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Tackling cold housing and fuel poverty in New Zealand: A review of policies, research, and health impacts Philippa Howden-Chapman a,n , Helen Viggers a , Ralph Chapman b , Kimberley O’Sullivan a , Lucy Telfar Barnard a , Bob Lloyd c a He Kainga Oranga/Housing and Health Research Programme, University of Otago, 23A Mein St., Wellington, New Zealand b School of Geography, Environment and Earth Sciences, Victoria University of Wellington, New Zealand c Department of Physics, University of Otago, New Zealand article info Article history: Received 7 April 2011 Accepted 22 September 2011 Keywords: Fuel poverty Energy policy Housing and health abstract About a quarter of New Zealand households are estimated to be in fuel poverty. NZ has a poor history of housing regulation, so existing houses are often poorly insulated and rental properties are not required to have insulation or heating. Average indoor temperatures are cold by international standards and occupants regularly report they are cold, because they cannot afford to heat their houses. Fuel poverty is thought to be a factor in NZ’s high rate of excess winter mortality (16%, about 1600 deaths a year) and excess winter hospitalisations (8%). We examined the link between indoor cold and health in two community trials, the Housing, Insulation, and Health Study and the Housing, Heating, and Health Study and both interventions demonstrated encouraging benefit/cost ratios. NZ governments have translated this and other research into major policy programmes designed to retrofit insulation and efficient heating into existing houses. However, houses are predominantly electrical resistance heated and a largely unregulated electricity market has seen rapidly rising residential electricity prices. These rising energy prices, combined with low rates of economic growth, rising unemployment and generally rising income inequality, are likely to further increase levels of fuel poverty in NZ, unless broader policy action is taken. & 2011 Elsevier Ltd. All rights reserved. 1. Introduction New Zealand does not have an official measure of poverty, so the concept and measurement of fuel poverty is, in a political sense, doubly contentious. Fuel poverty is usually defined as a situation where a household needs to spend more than 10% of its income on all household fuels to achieve a satisfactorily warm indoor environment (Boardman, 1991). As Brenda Boardman points out in her recent book, if we are to understand the underlying reasons for fuel poverty, we should not just concentrate on the immediate problems of fuel debts, disconnections, and cold homes. With fuel poverty, the real differentiating cause is the energy inefficiency of the home as a result of insufficient capital expenditure on improving the calibre of the home. As a con- sequence, the home is expensive to heat and so some of the poorest people have to buy the most expensive warmth. This emphasis on capital expenditure is what differentiates fuel poverty from poverty. Raising incomes can lift a household out of poverty, but rarely out of fuel poverty (Boardman, 2010), p. xv. The World Health Organization (WHO) recommends healthy indoor temperatures are between 18 and 21 1C(World Health Organization, 1987). The inability of many households to afford adequate heating for a reasonable outlay is a significant and under-researched problem in New Zealand (O’Sullivan et al., 2011). There are several factors which have exacerbated fuel poverty in New Zealand, which are related to those highlighted by Boardman. Three of the main factors include the poor quality of housing in terms of thermal efficiency, relatively high levels of income inequality in New Zealand compared to other Organiza- tion of Economic Cooperation and Development (OECD) countries (Wilkinson and Pickett, 2009) and an increase in the real price of residential electricity, which occurred mainly after deregulation of the industry in 1996 and 1998 1 (Howden-Chapman and Viggers et al., 2009). In this paper, we discuss such causal factors, after a considera- tion of the extent and consequences of fuel poverty in New Zealand. We then outline the research carried out by the Housing Contents lists available at SciVerse ScienceDirect journal homepage: www.elsevier.com/locate/enpol Energy Policy 0301-4215/$ - see front matter & 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2011.09.044 n Corresponding author. Tel.: þ644 918 6047. E-mail address: [email protected] (P. Howden-Chapman). 1 http://www.med.govt.nz/templates/MultipageDocumentPage____6479.aspx Please cite this article as: Howden-Chapman, P., et al., Tackling cold housing and fuel poverty in New Zealand: A review of policies, research, and health impacts. Energy Policy (2011), doi:10.1016/j.enpol.2011.09.044 Energy Policy ] (]]]]) ]]]]]]

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Energy Policy ] (]]]]) ]]]–]]]

Contents lists available at SciVerse ScienceDirect

Energy Policy

0301-42

doi:10.1

n Corr

E-m

(P. How

Pleasresea

journal homepage: www.elsevier.com/locate/enpol

Tackling cold housing and fuel poverty in New Zealand: A review of policies,research, and health impacts

Philippa Howden-Chapman a,n, Helen Viggers a, Ralph Chapman b, Kimberley O’Sullivan a,Lucy Telfar Barnard a, Bob Lloyd c

a He Kainga Oranga/Housing and Health Research Programme, University of Otago, 23A Mein St., Wellington, New Zealandb School of Geography, Environment and Earth Sciences, Victoria University of Wellington, New Zealandc Department of Physics, University of Otago, New Zealand

a r t i c l e i n f o

Article history:

Received 7 April 2011

Accepted 22 September 2011

Keywords:

Fuel poverty

Energy policy

Housing and health

15/$ - see front matter & 2011 Elsevier Ltd. A

016/j.enpol.2011.09.044

esponding author. Tel.: þ644 918 6047.

ail address: philippa.howden-chapman@otago

den-Chapman).

e cite this article as: Howden-Chapmrch, and health impacts. Energy Pol

a b s t r a c t

About a quarter of New Zealand households are estimated to be in fuel poverty. NZ has a poor history of

housing regulation, so existing houses are often poorly insulated and rental properties are not required

to have insulation or heating. Average indoor temperatures are cold by international standards and

occupants regularly report they are cold, because they cannot afford to heat their houses. Fuel poverty

is thought to be a factor in NZ’s high rate of excess winter mortality (16%, about 1600 deaths a year) and

excess winter hospitalisations (8%).

We examined the link between indoor cold and health in two community trials, the Housing,

Insulation, and Health Study and the Housing, Heating, and Health Study and both interventions

demonstrated encouraging benefit/cost ratios. NZ governments have translated this and other research

into major policy programmes designed to retrofit insulation and efficient heating into existing houses.

However, houses are predominantly electrical resistance heated and a largely unregulated electricity

market has seen rapidly rising residential electricity prices. These rising energy prices, combined with

low rates of economic growth, rising unemployment and generally rising income inequality, are likely

to further increase levels of fuel poverty in NZ, unless broader policy action is taken.

& 2011 Elsevier Ltd. All rights reserved.

1. Introduction

New Zealand does not have an official measure of poverty,so the concept and measurement of fuel poverty is, in a politicalsense, doubly contentious. Fuel poverty is usually defined as asituation where a household needs to spend more than 10% of itsincome on all household fuels to achieve a satisfactorily warmindoor environment (Boardman, 1991).

As Brenda Boardman points out in her recent book, if we are tounderstand the underlying reasons for fuel poverty, we shouldnot just concentrate on the immediate problems of fuel debts,disconnections, and cold homes.

With fuel poverty, the real differentiating cause is the energyinefficiency of the home as a result of insufficient capitalexpenditure on improving the calibre of the home. As a con-sequence, the home is expensive to heat and so some of thepoorest people have to buy the most expensive warmth. Thisemphasis on capital expenditure is what differentiates fuel

ll rights reserved.

.ac.nz

an, P., et al., Tackling coldicy (2011), doi:10.1016/j.en

poverty from poverty. Raising incomes can lift a household outof poverty, but rarely out of fuel poverty (Boardman, 2010), p. xv.

The World Health Organization (WHO) recommends healthyindoor temperatures are between 18 and 21 1C (World HealthOrganization, 1987). The inability of many households to affordadequate heating for a reasonable outlay is a significant andunder-researched problem in New Zealand (O’Sullivan et al.,2011). There are several factors which have exacerbated fuelpoverty in New Zealand, which are related to those highlighted byBoardman. Three of the main factors include the poor quality ofhousing in terms of thermal efficiency, relatively high levels ofincome inequality in New Zealand compared to other Organiza-tion of Economic Cooperation and Development (OECD) countries(Wilkinson and Pickett, 2009) and an increase in the real price ofresidential electricity, which occurred mainly after deregulationof the industry in 1996 and 19981 (Howden-Chapman andViggers et al., 2009).

In this paper, we discuss such causal factors, after a considera-tion of the extent and consequences of fuel poverty in NewZealand. We then outline the research carried out by the Housing

1 http://www.med.govt.nz/templates/MultipageDocumentPage____6479.aspx

housing and fuel poverty in New Zealand: A review of policies,pol.2011.09.044

Table 1Comparison of residential electricity use in New Zealand and other OECD

countries, 2008.

Proportion of

residential energy

that is electrical

Residential

electricity use

per capita

Total residential

energy use per

capita

TOE/persona TOE/person

Norway 0.78 0.62 0.79

P. Howden-Chapman et al. / Energy Policy ] (]]]]) ]]]–]]]2

and Health Research Programme/He Kainga Oranga2 to examinethe effect of improving the energy efficiency of housing on thehealth and well-being of the occupants. By providing solution-focused research, which evaluated the beneficial impact of retro-fitting insulation in existing houses and then assessed the impactof installing effective heaters, this programme has helped shapepolicies which have contributed to lower household fuel bills,warmer homes, and better well-being among residents.

Canada 0.42 0.41 0.98

United States 0.44 0.39 0.88

Sweden 0.50 0.36 0.72

Finland 0.36 0.34 0.94

New Zealand 0.75 0.25 0.33Australia 0.51 0.23 0.46

Iceland 0.14 0.22 1.56

France 0.31 0.21 0.67

Switzerland 0.26 0.20 0.78

Japan 0.52 0.19 0.37

Austria 0.22 0.18 0.78

United Kingdom 0.24 0.17 0.69

Belgium 0.20 0.16 0.82

Denmark 0.20 0.16 0.80

Ireland 0.23 0.16 0.70

Germany 0.18 0.15 0.83

Luxembourg 0.11 0.14 1.27

Greece 0.30 0.14 0.46

Spain 0.39 0.14 0.34

Netherlands 0.22 0.13 0.60

Czech Republic 0.22 0.12 0.56

Portugal 0.37 0.11 0.29

Hungary 0.18 0.10 0.55

Italy 0.22 0.10 0.46

Korea 0.26 0.10 0.39

Slovak Republic 0.18 0.07 0.39

Poland 0.13 0.06 0.49

Turkey 0.15 0.05 0.32

Mexico 0.23 0.04 0.16

Source data: Energy balances of OECD countries 2010.

a TOE¼tonnes of oil equivalent¼42 GJs¼11630 kWh.

2. Extent of fuel poverty in New Zealand

Using the same definition of adequate indoor temperatures asin the United Kingdom, the estimated levels of fuel poverty inNew Zealand in 2001 were similar to Scotland in 2003 (13%):some 10–14% of households were estimated to be in fuel poverty,with the levels likely to be higher in the South Island (Lloyd,2006). By 2008, the proportion of New Zealand households inpotential fuel poverty had increased to 25%, again with substan-tial regional variations. In the South Island, the rates of potentialfuel poverty in the two main cities were 40% in Christchurch and47% in Dunedin, compared to 14% in Auckland in the North Island(see Appendix 1). These rates are similar to the rise in fuel povertyin 2009 in Scotland (27%) and Northern Ireland (44%). However,these analyses assume that the only fuel used for heating waselectricity, and it was used in a resistance heater, so may haveoverestimated the fuel poverty in homes with solid fuel burnersand access to relatively cheap firewood and air-source heat-pumps (Howden-Chapman et al., 2009).

Nonetheless, these estimates are in general agreement withthose from the 1995–2005 New Zealand Household Energy EndUse Study, which carried out intensive monitoring in 400 housesand found that 28% of households in the lowest income quintilespent more than 10% of their monthly income on winter energy.Despite this level of expenditure on household energy, only abouta third of households in the lowest income quintile achieved anaverage living room evening winter temperature of above 16 1C,which itself is substantially lower than the WHO guidelines(World Health Organization, 2007). The average winter livingroom temperature in this study was found to be 17.9 1C, withsubstantial numbers of dwellings having temperatures below thisvalue. About half of all households in the study reported neverheating bedrooms (Isaccs et al., 2010; Isaacs et al., 2006).

It seems clear that of the high percentage of people who arepotentially in fuel poverty in New Zealand, very few actuallyspend the necessary proportion of their income on heatingneeded to attain the indoor environment which will protect theirhealth (Lloyd et al., 2008). The reason is not that people like tolive in cold homes, but that their disposable income is used forother necessities such as food and rent; they are faced with thehousehold expenditure trade-off described in the American lit-erature as to ‘‘heat or to eat?’’ (Bhattacharya et al., 2003; Caseyet al., 2006). Our estimates are that there are large and increasingnumbers of households in NZ who cannot afford to spend enoughon fuel to keep warm and healthy. (See Appendix 1 for estimatednumbers.)

Most New Zealand households use electricity for heat andalthough air-source heat-pumps are becoming more commonmany households are still reliant on electrical resistance heating.About three-quarters of New Zealand’s domestic energy use is inthe form of electricity; this is much higher than OECD norms(see Table 1). Although New Zealand’s domestic electricity (sixth

2 He Kainga Oranga/ translates from Te Reo Maori, the Maori language, as a

healthy village, or some healthy housing.

Please cite this article as: Howden-Chapman, P., et al., Tackling coldresearch, and health impacts. Energy Policy (2011), doi:10.1016/j.en

cheapest out of 20 OECD countries) and diesel fuel (third cheapestout of 25) are relatively cheap by world standards, and natural gasis not overly expensive (fifteenth cheapest out of 21), reliance onelectricity for domestic heating means that New Zealanders oftenpay more per kilowatt-hour (kWh) of domestic heat than peoplefrom other countries. It costs almost one and a half times as muchfor a domestic customer to buy a gigajoule3 (GJ) of electricalenergy in New Zealand than it does for a customer in Italy (themost expensive country listed for natural gas) to buy a GJ ofenergy in the form of natural gas.

Despite New Zealand’s over reliance on electricity for spaceheating, domestic electricity use per household has remainedrelatively stable since the mid-1970s (Liddle, 2009). New Zealandat that time had the third highest rate of domestic electricity usein a selection 21 OECD countries; by 2010 it was sixth, anddeclining with some lower use countries rapidly approachingNew Zealand’s usage. However, at Table One shows many of theother countries in the selection use substantial amounts of otherfuels for domestic heating; so that New Zealand is 25th out of 30for total residential energy use per person (International EnergyAgency, 2010). The countries which use less domestic energy perperson (Turkey, Mexico, and Portugal) also have warmer climates.Of the countries with which New Zealand typically comparesitself, the United States used approximately 2.7 times as muchdomestic energy as New Zealand per person, Britain 2.1 times,Australia 1.4 times, and even Japan (not renowned for expansivedomestic energy use) 1.1 times as much per person.

3 One gigajoule equals 278 kWh.

housing and fuel poverty in New Zealand: A review of policies,pol.2011.09.044

Fig. 1. Proportion of household income spent on fuel, by income, 1989–2010.

Data source: Statistics New Zealand

P. Howden-Chapman et al. / Energy Policy ] (]]]]) ]]]–]]] 3

The pattern is explicable given relatively high residential gasprices in New Zealand, low gross domestic product (GDP) percapita and high levels of income inequality, but is less explicablewhen relatively low, albeit rising, electricity prices are considered(Schipper et al., 2000; Amitrano, 2004; Ministry of EconomicDevelopment, 2010).

There is not unexpectedly a social gradient in fuel expendi-ture; those on low incomes pay a higher proportion of theirhousehold income for energy than those on higher incomes(Howden-Chapman et al., 2009). Fig. 1 shows that between1989 and 2010, in the lowest income decile household expendi-ture on energy rose from 7.6% to 13.1%, compared to householdsin the top earning decile, where expenditure on energy remainedmore stable (1.1–1.6%).

Moreover, an increasing proportion of households on lowincomes are in debt to their electricity retailer (ElectricityCommission, 2010; O’Sullivan et al., 2011). Such a social gradientin the ability to warm the indoor environment inevitably leadsto a social gradient in population health outcomes (Graham,2007).

3. Effect of fuel poverty in New Zealand

Researchers almost two decades ago identified that, despitehaving a temperate climate, New Zealand had high levels of excesswinter mortality (Isaacs and Donn, 1993). The levels of excess wintermortality have not changed in the last 20 years and are higher than inless temperate European countries (Healy, 2003). Fuel povertyresulting in low indoor temperatures is likely to be a contributingfactor in the approximately 1600 people over 65 dying each year inexcess winter mortality, about 16% of winter deaths (Davie et al.,2007). Research carried out by the Housing and Health ResearchProgramme has shown that there is also an 8% excess wintermorbidity in New Zealand. A cohort study, based on the uniquepatient identifier, the National Health Index, was used to link alldwellings to hospitalisation records. This study showed a small butsignificant increase in hospitalisations from people living in olderdwellings, in areas that had a higher proportion of rental householdsand households in poor condition (Telfar Barnard, 2010).

Consistent with these elevated rates of excess winter hospitalisa-tion in New Zealand, people with respiratory health problemsregularly report they are cold in their homes most of the time duringwinter and moreover, they are colder than they would like to be(Howden-Chapman et al., 2007; Howden-Chapman et al., 2008).

Please cite this article as: Howden-Chapman, P., et al., Tackling coldresearch, and health impacts. Energy Policy (2011), doi:10.1016/j.en

Household occupants in our three large community trials (discussedin more detail below), were asked the same question about whetherthey felt cold in their home during the preceding winter at thebaseline and after the intervention. In each of our community trialswe had recruited people with respiratory illnesses, which are clearlyaggravated by cold and dampness, although the precise criteria variedfrom general respiratory problems (Howden-Chapman et al., 2007),to children with doctor-diagnosed asthma (Howden-Chapman et al.,2008) to older people with chronic obstructive pulmonary disease(Viggers et al., 2011). Between a third and a half (32–47%) ofhousehold occupants reported that their house was ‘‘always’’ coldduring winter, with more reporting that it was cold ‘‘most of thetime’’. Baseline questionnaires from these studies indicate 65% of theoccupants in nearly 2000 households reported being cold ‘‘all’’ or‘‘most of the time’’.

Similar results were found in a study of university studenthousing in Dunedin, where 90% of the houses were belowrecommended temperatures (World Health Organization, 1987)and only a third of students said they were ‘‘comfortable’’ in theirhomes during winter; the researchers drew the somewhat ironicconclusion that ‘‘houses in New Zealand are energy efficient, inthe respect that they use little energy, but are poorly heated,’’(Shannon, Lloyd et al., 2003, p. 6).

Evidence from focus groups drawn from the general publicsuggests that while participants had very positive attitudes andnorms towards efficiently heated warm homes as well as the needto support pro-environmental policies, the capital cost of effectiveheaters, lack of available information and factors such as tenancyarrangements made this unfairly difficult to attain for low-incomehouseholds (Vujcich, 2008). Some people in focus groups evincedpioneer stoicism about living in cold homes, while others saw it as away of living more cheaply (Cupples et al., 2007). In an in-depthqualitative study of people carrying out home dialysis, four out of thefive families said they were cold all the time in winter (Tiatia, 2011).

As money spent on energy cannot be spent on other necessitiessuch as food, the efficiency of domestic energy is linked with healthindirectly and directly. Indoor temperatures should be maintainedabove 18 1C; below 16 1C, respiratory stress occurs, and below 12 1Ccardiovascular stress occurs (Collins, 1993). There is a plausible directbiological link between being cold and respiratory and cardiacsymptoms (Neild et al., 1994), which is coming to be better under-stood (The Eurowinter Group, 1997). When the body is cold, a seriesof defence mechanisms are triggered, which result in the thickeningof the blood, increased blood pressure or hypertension, and theseincrease the risk of cardiovascular or cerebrovascular events (LanChang et al., 2004; Howieson and Hogan, 2005).

Houses that are cold are likely to be damp and this can lead tothe growth of moulds, which can cause respiratory symptoms(Collins, 2000). Viruses and bacteria, which cause infectiousdiseases, have also been shown to survive longer in damp andcolder temperatures (Hersoug, 2005). Respiratory processes areaffected by local inflammation (Howieson and Hogan, 2005).Ciliary action is disrupted in the membranes of the respiratorytract and bronchoconstriction, or the narrowing of respiratorypassages, is triggered by breathing cold air (Collins, 2000). Inaddition, Collins (2000, p. 43) states that ‘‘Acute respiratory infec-

tious diseases cause the highest mortality when they affect a

vulnerable section of the population, such as elderly people already

suffering from chronic disabling respiratory illness’’.

4. The interaction of weak housing quality regulation andother factors

A 2006 WHO review of 10 countries within the WHO EuropeanRegion estimated that the attributable fraction of excess winter

housing and fuel poverty in New Zealand: A review of policies,pol.2011.09.044

P. Howden-Chapman et al. / Energy Policy ] (]]]]) ]]]–]]]4

deaths due to housing conditions was around 40% (World HealthOrganization, 2007). No such calculations have yet been done inNew Zealand, but houses are constructed to minimal standards,compared to international best practice. Four factors seem to havecome together to create a widespread problem with cold, damphousing. One factor is the legacy of ‘‘light regulation’’ in mostsectors of the economy, including housing and energy (Bertramand Twaddle, 2005). A second related factor over the last twentyyears or so has been poorly regulated and monitored constructionmethods, which have led to widespread ‘‘leaky buildings’’, whereexternal water has penetrated internal cavities causing thegrowth of mould, that has rotted the structure of the oftentimber-frame building (Howden-Chapman et al., 2010). A thirdfactor is the disregard until recently of the health impacts of poorhousing, particularly in existing (as opposed to new) housing,where the building code does not apply and the only extantlegislation dates from 1947 and is poorly enforced.

A fourth factor is the perverse effect of the traditional avail-ability of cheap electricity, which made energy efficient buildingpractices less worthwhile, especially if a short-term view wastaken (Grimes et al., 2004). However, as electricity prices haverisen, use of electricity to heat poorly insulated dwellings hasmade less and less economic sense, as the heat is wasted;conversely, if dwellings are insulated, there are both economicand health benefits of heating.

New Zealand’s poor record in regard to housing energyefficiency regulation may reflect factors associated with politicalideology and governance. A 2006 review of current residentialenergy policy concluded that the then prevailing policies wereunlikely to promote optimal investment in energy efficiency(McChesney et al., 2006). Until recently, minimal attention hasbeen paid to home insulation and heating systems compared toEuropean countries, such as Germany. Indeed major constructioncompanies in New Zealand lobbied against the perceived com-pliance costs of increasing insulation standards (Lah, 2009). Lahsuggests that a laissez faire political climate in New Zealand, ascompared with the more corporatist governance conditions inGermany, was a factor in the slow development of tighterdomestic energy regulation in New Zealand. It was not until thesecond oil crisis in 1978–1979 that there was a move to requireinsulation even in new houses, a move driven more by concernsabout the cost of energy than concerns about health effects.

Since a National Environmental Standard for air quality wasintroduced in 2004 and revised in 2011,4 several regional councilshave required households to remove inefficient wood burners inorder to reduce air-polluting particulate matter emissions(Melhuish et al., 2005/6), which may partly explain declininglevels of space heating in recent years (Howden-Chapman et al.,2009).5 But even after the 2004 Building Code update, a randomsurvey of new home owners showed that their houses did notalways provide a level of acceptable comfort (Page, 2007).

Up to two-thirds of existing New Zealand houses are estimatedto lack a level of insulation that would bring them close to the1996 NZ standard for insulation in new homes (Building ResearchAssociation of New Zealand, 2007). A national residential energyefficiency programme, the ‘‘Energy Saver Fund’’, was first intro-duced in 1995, in conjunction with the Wholesale ElectricityReforms. The establishment of this Fund was in recognition that alack of effective competition in the domestic electricity market for

4 National environmental standards for air quality: http://www.mfe.govt.nz/

laws/standards/air-quality/index.html (accessed March 2011)5 The 2008 newly elected government subsequently announced a relaxation

of the timetable for meeting PM10 standards. Revised National Environmental

Standards for Air Quality: http://www.mfe.govt.nz/laws/standards/air-quality/

review/index.html (accessed March 2011)

Please cite this article as: Howden-Chapman, P., et al., Tackling coldresearch, and health impacts. Energy Policy (2011), doi:10.1016/j.en

residential customers required government intervention (EnergyEfficiency and Conservation Authority, n.d.). The Fund was man-aged by the Energy Efficiency and Conservation Authority as theEnergyWise home grants programme to co-fund insulation pro-jects. Funding was expanded substantially under the 1999–2008Labour-led government, which established the Energy Efficiencyand Conservation Authority as a Crown Agency.

The 2001 National Energy Efficiency and Conservation Strategyprioritised improved health and welfare in the residential sectorin order to ‘‘improve community wellbeing by enhancing the

provision of adequate energy services for all in the community.’’6,7

The scheme, which was updated in 2007 provided subsidies andgrants for retrofitted insulation to low-income households, inter-est-free loans for some appliances, and a partial subsidy schemefor landlords to improve rental accommodation energy efficiency(New Zealand Government, 2007).

In 2008, in conjunction with the introduction of the EmissionsTrading Scheme, the minority Labour Government, which gov-erned with the support of the Green Party, set up the HouseholdFund, a one billion dollar (US$844m; h591m) retrofit programmeover 15 years designed in part to compensate for the regressiveimpact of their newly introduced carbon trading policies, byredistributing the windfall profits accruing to government-ownedelectricity companies. The fund continued under the National-ledgovernment from late 2008 as the Warm Up New Zealand Fund,although the allocation was reduced to a third of that proposed bythe previous Government. In addition, while a limited number ofextra subsidies continued to be available for low-income andrental households, the scheme was rebranded as being availableto all households, not just those eligible for a ‘‘communityservices card’’ (the card delineates those on low incomes). Insome areas, the co-payments can be made as part of local councilrates.8

5. Private rental housing

The problem of increasing the energy efficiency of NewZealand homes to reduce fuel poverty and improve health iscompounded by the problem of poor housing quality in theprivate rental housing sector, which appears to be particularlymarked. The 2006 Census showed a steep decline in home-ownership and (72% in 1991; 67% in 2006) rise in renting. The2008 NZ Home and Income Survey showed that those on lowincomes are more likely to rent and rental properties are pre-dominantly older housing stock (Telfar Barnard, 2010).

The private rental market in New Zealand is very lightlyregulated and landlords are required neither to retrofit insulation,nor to provide heating for tenants. From a market perspective,there are split incentives between the costs to the landlord ofbuilding improvements and the immediate benefits to thetenants, who benefit from lower energy bills and/or increasedcomfort (de T’Serclaes and Jollands, 2007). Moreover, tenants areunlikely to invest in improving homes that they are unlikely tooccupy for long periods and cannot change the fabric of thebuilding without landlord consent.

It is not entirely clear, however, why New Zealand landlordsdo not view a potential gain in capital value with the retrofittingof 55%-subsidised insulation in their rental dwelling as an

6 EECA: National Energy Efficiency and Conservation Strategy: Towards a

Sustainable energy future Ministry for the Environment. 2001 September p. 67 History of the Project: http://www.mfe.govt.nz/issues/energy/warm-homes/

history.html (accessed March 2011)8 http://www.energywise.govt.nz/funding-available/

insulation-and-clean-heating

housing and fuel poverty in New Zealand: A review of policies,pol.2011.09.044

P. Howden-Chapman et al. / Energy Policy ] (]]]]) ]]]–]]] 5

adequate incentive for investment, bearing in mind also that theycan look forward to untaxed capital gains in New Zealand.However, a condition of the subsidy, that it applies only toproperties occupied by low-income tenants, may deter somelandlords.9

6. Impact of energy policy

It is not just the quality of housing that has an impact on fuelpoverty; there is inevitably a broader impact from energy policy.As more households use electricity, rather than wood or coal, forhome heating in New Zealand, rising residential electricity priceshave underlined the unsustainability of poorly insulated dwell-ings, and accentuated fuel poverty (Howden-Chapman et al.,2009). As non-governmental organizations argued in a recentsubmission to the government, in the March 2006 year, residen-tial electricity consumers used 32.7% of New Zealand’s electricity,but provided 44.2% of the sales revenue (Child Poverty ActionGroup, 2010).

Apart from the pressure of peak oil (Lloyd and Subbarao,2009), the rapid price rise in residential electricity is due in partto the 1996 deregulation of the electricity market. Residentialelectricity, unlike some industrial electricity, is no longer cross-subsidised by commercial rates and there is no regulationrequiring retail companies to have special rates for low incomecustomers, such as that imposed by Great Britain’s Ofgem(Bertram and Twaddle, 2005). For an increasing number ofhouseholds, this has led to disconnection from electricity servicesfor non-payment of bills, a severe outcome of fuel poverty, whichincreases the strain on already stretched household budgets(O’Sullivan et al., 2011).

Unlike the European Union, which has instituted new manda-tory energy certificates for housing, New Zealand has no suchrequirements, nor does it have regulation prohibiting energysuppliers from cutting off gas and electricity during winter timeas does the Netherlands, for example (World Health Organization,2007). An Electricity Commission was set up under the 1992New Zealand Electricity Act and began to consider the problemof fuel poverty, but was recently abolished. Its principal objectiveswere to ensure that electricity was produced and delivered toall classes of consumers in an efficient, fair, reliable, andenvironmentally sustainable manner, while promoting and facil-itating the efficient use of electricity. The Commission wasreplaced in late 2010 by the Electricity Authority, whose mandateis to promote competition in, reliable supply by, and theefficient operation of, the electricity industry for the long-term benefit of consumers. Thus, fairness has been jettisoned asa guiding principle, and economic efficiency now occupiescentre stage.

In general, customers are expected and encouraged by bothgovernment and non-government organizations to disciplineoligopolistic behaviour on the supply side by switching tothe company with the cheapest electricity price plan. Thoseon low incomes, or those who have fallen into debt, are encour-aged to use pre-payment meters, but in New Zealand, a pricecomparison on a government-sponsored website showed thatprepayment metering was more expensive than other paymentoptions (O’Sullivan et al., 2011). It is important in this respect toascertain whether prepayment metering encourages higherindoor temperatures or hinders them due to easier prioritisingof disposable income to more short term benefits (e.g. food or

9 ‘Get your rental property insulated and energy wise for less than half

the price’: http://www.dbh.govt.nz/UserFiles/File/Tenancy/pdf/eeca-brochure.pdf

(accessed March 2011)

Please cite this article as: Howden-Chapman, P., et al., Tackling coldresearch, and health impacts. Energy Policy (2011), doi:10.1016/j.en

rent). Some work in this regard is in progress as we are currentlycarrying out a longitudinal qualitative study of people who haveconsulted a home budgeting service and have, as a consequence,begun to use prepayment electricity meters (Viggers et al., 2011).This study is also exploring ‘‘self-disconnection’’ as a means ofbudgeting.

7. Policies directly addressing fuel poverty

In contrast to the position in the United Kingdom, fuel povertyhas generated little policy interest in New Zealand. The LabourGovernment’s 2004 document, Sustainable Energy: Creating a

Sustainable Energy System briefly discussed fuel poverty(Ministry of Economic Development, 2004), but unlike the BritishGovernment, there was no commitment to reducing or eliminat-ing fuel poverty. A central government cross-departmentalresearch project The Extent of Fuel Poverty in New Zealand and

Possible Policy Responses was funded by Cabinet in 2008/9, but hasyet to report.10

However, the Energy Efficiency and Conservation Strategy of2007 did start from the premise that ‘‘insulated homes arecheaper to heat and healthier to live in’’ (New ZealandGovernment, 2007). More funding was allocated to incentiveprogrammes, such as assistance to landlords to insulate proper-ties and the setting of minimum standards, to increase the rate ofinsulation.

The 2011 National Government’s draft Energy Strategy sub-sumed the previous Government’s Energy Efficiency and Conser-vation Strategy and mentions ‘‘household energy affordability’’(p. 16) and energy security, but in the context of an effectiveelectricity market, not fuel poverty (New Zealand Government,2011). The strategy does have a stated objective of ‘‘Warm, dry and

energy efficient homes with improved air quality to avoid ill-health

and lost productivity’’ (p. 32) and indirectly acknowledges theconsequences of fuel poverty:

‘‘Many New Zealand homes are inadequately insulated and have

inefficient space and water heating systems. This means they are

difficult and expensive to heat and as a result are often cold and

damp. Cold and damp homes cause health problems, particularly

respiratory illnesses that result in days off work and school.’’

(p. 32)

In one important respect, then, there has been multi-partysupport for reducing fuel poverty in New Zealand: via the retrofittingof insulation and installation of more effective heating in existinghomes. The support for this policy was partially underpinned by thesolution-focused research discussed in the next section.

8. Researching the link between fuel poverty and health

In order to help find solutions for damp, cold housing, He

Kainga Oranga, our Housing and Health Research Programme, hascarried out a series of community trials in partnership withcommunity and government agencies, as well as private compa-nies (Howden-Chapman et al., 2005). The first community study,carried out in 2001 and 2002, the Housing, Insulation and Health

Study, involved retrofitting insulation in 1350 stand-alone houses,with 4407 participants at no cost to the participants. Therandomly selected intervention group were insulated during theintervening summer, between the baseline and follow-up winter;

10 http://www.morst.govt.nz/funding/cdrp/CDRP-Funding-Round-200809/

housing and fuel poverty in New Zealand: A review of policies,pol.2011.09.044

P. Howden-Chapman et al. / Energy Policy ] (]]]]) ]]]–]]]6

the control group houses were insulated after the follow-upwinter (Howden-Chapman et al., 2007).

The study found that insulating existing houses led to asignificantly warmer, drier indoor environment and resulted inimproved self-rated health, self-reported wheezing, days offschool and work, and self-reported visits to general practitionersas well as a non-significant trend for fewer hospital admissionsfor respiratory conditions. Insulation was associated with a smallincrease in bedroom temperatures during the winter (0.5 1C) anddecreased relative humidity (�2.3%), despite energy consump-tion in insulated houses being 81% of that in uninsulated houses’’(i.e. a 19% reduction).11 These changes occurred alongside thehypothesised health benefits (reduced odds of ’’fair’’ or ’’poor’’self-rated health, self-reported wheezing, and self-reports ofchildren taking days off school, and adults taking days off work).

The intervention in our second community trial, the Housing,

Heating and Health Study was installing effective heating in pre-insulated housing that were previously relying on stand-alone barheaters or unflued gas heaters (Howden-Chapman et al., 2008).Households were given the choice of air-source heat pumps,wood pellet burners, or flued gas heaters. These more effectiveheaters increased the efficiency of heating. The in-home tem-peratures increased in both the child’s bedroom (0.57 1C) and theliving room (1.10 1C), despite a small, but insignificant drop inoverall energy consumption. Again there were improved well-being measures reported—a decrease in reports of poor childhealth, reduced reports of lower respiratory symptoms, and fewerdays off school.12

These studies showed that improving the indoor temperatureof New Zealand houses also improved the self-reported health ofoccupants and demonstrated the co-benefits of energy efficiencymeasures, such as insulation, on mitigating energy use and carbondioxide emissions. To capture the broader systemic outcomes, wecompleted cost-benefit studies of both community trials. Taking aconservative approach, the Housing, Insulation and Health Studyshowed a benefit to cost ratio of almost two-to-one (1.86:1)(Chapman et al., 2009). Although valuation of mental healthchanges is difficult and necessarily approximate, when self-reported mental health improvements were included the bene-fit-to-cost ratio increased to over two-to-one (�2.16:1)(Howden-Chapman and Chapman, 2009).13,14

11 In Christchurch, one of the seven communities where the Insulation Study

was conducted, the lines company Orion Energy took daily measurements of the

effects of insulation on electricity consumption in the Christchurch region. While

the sample was small (200 houses), compared to the main study (1350 house-

holds), insulated homes were 1–2 1C higher in temperature and daily energy

consumption decreased between 12.7% and 18% Energy Efficiency and Conserva-

tion Authority (n.d.). EECA Residential Programme Compendium (1995–present).

Wellington, EECA.12 A subsequent study of the impact of effective heaters in 3453 houses in

Christchurch found electricity usage in the second year after installation was 2%

lower than that in the year prior to installation. Environment Canterbury Meridian

Energy and Orion NZ Ltd (2009). Impact of Environment Canterbury’s Clean Heat

project on Christchurch electricity usage. Christchurch, http://www.oriongroup.co.

nz/downloads/Clean_Heat_electricity_report_Nov09%5B1%5D.pdf.13 People in the intervention group that had insulation retrofitted in their

houses in the Housing, Insulation, and Health Study had 0.56 times the odds of

being in the bottom half of a reduced SF36 mental health scale [0.41–0.77;

p¼0.0003]. Using methods of inter-group comparison, consistent with those used

in the original cost-benefit study, we found a net 6% decline in the rate of poor

mental health for the intervention group compared to the control group. We also

took into account that 16% of adults reported poor mental health at the baseline

and made a further adjustment for the estimated one third of these warranting

clinical treatment. Averaging across the households in the study, the present value

of mental health savings was about one quarter of the cost of the insulation

retrofit.14 A recent cost-benefit study also addressing mental health benefits is Liddell

et al. (2011).

Please cite this article as: Howden-Chapman, P., et al., Tackling coldresearch, and health impacts. Energy Policy (2011), doi:10.1016/j.en

The cost–benefit study of the Housing, Heating and HealthStudy showed that the ratio of benefits to costs was lessfavourable than in the Housing, Insulation, and HealthStudy, but was economically worthwhile if a family with a childwith asthma, which affects one in five children in New Zealand,lived in the house with improved heating (Preval et al., 2010).While this is a significant contingency, it is notable that theeffective heaters are about twice as expensive as retrofittedinsulation; accordingly, it is not surprising that the return onimproved heating was less clear-cut. Nevertheless, taking intoaccount the evidence that warmth improves a number of healthconditions and comfort is valued, there is a case for investment inimproved heating.

Our current community trials include the Home Injury Preven-

tion Intervention (HIPI) Study, which looks at the effect of pre-insulation and remediation of housing hazards on home injuries,which are known to occur more in cold houses (Keall et al., 2011)and the Warm Homes for Elder New Zealanders study (WHEZ).

The WHEZ Study is evaluating the effect of winter electricityvouchers on older people with chronic obstructive pulmonarydisease and has been designed explicitly to attempt to reduce fuelpoverty, by pre-insulating the participants’ houses and thenproviding NZ$500 (US$422; h296) in the electricity accounts ofthose in the intervention group (Viggers et al., 2011). As in all ourstudies, the control group will receive the intervention at theconclusion of the study.

9. Government response to fuel poverty

A 2007 WHO report stated that ‘‘more studies are needed toshow that better and energy-efficient housing makes a consider-able contribution towards protecting health’’ (p. 7) and it is herethat New Zealand has shown a strong link between research andpolicy (Davis and Howden-Chapman, 1996).

The framing of the two completed community trials describedabove helped to shape major policy investments in the term oftwo successive governments in New Zealand. As already noted,the minority Labour Government, which governed with thesupport of the Green Party until 2008, set up a one billion dollarretrofit insulation programme, in part to compensate for theregressive impact in terms of income of carbon pricing.

The programme was modified by the incoming minorityNational Government, which governs with the support of theMaori Party. The Warm Up New Zealand: Heat Smart programmeprovides a subsidy to homeowners to install insulation and cleanheating devices in their homes. This programme is designed toimprove productivity and health outcomes, reduce energy costs,and stimulate the economy by generating jobs for New Zealan-ders involved in producing and installing insulation and cleanheating. The government committed more than $323 million(US$272 million; h191 million) over four years to the programme,which is designed to assist at least 186,500 households. Unlikethe previous government’s programme, this programme is nottargeted exclusively at low-income households.

Since 2009, when the programme was instituted, almost100,000 houses have been retrofitted. We are part of a researchteam currently evaluating the effects of these retrofits on existinghouses, by matching houses that have been insulated with housesof similar age and construction in the same small census areaunit, and measuring differences in their occupants’ hospitalisationrates, pharmaceutical usage, and energy use.15

15 Almost one million people are in this cohort and results will be available in

2011.

housing and fuel poverty in New Zealand: A review of policies,pol.2011.09.044

Table A2Number of households living in potential fuel poverty in New Zealand by

climate zone.

Climate zone Zone 1 Zone 2 Zone 3 NZ

Number of households 555,000 607,000 444,000 1,606,000

% of NZ households 35 38 28 100

Potential fuel poverty % 14 24 43

Contribution to the nationalhousing stock

5% 9% 12% 25%

Number of households in potentialfuel poverty (rounded)

80,000 140,000 190,000 410,000

P. Howden-Chapman et al. / Energy Policy ] (]]]]) ]]]–]]] 7

10. Conclusion

Low-income households pay a high proportion of their incomefor residential energy in New Zealand; fuel poverty and cold,damp houses remain a significant policy problem. Low-incomehouseholds are more likely to be renting and there are norequirements for private landlords to insulate or heat their rentalproperties, which tend to be older stock. Consequently, vulnerablepopulations, particularly those on low incomes, the old and theyoung are more likely to be hospitalised in winter for respiratoryand cardiovascular conditions. They are also more likely to dieprematurely in winter than those who live in more modernhousing, which has been built to higher building standards. Lowhousing and heating standards are having serious effects onNew Zealand’s population health.

Unlike other OECD countries that have also identified theproblem of fuel poverty, New Zealand has been to slow torecognise the problem’s antecedents—inadequate standards forexisting houses, rising income inequality, and the need to protectlow-income households from the rising price of heating fuels.

Nevertheless, recent New Zealand governments have acted totranslate research into policy. Research by the Building ResearchAssociation of New Zealand (the HEEP study) and work commis-sioned by the Energy Efficiency and Conservation Authority andthe Ministry for the Environment contributed to improvingunderstanding of the difficulties faced by households in inade-quate housing; and the work of Lloyd and colleagues has provideestimates of the extent of fuel poverty. Our community trials haveshown that retrofitting insulation and then installing sustainableheating in existing houses has multiple benefits in energyefficiency, carbon mitigation and most particularly health bene-fits. Such multiple outcomes are important for population healthinterventions and research-informed public policy. The Housing,Insulation, and Health Study and the Housing, Heating, andHealth Study have added substantially to the international knowl-edge on the health benefits of improving energy efficiency, and onthe consequential benefits to society.

These research findings are important at this juncture becausethe extent of fuel poverty in New Zealand has been rising, and theoutlook for residential energy prices is that they will rise furtherin the next decade and probably beyond, especially as bothclimate change mitigation and fossil fuel peaking challenges arefaced (Brecha, 2008). At the same time, the economic difficultiesfaced by the lower income quintiles in New Zealand mean thatincreased numbers of New Zealanders may face more intensepoverty if unemployment continues to rise and incomes stagnateor decline. The conjunction of these factors is likely to intensifyfuel poverty, even as the current government’s ‘‘Warm Up New

Table A1Proportion of households in potential fuel poverty in selected New Zealand cities.

Location Heating energy

needed (kWh/y)

Other electricity

used (kWh/y)a

Total energy

cost at 21c per

kWh

In

(h

in

fu

Auckland 4000–6000 5500 $2000–$2400 $2

$2

Wellington 8000–13,000 5900 $2900–$3900 $2

$3

Christchurch 11,000–15,000 6200 $3600–$4400 $3

$4

Dunedin 13,000–16,000 6600 $4100–$4750 $4

$4

All dollar figures are NZ dollars.

a The higher values for cooler climates reflect higher losses for hot-water heating.

Please cite this article as: Howden-Chapman, P., et al., Tackling coldresearch, and health impacts. Energy Policy (2011), doi:10.1016/j.en

Zealand’’ programme assists a range of households to improvetheir dwellings’ standards of energy performance.

Appendix 1. Estimation of New Zealand fuel poverty, 2008

This appendix provides an estimate of fuel poverty in four NewZealand cities in 2008, explaining the methods used. Fuel povertyis defined (as in the UK) as a situation in which a householdwould need to spend more than 10% of its income on all house-hold energy requirements (excluding transport), to achieve adefined indoor thermal comfort level. This comfort level includesliving temperatures of 21 1C and bedroom temperatures of 18 1C.Accordingly, low income households living in thermally ineffi-cient dwellings are more likely to be in fuel poverty than higherincome households living in thermally efficient dwellings. A priorstudy in New Zealand found high levels of fuel poverty were likelyto exist in NZ in 2001 (Lloyd, 2006). That paper showed that, in2001, �10–14% of households in New Zealand were likely to be infuel poverty. The table in Lloyd (2006) detailing the percentagesof households in fuel poverty for four major New Zealand cities –Auckland, Wellington, Christchurch, and Dunedin – is updatedhere to 2008 using the 2007/2008 values for electricity prices andincome from the Ministry of Economic Development and Statis-tics New Zealand, respectively. Results are shown in Tables A1and A2.

The calculations assume that space heating is provided byelectric resistive heating, which is the predominant form of spaceheating. To the extent that cheaper forms of space heating areused (e.g. firewood in towns and rural areas), the percentagesreported here overestimate the number of households in fuelpoverty. On the other hand, the calculations also assume that thedwellings in question average 100 m2, which is in fact lowcompared to recent housing floor areas; this means the percen-tages reported here may be underestimates. The net effect of

come thresholds

ousehold

come), to avoid

el poverty

% of city population

in potential fuel

poverty

Number of

households

2008

Number of

households in

potential fuel

poverty 2008

0,000 14 386,000 54,000

4,000

9,000 24 133,000 32,000

9,000

6,000 40 134,000 54,000

4,000

1,500 47 44,000 21,000

7,500

housing and fuel poverty in New Zealand: A review of policies,pol.2011.09.044

P. Howden-Chapman et al. / Energy Policy ] (]]]]) ]]]–]]]8

these two factors is unclear; for this reason, the tables here usethe term ‘‘potential fuel poverty’’.

On a zonal basis, if Auckland, with a fuel poverty level of �14%is taken to be representative of zone 1, Wellington at 24% to berepresentative of zone 2, and an average of Dunedin andChristchurch at 43% to be representative of zone 3, an approx-imate estimate can be made of the total potential fuel povertylevel in New Zealand. For 2008 this comes to 25% of totalhouseholds in New Zealand or around 400,000 households. Theestimated level of (potential) fuel poverty in New Zealand thusappears to have increased dramatically from 2001 to 2008, mainlydue to electricity prices increasing much faster than incomes overthis period.

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