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Using stated preference methods to assess environmental impacts of forest biomass power plants in Portugal

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As a renewable energy source, the use of forest biomass for electricity generation is advantageous in comparison with fossil fuels, however the activity of forest biomass power plants causes adverse impacts, affecting particularly neighbouring communities. The main objective of this study is to estimate the effects of the activity of forest biomass power plants on the welfare of two groups of stakeholders, namely local residents and the general population and we apply two stated preference methods: contingent valuation and discrete choice experiments, respectively. The former method was applied to estimate the minimum compensation residents of neighbouring communities of two forest biomass power plants in Portugal would be willing to accept. The latter method was applied among the general population to estimate their willingness to pay to avoid specific environmental impacts. The results show that the presence of the selected facilities affects individuals’ well-being. On the other hand, in the discrete choice experiments conducted among the general population all impacts considered were significant determinants of respondents’ welfare levels. The results of this study stress the importance of performing an equity analysis of the welfare effects on different groups of stakeholders from the installation of forest biomass power plants, as their effects on welfare are location and impact specific. Policy makers should take into account the views of all stakeholders either directly or indirectly involved when deciding crucial issues regarding the sitting of new forest biomass power plants, in order to achieve an efficient and equitable outcome.

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File URL: http://www3.eeg.uminho.pt/publications/NIMAwp59.pdf
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Paper provided by Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho in its series NIMA Working Papers with number 59.

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Length: 17 pages
Date of creation: Nov 2015
Publication status: Published in Environment, Development and Sustainability, October 2016, Volume 18, Issue 5, pages 1323–1337
Handle: RePEc:nim:nimawp:59/2015
DOI: 10.1007/s10668-016-9795-6
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  7. Anabela Botelho & Lígia Costa Pinto & Patricia Sousa, 2013. "Valuing wind farms’ environmental impacts by geographical distance: A contingent valuation study in Portugal," NIMA Working Papers 52, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
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