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### Abstract

Trees cast shade on homes and buildings, lowering the inside temperatures and thus reducing demand for power to cool these buildings during hot times of the year. Drawing from a large sample of residences in Auburn, Alabama, we develop a statistical model that produces specific estimates of the electricity savings generated by shade-producing trees in a suburban environment. This empirical model links residential energy consumption to hedonic characteristics of the structures, characteristics and behaviors of the occupants, and the extent, density, and timing of shade cast on the structures. Our estimates suggest that if an additional 10 percent of the 125 million home owners in America started using tree shade to reduce electricity consumption an average of 10 kwh/day for 100 days per year, the annual amount of electricity conserved would be approximately 12,500 thousand megawatts. At the 2007 average residential price of electricity ($0.1065/kwh), this would save each household an estimated$106/year and \$1.3 billion in the aggregate. Moreover, the electricity saved would represent approximately one-third of the electricity produced annually in the U.S. by wind power.