Tackling housing shortages and emissions through green mortgages in Mexico: EcoCasa

Addressing housing shortages and emissions throughenergy-efficient buildings and green mortgages for low- and middle-income families

Sector
Buildings & Cities
Region
Latin America & the Caribbean
Affected Stakeholder
Consumers

Problem

Mexico faces the dual challenge of reducing greenhouse gas (GHG) emissions in its residential housing sector while addressing a housing shortage and affordability crisis. Mexico has a housing shortage of 9.2 million homes, with demand far exceeding supply, particularly among low- and middle-income households, making affordability a major concern. Housing prices also saw a significant increase, with prices 12% more expensive in 2023 compared to the year before. 

The country has a climate ambition to reduce emissions by 35% by 2030. Mexico’s residential housing market is a significant contributor to the country’s carbon emissions, consuming 16% of the country’s total energy and 26% of electricity in 2022. A significant contributor is inadequate architectural design, leading to energy inefficiencies, the use of emission-intensive materials, and inefficient construction practices.

Responses

Launched in 2013, EcoCasa aims to address both housing shortages and GHG emissions by supporting the construction of 27,000 energy-efficient homes. Through this programme, the Mexican government partnered up with financial institutions German Development Bank (KfW) and the Inter-American Development Bank (IDB) to provide affordable, energy-efficient homes for low- and middle-income households using green mortgage mechanisms.

The EcoCasa programme provides financial incentives and technical assistance to developers to incorporate green technologies into social housing projects, with a particular focus on low to middle-income workers not covered by any social security programmes. Loans are also provided to local financial institutions to offer affordable mortgages for energy-efficient homes, ensuring a place-based approach to the programme. By focusing on low- and middle-income families, the program promotes sustainable housing while helping reduce emissions. 

As of 2023, the program has constructed 71,440 homes, reduced 2.62MtCO2e, and provided 1,700 green mortgages, improving housing affordability and sustainability.

Find out more:  World Economic Forum