Marine trade-offs: comparing the benefits of off-shore wind farms and marine protected areas

The drive to increase renewable electricity production in many parts of Europe has led to an increasing concentration of location of new sites at sea. This results in a range of environmental impacts which should be taken into account in a benefit-cost analysis of such proposal. In this paper, we use choice modelling to investigate the relative gains and losses from siting new windfarms off the coast of Estonia, relative to the option of creating a new marine protected area. Methodologically, the paper makes a contribution by showing the ability of the latent class mixed logit model to represent both within-and between-class preference heterogeneity, and thus its power to provide a more sophisticated representation of preference heterogeneity than latent class or mixed logit approaches. The paper is also the first to use the latent class mixed logit in willingness-to-pay space for environmental goods.