As renewable energy generation grows in popularity, how are wind farms
affecting local house prices?
Renewable energy technology has potential global environmental benefits in
terms of reduced CO2 emissions and slower depletion of natural energy
resources. But like most power generation and transmission infrastructure,
the associated plant, access services and transmission equipment can
involve environmental costs. This is particularly so in the case of wind
turbine developments, where the sites that are optimal in terms of energy
efficiency are typically in rural, coastal and wilderness locations that
offer natural environmental amenities. These amenities include the
aesthetic appeal of the landscape, outdoor recreational opportunities and
the existence values of wilderness habitats. In addition, people living
close to operational wind turbines have reported health effects related to
noise and visual disturbances.
The UK, Europe and parts of the US have seen rapid expansion in wind
turbine developments since the mid-1990s. Although these wind farms provide
some local benefits, including shared ownership schemes and the rents to
land owners, new developments have faced significant opposition from local
residents and other stakeholders with interests in environmental preservation.
This is controversial, given that opinion polls and surveys indicate
majority support of around 70 per cent for green energy, including wind
farms (Eurobarometer 2007). This contradiction has led to accusations of
‘nimbyism’ (not in my backyard-ism), on the assumption that it is the same
people opposing wind farm developments in practice who support them in
principle.
Preliminary research by Dr Steve Gibbons at the ESRC-funded Spatial
Economics Research Centre illuminates these debates by providing
quantitative evidence on the local benefits and costs of wind farm
developments in England and Wales. In the tradition of studies in
environmental, public and urban economics, housing costs are used to reveal
local preferences for wind farm development. This is feasible, because wind
farms are increasingly encroaching on rural, semi-rural and even urban
residential areas in terms of their proximity and visibility, providing a
large sample of housing sales that are potentially affected. Around 2.5 per
cent of residential postcodes are within 4km of operational or proposed
rural and semi-rural wind farm developments.
Estimation is based on ‘quasi-experimental’ research designs that compare
price changes in places close to wind farms when wind farms become
operational with various comparator groups. These groups include: places
close to wind farms that became operational in the past, or where they will
become operational in the future; places close to wind farm sites that were
refused planning permission: places close to wind farms that are planned or
proposed but are not yet operational; and places close to where wind farms
became operational but where the turbines are hidden by the terrain.
These comparisons suggest that wind farm developments reduce house prices
in places where the turbines are visible. The price reduction suggested by
the initial results from the analysis is around three per cent for housing
within four kilometres of a wind farm. The impact increases to seven per
cent within one kilometre and falls almost to zero by 14 km, which is at
the limit of likely visibility.
If we take these figures seriously as estimates of the mean willingness to
pay to avoid wind farms in communities exposed to their development, the
implied costs are substantial. Rough calculations based on the estimates
suggest that the implied social costs on the local community (within four
kilometres) amounts to about £5.6 million per operational wind farm, or
about £210 per household per year. There may be some understandable
economic justification for the ‘nimbyism’ of wind farm opposition.
0 Comments