Pavement surface temperature is calculated using a fundamental energy balance model developed previously. It can be studied using a one-dimensional mathematical model. The input to the model is changed, to study the effect of different properties of pavement on its diurnal surface temperatures. It is observed that the pavement surface temperature has a microclimatic effect on the air temperature above it. A major increase in local air temperature is caused by heating of solid surfaces in that locality. A case study was done and correlations have been established to calculate the air temperature above a paved surface. Validation with in-situ pavement surface and air temperatures were made. Experimental measurement for the city of Phoenix shows the difference between the ambient air temperature of the city and the microclimatic air temperature above the pavement is approximately 10 degrees Fahrenheit. One mitigation strategy that has been explored is increasing the albedo of the paved surface. Although it will reduce the pavement surface temperature, leading to a reduction in air temperature close to the surface, the increased pavement albedo will also result in greater reflected solar radiation directed towards the building, thus increasing the building solar load. The first effect will imply a reduction in the building energy consumption, while the second effect will imply an increase in the building energy consumption. Simulation is done using the EnergyPlus tool, to find the microclimatic effect of pavement on the building energy performance. The results indicate the cooling energy savings of an office building for different types of pavements can be variable as much as 30%.