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Annoyance and welfare costs from the presence of renewable energy power plants: an application of the contingent valuation method

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Sustainability is frequently defined by its three pillars: economically viable, socially equitable, and environmentally bearable. Consequently the evaluation of the sustainability of any decision, public or private, requires information on these three dimensions. This paper focuses on social sustainability. In the context of renewable energy sources, the examination of social sustainability requires the analysis of not only the efficiency but also the equity of its welfare impacts. The present paper proposes and applies a methodology to generate the information necessary to do a proper welfare analysis of the social sustainability of renewable energy production facilities. This information is key both for an equity and an efficiency analysis. The analysis focuses on the case of investments in renewable energy electricity production facilities, where the impacts on local residents’ welfare are often significantly different than the welfare effects on the general population. We apply the contingent valuation method to selected facilities across the different renewable energy power plants located in Portugal and conclude that local residents acknowledge differently the damage sustained by the type, location and operation of the plants. The results from these case studies attest to the need of acknowledging and quantifying the negative impacts on local communities when assessing the economic viability, social equity and environmental impact of renewable energy projects.

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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 60.

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Length: 18 pages
Date of creation: Nov 2015
Handle: RePEc:nim:nimawp:60/2015
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NIMA, EEG - Universidade do Minho, 4710-057 Braga, Portugal

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  1. Hanley, Nick & Mourato, Susana & Wright, Robert E, 2001. " Choice Modelling Approaches: A Superior Alternative for Environmental Valuation?," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 435-462, July.
  2. Lund, Henrik, 2007. "Renewable energy strategies for sustainable development," Energy, Elsevier, vol. 32(6), pages 912-919.
  3. Ferreiro, Maria de Fátima & Gonçalves, Maria Eduarda & Costa, Ana, 2013. "Conflicting values and public decision: The Foz Côa case," Ecological Economics, Elsevier, vol. 86(C), pages 129-135.
  4. Carlsson, Fredrik & Martinsson, Peter, 2006. "Do Experience and Cheap Talk influence Willingness to Pay in an Open-Ended Contingent Valuation Survey?," Working Papers in Economics 190, University of Gothenburg, Department of Economics.
  5. Pere Ariza-Montobbio & Katharine Farrell & Gonzalo Gamboa & Jesus Ramos-Martin, 2014. "Integrating energy and land-use planning: socio-metabolic profiles along the rural–urban continuum in Catalonia (Spain)," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(4), pages 925-956, August.
  6. Rashad, S. M. & Ismail, M. A., 2000. "Environmental-impact assessment of hydro-power in Egypt," Applied Energy, Elsevier, vol. 65(1-4), pages 285-302, April.
  7. Marco Bagliani & Egidio Dansero & Matteo Puttilli, 2010. "Territory and energy sustainability: the challenge of renewable energy sources," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 53(4), pages 457-472.
  8. Adamowicz W. & Louviere J. & Williams M., 1994. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 271-292, May.
  9. Borchers, Allison M. & Duke, Joshua M. & Parsons, George R., 2007. "Does willingness to pay for green energy differ by source?," Energy Policy, Elsevier, vol. 35(6), pages 3327-3334, June.
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