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Renewable Energy and Negative Externalities: The Effect of Wind Turbines on House Prices

Author

Listed:
  • Martijn I. Dröes

    (University of Amsterdam, VU University Amsterdam, the Netherlands)

  • Hans R.A. Koster

    (VU University Amsterdam, the Netherlands)

Abstract

In many countries, wind turbines are constructed as part of a strategy to reduce dependence on fossil fuels. In this paper, we measure the external effect of wind turbines on the transaction prices of nearby houses. A unique house price dataset covering the period 1985-2011 is used, including the exact location of all wind turbines built in the Netherlands. We find that house prices within a two kilometer radius of a turbine, after it has been constructed, decrease by about 1.4 to 2.3 percent on average. We find anticipation effects up to three years in advance of the construction of a wind turbine. We provide further evidence that the external costs of a wind turbine are at least 10 percent of its construction cost.

Suggested Citation

  • Martijn I. Dröes & Hans R.A. Koster, 2014. "Renewable Energy and Negative Externalities: The Effect of Wind Turbines on House Prices," Tinbergen Institute Discussion Papers 14-124/VIII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20140124
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    More about this item

    Keywords

    renewable energy; wind turbines; externalities; house prices;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • 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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