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Smells like Green Energy: The Impact of Bioenergy Production on Residential Property Values in Germany

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  • Hoffmann, Christin
  • Byrukuri Gangadhar, Shanmukha Srinivas
  • Müsgens, Felix

Abstract

One requirement for the fast and efficient development of bioenergy is a clear understanding of the negative externalities bioenergy facilities cause. At this point, discussions in practice and research as to which externalities have an impact and how strong this potential impact actually is remain inconclusive. We utilize bioenergy plant construction data from Germany between 2007 and 2022 and match it with information about real estate in the plants’ vicinity. Applying improved difference-in-difference estimation procedures to analyze heterogeneous treatment effects, we interpret a causal impact of bioenergy plant commissioning on housing prices in the vicinity in terms of the average net external effects affecting the vicinity. Overall, we find a minor negative impact of −0.5% on home prices within 1 km of bioenergy plants but no statistically significant effect beyond this distance. This suggests that visual pollution has a limited role as an externality of bioenergy plants. However, if we restrict the sample to homes downwind of bioenergy plants, we find a significant yet small negative impact on home prices, ranging from −1.0% to −1.3%. Additionally, homes near bioenergy plants that use gaseous inputs – which emit stronger odors – experience price reductions between −0.4% to −0.7%. This lets us conclude that, besides visual pollution, odor emission may play a more significant role in affecting nearby home prices.

Suggested Citation

  • Hoffmann, Christin & Byrukuri Gangadhar, Shanmukha Srinivas & Müsgens, Felix, 2025. "Smells like Green Energy: The Impact of Bioenergy Production on Residential Property Values in Germany," Energy Economics, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:eneeco:v:145:y:2025:i:c:s0140988325002282
    DOI: 10.1016/j.eneco.2025.108404
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    Keywords

    Bioenergy; Odor emission; Difference-in-differences; Hedonic pricing;
    All these keywords.

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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