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The Impact of Wind Farms on Property Values: A Geographically Weighted Hedonic Pricing Model

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

Wind power is the most important renewable energy source in many countries today, characterized by a rapid and extensive diffusion since the 1990s. However, it has also triggered much debate with regard to the impact on landscape and vista. Therefore, siting processes of wind farm projects are often accompanied by massive public protest, because of visual and aural impacts on the surrounding area. These mostly negative consequences might be reflected in property values and house prices. The aim of this paper is to investigate the impacts of wind farms on the surrounding area through property values, by means of a hedonic pricing model, using both a spatial fixed (viewshed) effects (accounting for spatially clustered unobserved influences) and a Geographically Weighted Regression model (accounting for spatial heterogeneity). The analysis is the first of its kind undertaken for a local region in Continental Europe (North Rhine-Westphalia, Germany). Viewsheds are calculated for each property using a digital surface model. Focusing on proximity and visibility effects caused by wind farm sites, we find that proximity, measured by the inverse distance to the nearest wind turbine, indeed causes significant negative impacts on the surrounding property values. Thereby, local statistics reveal varying spatial patterns of the coefficient estimates across and within the city areas and districts. In contrast, no evidence is found for a statistically significant impact of the visibility of the wind farm turbines.

Suggested Citation

  • Sunak, Yasin & Madlener, Reinhard, 2012. "The Impact of Wind Farms on Property Values: A Geographically Weighted Hedonic Pricing Model," FCN Working Papers 3/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Mar 2013.
  • Handle: RePEc:ris:fcnwpa:2012_003
    Note: revised March 2013
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Wind farms: Is NIMBY justified?
      by Economic Logician in Economic Logic on 2012-09-06 19:29:00

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    Cited by:

    1. Rohlfs, Wilko & Madlener, Reinhard, 2011. "Multi-Commodity Real Options Analysis of Power Plant Investments: Discounting Endogenous Risk Structures," FCN Working Papers 22/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    2. Ben Hoen & Jason Brown & Thomas Jackson & Mark Thayer & Ryan Wiser & Peter Cappers, 2015. "Spatial Hedonic Analysis of the Effects of US Wind Energy Facilities on Surrounding Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 51(1), pages 22-51, July.
    3. Charlotte von Möllendorff & Heinz Welsch, 2017. "Measuring Renewable Energy Externalities: Evidence from Subjective Well-being Data," Land Economics, University of Wisconsin Press, vol. 93(1), pages 109-126.
    4. Dergiades, Theologos & Madlener, Reinhard & Christofidou, Georgia, 2012. "The Nexus between Natural Gas Spot and Futures Prices at NYMEX: Do Weather Shocks and Non-Linear Causality in Low Frequencies Matter?," FCN Working Papers 17/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Sep 2013.
    5. Wüstemeyer, Christoph & Bunn, Derek & Madlener, Reinhard, 2012. "Bridging the Gap between Onshore and Offshore Innovations by the European Wind Power Supply Industry: A Survey-based Analysis," FCN Working Papers 19/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    6. Zerrahn, Alexander & Krekel, Christian, 2015. "Sowing the Wind and Reaping the Whirlwind? The Effect of Wind Turbines on Residential Well-Being," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112956, Verein für Socialpolitik / German Economic Association.
    7. Shawn J. McCoy & Randall P. Walsh, 2014. "W.U.I. on Fire: Risk, Salience & Housing Demand," NBER Working Papers 20644, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Wind power; Hedonic pricing; Spatial fixed effects; Geographically Weighted Regression;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • 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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