Continuing to reduce energy use in American homes saves money and avoids the pollution that results from burning fossil fuels. Adding more insulation is desirable, but once the wall cavity is full how can more insulation be added cost-effectively without increasing the risk of mold or other water damage to the wood-based materials commonly in use? One popular alternative is to add extruded polystyrene over the oriented strandboard sheathing just under the siding. This option keeps the wood warm, but it may reduce the ability of the wall to dry out if it gets wet. USDA Forest Service researchers at the Forest Products Laboratory in Madison, Wisc., built a test hut with a variety of different exterior insulations and interior vapor retarders to test some common cases in the cold climate of Wisconsin. For two years, the researchers monitored the walls by measuring their water content to evaluate the risk of moisture damage. All the walls were able to dry out under the test conditions, even when water was artificially added to the wall cavity; in fact, keeping the walls warm helps them to dry out during cold weather. Data gathered during this project will be used to help understand what conditions could lead to increased risk of moisture damage.