neither member- or becoming members of ICLEI, increases the odds
ship group is expected to have an effect on energy that a city will adopt higher levels of energy codes

Figure 1. Marginal effects of interest groups on predicted policy adoption.


42 J. C. MARTEL

Figure 2. Odds Ratios for Energy Code Adoption. Note: Point estimate is the odds ratio. Outer confidence interval is 0.90 and inner
confidence interval is 0.80.

by an average of 2.18, as cities commonly use build- education variables that come from sustainability lit-
ing codes as a strategy to meet their local energy erature might not be entirely applicable to the
goals (Figure 2). building code policy domain.
Cities with greater financial resources are more Regarding problem severity, the cost of electricity
likely to advance codes. Code advancements do is expected to be correlated with energy code
have transaction costs, such as training programs adoptions as the payback period for energy effi-
and new code books for contractors and building ciency improvements is shorter when energy costs
department staff, that are commonly absorbed by are higher, making energy efficiency more attractive
the city. While city fiscal conditions are correlated as a solution to high energy costs. Another inter-
with modern code adoption, household income is pretation is that energy costs would be lower where
not. Building energy code advancements have been communities better handle their energy demand
framed as a way to protect lower-income house- with energy efficiency programs. In reality, energy
holds from rising energy costs. This could explain politics are far more complex than that. For
why modern building codes are advanced in com- example, cities in Wyoming have very inexpensive
munities with diverse household incomes. The energy with an average cost of only $0.08 per kWh
population is very significant to modern energy compared to Kansas where average energy costs
code adoption, while education is not. Urban sus- are $0.12 per kWh. The statistical modeling esti-
tainability literature commonly finds that higher mates that a one standard deviation increase in
income and education levels are correlated with energy costs is correlated with an 18% decrease in
more sustainability policy adoption, but building the likelihood to adopt more stringent energy
codes are a foundational policy option sometimes codes. This is counterintuitive and is likely picking
grouped with sustainability policies but sometimes up effects of energy conditions and energy mixes
not. The sustainability departments may be (i.e., a mix of cheap coal compared to natural gas or
engaged in building energy code adoptions as it renewables). Additionally, energy costs as a regres-
may be one strategy on their broader agenda, but sor in a statistical model explaining building energy
the heavy lifting of building energy code adoption code adoptions may suffer from endogeneity.
is typically executed by the building and planning Indeed, the adoption of modern energy codes could
departments. Thus, expectations for the income and affect energy prices as buildings using less energy
JOURNAL OF SUSTAINABLE REAL ESTATE 43

could reduce peak demand, thereby allowing debates in a formal, well-established policy setting.
cheaper energy (Kneifel & O’Rear, 2015). Thus, the A methodological limitation to this study is that
coefficient on energy costs could be over or under- state-level fixed effects could not be added to the
estimated. Finally, the median year of housing age model due to the low number of observations in
was expected to capture information about the lev- some states (North Dakota, South Dakota,
els of new construction activity in a community but and Wyoming).
was not statistically significant.
Given that code, adoption is under the jurisdic-
Conclusion and Policy Implications
tion of the local governments in home rule states,
the sample of data collected for this study suggests This research adds depth to the collective under-
that, when given local autonomy, some local gov- standing of the types of groups that are participat-
ernments adopt modern building standards while ing in urban sustainability policy processes while
others do not. Indeed, some communities have no analyzing organized interest groups in a highly
energy codes or building codes at all. One might technical sector of urban sustainability: building
assume that building must not be occurring in pla- energy use. To date, sustainability research has
ces with no or outdated codes. Yet, the Census esti- examined policy activity in an aggregate fashion,
mations for construction industry working in places grouping initiatives from multiple sectors together
with outdated codes is similar to cities with modern to better understand why some governments pur-
codes, suggesting that construction activity is pre- sue sustainability, and others do not. While this pro-
sent in these communities. Given that building vides valuable insight, as the field of inquiry grows,
energy codes are a critical policy tool for reaching it is important to more deeply explore specific sec-
global climate and energy goals, subsequent work tors to better understand decision-making. The
could assess strategies for encouraging these com- actor groups that are responsible for many aspects
munities to adopt modern building codes. of the policy processes are overlooked because they
A limitation to this study is that there is expected are sector-specific (Koski, 2010). This research adds a
to be some contamination of USGBC members who
building block to sectoral research intended to be
are also NAHB members, but the data collection
nested within broader sustainability research.
methods cannot detect cross-membership between
Building codes and green building programs, in par-
the two groups. A second limitation of this study is
ticular, hold considerable promise for reducing
that it does not include all energy code interest
greenhouse gas emissions, and yet, the politics and
groups due to resource constraints and lack of feasi-
interest group mobilization is understudied.
bility in collecting counts on each interest group
This study examines the power of interest groups
involved in energy code policy advocacy. The
in shaping the energy efficiency building require-
Building Codes Assistance Project has designed an
ments that cities adopt as mechanisms to achieve
“energy codes universe” that illustrates the multi-
their sustainability goals. It examines the effects of
tude of interest groups, nonprofits and government
agencies involved in the energy code policy proc- traditional and “green” industry member associa-
esses involving code development, adoption, imple- tions on policy adoption for energy-efficient build-
mentation, and enforcement (Building Codes ings. Private interest group theory anticipates the
Assistance Project, 2017). While this study examined opposition of environmental regulation from busi-
a few of the most widely-known groups, subse- ness interest groups in the pursuit of profit maxi-
quent research could further examine actors in the mization while public interest group theory predicts
energy code policy arena. An obvious case selection that business interest groups will support environ-
to study is the code development hearings where mental regulation motivated by the protection of
the various stakeholders join to testify their com- common public goods while being reasonably prof-
pany’s stance on code proposals, government mem- itable. I used counts of members to operationalize
bers vote on the proposals, and an elected these different homebuilder segments. A subse-
committee mediates. Subsequent research could quent study could administer surveys to home-
review testimony to give insights into the code builder segments to operationalize political ideology
44 J. C. MARTEL

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National Association of Homebuilders decreases the
Berry, J. M., & Wilcox, C. (2009). Interest group society (5th
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Disclosure Statement Darnall, N., Potoski, M., & Prakash, A. (2009). Sponsorship
matters: Assessing business participation in government-
There are no conflicts of interest associated with this research.
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