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Local Impacts of Wind Farms on Property Values: A Spatial Difference-in-Differences Analysis

Author

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  • Sunak, Yasin

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Madlener, Reinhard

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

Today’s investment decisions in large-scale onshore wind projects in Germany are no longer determined only by the investment’s economic benefit, but also by concerns associated to social acceptance. Despite a mostly positive attitude towards the expansion of wind power, local public concerns often stem from the belief that the proximity to large-scale wind farms may lead to a decrease in property prices. In particular, the change in landscape caused by the construction of a wind farm may have an adverse impact on the view from some properties, and thus may negatively affect their price. To investigate the potential devaluation of properties in Germany due to wind farms, we use a quasi-experimental technique and apply a spatial difference-in-differences approach to various wind farm sites in the federal state of North Rhine-Westphalia. We adopt a quantitative visual impact assessment approach to account for the adverse environmental effects caused by the wind turbines. To properly account for spatial dependence and unobserved variables biases, we apply augmented spatial econometric models. The estimates indicate that the asking price for properties whose view was strongly affected by the construction of wind turbines decreased by about 10-17%. In contrast, properties with a minor or marginal view on the wind turbines experienced no devaluation.

Suggested Citation

  • Sunak, Yasin & Madlener, Reinhard, 2014. "Local Impacts of Wind Farms on Property Values: A Spatial Difference-in-Differences Analysis," FCN Working Papers 1/2014, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Oct 2014.
  • Handle: RePEc:ris:fcnwpa:2014_001
    Note: Revised version, October 2014
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    References listed on IDEAS

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    Cited by:

    1. Wüstemeyer, Christoph & Madlener, Reinhard & Bunn, Derek W., 2015. "A stakeholder analysis of divergent supply-chain trends for the European onshore and offshore wind installations," Energy Policy, Elsevier, vol. 80(C), pages 36-44.
    2. Elham Erfanian & Alan R. Collins & Daniel Grossmam, 2018. "The Impact of Naloxone Access Laws on Opioid Overdose Deaths in the U.S," Working Papers Working Paper 2018-03, Regional Research Institute, West Virginia University.
    3. Höfer, Tim & Sunak, Yasin & Siddique, Hafiz & Madlener, Reinhard, 2016. "Wind farm siting using a spatial Analytic Hierarchy Process approach: A case study of the Städteregion Aachen," Applied Energy, Elsevier, vol. 163(C), pages 222-243.
    4. Petrova, Maria A., 2016. "From NIMBY to acceptance: Toward a novel framework — VESPA — For organizing and interpreting community concerns," Renewable Energy, Elsevier, vol. 86(C), pages 1280-1294.

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    More about this item

    Keywords

    Wind power; Difference-in-differences; Visual impact; Spatial dependence;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • 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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