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Disamenity or premium: Do electricity transmission lines affect farmland values and housing prices differently?

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  • Lu, Qinan
  • Cheng, Nieyan
  • Zhang, Wendong
  • Liu, Pengfei

Abstract

A substantial increase in electricity demand has triggered a rising investment in energy infrastructure in the US over the last decade. This paper examines the capitalization effects of electricity transmission lines (TMLs) on nearby farmland values and housing prices in the Midwest from 2015 to 2019, based on 16,026 parcel-level farmland sales data from FarmlandFinder and 1,905,280 housing transaction data from the Zillow Transaction and Assessment Dataset database. Our estimation results reaffirm the disamenity effects of TMLs on housing property values and find that the disamenity effects are larger on houses in urban areas than in rural areas. Nearby TMLs generate premiums for surrounding farmland, which contrasts with the disamenity evidence due to aesthetics (either visual or audible) in the literature. We further show that farmland parcels within 0–2 km of TMLs in high-wind areas are approximately 3.10% more expensive than comparable parcels in low-wind areas. Our paper provides novel and contrarian evidence on the effects of TMLs on property values amid rising investment in energy infrastructure.

Suggested Citation

  • Lu, Qinan & Cheng, Nieyan & Zhang, Wendong & Liu, Pengfei, 2023. "Disamenity or premium: Do electricity transmission lines affect farmland values and housing prices differently?," Journal of Housing Economics, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:jhouse:v:62:y:2023:i:c:s1051137723000554
    DOI: 10.1016/j.jhe.2023.101968
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    Keywords

    Transmission lines (TMLs); Property values; Wind resources; Disamenity; Option values;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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