When I reduce my home's energy costs, who should reap the benefit?

In this project, " The Efficient Life," Slate has been seeking your best ideas for helping people use less energy at home and save money. You can read Daniel Gross' explanation of " The Efficient Life" here, his article about  compact fluorescent light bulbs here, his article about  utility bills and peer pressure here, his passionate exhortation that  you get a home energy assessment here, his speculation about whether  we should pay fuel bills in cash here, his annoyance with  his vague heating bill here, his  love letter to home insulation here, and his plea that someone pay him to be more efficient here. You can scan all the proposals submitted by readers  here. Slate will be announcing the top dozen ideas soon.

In theory, energy-efficiency investments should have a double payoff for homeowners and lenders. First, they should boost a home's value. Consider two homes that are identical except for insulation: The better-insulated one costs $400 less per year to heat and cool. It should therefore command a higher price on the market. According to Mark Zandi, chief economist at Moody's/Economy.com, the price-to-rent ratio for housing (which is similar to a price-to-earnings ratio for a stock) was 10-to-1 in December 2009. If you reduce a home's annual energy use by $400, you boost the income you can get from renting it at the same price. Using the price-to-rent ratio, the market price for the home should rise by $4,000. The other payoff goes to lenders: From their perspective, somebody who has invested in reducing energy costs should be a better credit risk. Struggling homeowners will frequently pay utility bills before they pay the mortgage. People with lower electricity and heating bills will have more money available to pay down debt.

Of course, it doesn't quite work out that way. To a large degree, people still regard spending money on energy efficiency as consumption rather than investment. The same impulse that stops people from buying new sofas is tamping down their willingness to buy new furnaces, air conditioning units, and insulation. What's more, the market hasn't yet recognized the dynamic I outlined above. "The reality is that the energy savings have to be really large in order to get noticed," notes Jonathan Miller, real estate blogger and CEO of the New York-based appraisal firm Miller Samuel.

In addition, mortgage underwriting and appraisal standards have tightened since the bust. If you can put down $25,000 on a home that costs $250,000 but then ask the bank for an extra $10,000 to fund improvements that will pay off over several years, the answer is likely to be no. "When you start asking for a mortgage above the purchase price, then you change the mortgage product that can be offered to the buyer," Miller adds. That said, "green mortgages"—loans that factor in the costs of energy-efficiency improvements to the overall purchase price—do exist. The Federal Housing Administration and Fannie Mae have versions of them.

A smarter approach might be to separate the energy-efficient equipment and material from the homeowners and attach it to the house. Unlike couches and tables, you don't take the equipment and stuff with you if you sell the house. In 2007, Berkeley, Calif.—somehow this is not surprising—pioneered the concept of municipal solar. The city finances the placement of solar panels on homeowners' roofs, then recoups the cost through property tax payments. If the house is sold, the benefit of having solar, and the obligation of paying for it, transfers to the new owner. Boulder, Colo., has started a similar program. There are other wrinkles. Babylon, N.Y., on Long Island, has a program under which the city finances energy assessments and energy-savings improvements and then sets up a payment plan separate from the property tax system.

The federal government has given a boost to such efforts by setting up the Property Assessed Clean Energy program. It empowers states and municipalities to create special taxing districts that can issue tax-exempt bonds to fund energy-efficiency and renewable-energy improvements. Property owners pay back the borrowed funds through a special tax, often rolled into property taxes. "If the property is sold before the end of the repayment period, the new owner inherits both the remaining repayment obligation and the financed energy improvements."