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Externalities of Geothermal Power Plants: A Hedonic Analysis of Land Prices in Japan

Author

Listed:
  • Shigeharu Okajima

    (Department of Economics, Osaka University of Economics. 2-2-8, Osumi, Higashiyodogawa-ku, Osaka, 533-8533, Japan.)

  • Hiroko Okajima

    (School of Economics, Nagoya University. Furo-cho, Chikusa-ku, Nagoya, 464-8601, Japan.)

  • Yoshito Nakayama

    (Department of Economics, Osaka University of Economics. 2-2-8, Osumi, Higashiyodogawa-ku, Osaka, 533-8533, Japan.)

Abstract

This study quantitatively assesses the negative externalities of geothermal power plants by analyzing their impact on local land values in Japan. Using a hedonic pricing approach and a difference-in- differences framework, the analysis finds that land prices within a 2 km radius of a geothermal power plant declined by approximately 7% to 12% after their installation, even after accounting for various fixed effects and robustness checks. The study utilizes data on all 28 large-scale geothermal power plants with a capacity of at least 1,000 kilowatts that were operational in Japan as of 2018, covering a 42-year period from 1983 to 2024. The findings highlight the complex interplay between renewable energy expansion and local economic conditions, emphasizing the need to balance the benefits of clean energy with local stakeholders' concerns to ensure a sustainable energy transition in Japan.

Suggested Citation

  • Shigeharu Okajima & Hiroko Okajima & Yoshito Nakayama, 2026. "Externalities of Geothermal Power Plants: A Hedonic Analysis of Land Prices in Japan," RIEEM Discussion Paper Series 2505, Research Institute for Environmental Economics and Management, Waseda University.
    • Handle: RePEc:was:dpaper:2505
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    References listed on IDEAS

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    1. Lang, Corey & Opaluch, James J. & Sfinarolakis, George, 2014. "The windy city: Property value impacts of wind turbines in an urban setting," Energy Economics, Elsevier, vol. 44(C), pages 413-421.
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    Keywords

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    JEL classification:

    • 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
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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