Spatial Hedonic Analysis of the Effects of US Wind Energy Facilities on Surrounding Property Values

  • Ben Hoen
  • Jason P. Brown
  • Thomas Jackson
  • Mark A. Thayer
  • Ryan Wiser
  • Peter Cappers
Article

Abstract

Rapid, large-scale U.S. deployment of wind turbines is expected to continue in the coming years. Because some of that deployment is expected to occur in relatively populous areas, concerns have arisen about the impact of turbines on nearby home values. Previous research on the effects of wind turbines on surrounding home values has been limited by small home-sale data samples and insufficient consideration of confounding home-value factors and spatial dependence. This study examines the largest set of turbine-proximal sales data to date: more than 50,000 home sales including 1,198 within 1 mile of a turbine (331 of which were within a half mile). The data span the periods well before announcement of the wind facilities to well after their construction. We use ordinary least squares and spatial-process difference-in-difference hedonic models to estimate the home-value impacts of the wind facilities, controlling for value factors existing prior to the wind facilities’ announcements, the spatial dependence of home values, and value changes over time. A series of robustness models provide greater confidence in the results. We find no statistical evidence that home values near turbines were affected in the turbine post-construction or post-announcement/pre-construction periods.

Keywords

Turbines Wind Property Value Price Hedonic Spatial 

References

  1. American Wind Energy Association (AWEA) (2013). AWEA U.S. wind industry - fourth quarter 2012 market report - executive summary. Washington, DC: American Wind Energy Association.Google Scholar
  2. Anderson v. Board of Assessors of the Town of Falmouth (2013). Commonwealth of Massachusetts Appellate Tax Board (MAATB). August 27, 2013. File no. F314689 (2011) and F316333 (2012).Google Scholar
  3. Anselin, L. (1988). Spatial econometrics: methods and models. Berlin: Springer.CrossRefGoogle Scholar
  4. Anselin, L. (2002). Under the Hood Issues in the Specification and Interpretation of Spatial Regression Models. Agricultural Economics, 27(3), 247–267.CrossRefGoogle Scholar
  5. Anselin, L., & Lozano-Gracia, N. (2008). Errors in Variables and Spatial Effects in Hedonic House Price Models of Ambient Air Quality. Empirical Economics, 34(1), 5–34.CrossRefGoogle Scholar
  6. Arraiz, I., Drukker, D. M., Kelejian, H. H., & Prucha, I. R. (2009). A Spatial Cliff-Ord-type Model with Heteroskedastic Innovations: Small and Large Sample Results. Journal of Regional Science, 50(2), 592–614.CrossRefGoogle Scholar
  7. Bateman, I., Day, B., & Lake, I. (2001). The effect of road traffic on residential property values: a literature review and hedonic pricing study. Edinburgh, Scotland: Scottish Executive and the Stationary Office.Google Scholar
  8. Baxter, J., Morzaria, R., & Hirsch, R. (2013). A Case–control Study of Support/Opposition to Wind Turbines: Perceptions of Health Risk, Economic Benefits, and Community Conflict. Energy Policy, 61, 931–943.CrossRefGoogle Scholar
  9. Bloomberg New Energy Finance (Bloomberg) (2013). Q1 2013 North America wind market outlook. New York: Bloomberg New Energy Finance.Google Scholar
  10. Bond, S. (2008). Attitudes Towards the Development of Wind Farms in Australia. Journal of Environmental Health Australia, 8(3), 19–32.Google Scholar
  11. Bond, S. (2010). Community Perceptions of Wind Farm Development and the Property Value Impacts of Siting Decisions. Pacific Rim Property Research Journal, 16(1), 52–69.CrossRefGoogle Scholar
  12. Boyle, M. A., & Kiel, K. A. (2001). A Survey of House Price Hedonic Studies of the Impact of Environmental Externalities. Journal of Real Estate Research, 9(2), 117–144.Google Scholar
  13. Braunholtz, S., & Scotland, M. O. R. I. (2003). Public attitudes to windfarms: a survey of local residents in Scotland. Edinburgh, Scotland: Scottish Executive.Google Scholar
  14. Brown, J., Pender, J., Wiser, R., Lantz, E., & Hoen, B. (2012). Ex Post Analysis of Economic Impacts from Wind Power Development in U.S. Counties. Energy Economics, 34(6), 1743–1745.CrossRefGoogle Scholar
  15. Carter, J. (2011). The effect of wind farms on residential property values in Lee County, Illinois. Master’s thesis. Normal, IL: Illinois State University.Google Scholar
  16. Cook, R. D. (1977). Detection of Influential Observations in Linear Regression. Technometrics, 19(1), 15–18.CrossRefGoogle Scholar
  17. Cook, R. D., & Weisberg, S. (1982). Residuals and influence in regression. New York: Chapman & Hall.Google Scholar
  18. Currie, J., Davis, L., Greenstone, M., & Walker, R. (2012). Do housing prices reflect environmental health risks? Evidence from more than 1600 toxic plant openings and closings. Working Paper 12–30. Cambridge, MA: Massachusetts Institute of Technology, Department of Economics.Google Scholar
  19. Devine-Wright, P. (2005). Beyond Nimbyism: Towards an Integrated Framework for Understanding Public Perceptions of Wind Energy. Wind Energy, 8(2), 125–139.CrossRefGoogle Scholar
  20. Donovan, G. H., Champ, P. A., & Butry, D. T. (2007). Wildfire Risk and Housing Prices: a Case Study from Colorado Springs. Land Economics, 83(2), 217–233.Google Scholar
  21. Freeman, A. M. (1979). Hedonic Prices, Property Values and Measuring Environmental Benefits: a Survey of the Issues. Scandinavian Journal of Economics, 81(2), 154–173.CrossRefGoogle Scholar
  22. Gipe, P. (1995). Wind energy comes of age. New York: Wiley Press.Google Scholar
  23. Haurin, D. R., & Brasington, D. (1996). School Quality and Real House Prices: inter-and Intrametropolitan Effects. Journal of Housing Economics, 5(4), 351–368.CrossRefGoogle Scholar
  24. Heintzelman, M. D., & Tuttle, C. (2012). Values in the Wind: a Hedonic Analysis of Wind Power Facilities. Land Economics, 88, 571–588.Google Scholar
  25. Hinman, J. L. (2010). Wind farm proximity and property values: a pooled hedonic regression analysis of property values in central Illinois. Master’s thesis. Normal, IL: Illinois State University.Google Scholar
  26. Hoen, B., Wiser, R., Cappers, P., Thayer, M., & Sethi, G. (2009). The impact of wind power projects on residential property values in the United States: a multi-site hedonic analysis. Report no. LBNL-2829E. Berkeley, CA: Lawrence Berkeley National Laboratory.CrossRefGoogle Scholar
  27. Hoen, B., Wiser, R., Cappers, P., Thayer, M., & Sethi, G. (2011). Wind Energy Facilities and Residential Properties: the Effect of Proximity and View on Sales Prices. Journal of Real Estate Research, 33(3), 279–316.Google Scholar
  28. Hubbard, H. H., & Shepherd, K. P. (1991). Aeroacoustics of Large Wind Turbines. Journal of the Acoustical Society of America, 89(6), 2495–2508.CrossRefGoogle Scholar
  29. Intergovernmental Panel on Climate Change (IPCC). (2011). Special report on renewable energy sources and climate change mitigation. Cambridge, UK and New York: Cambridge University Press.Google Scholar
  30. Jackson, T. O. (2001). The Effects of Environmental Contamination on Real Estate: a Literature Review. Journal of Real Estate Research, 9(2), 93–116.Google Scholar
  31. Jackson, T. O. (2003). Methods and Techniques for Contaminated Property Valuation. The Appraisal Journal, 71(4), 311–320.Google Scholar
  32. Kane, T. J., Riegg, S. K., & Staiger, D. O. (2006). School Quality, Neighborhoods, and Housing Prices. American Law and Economics Review, 8(2), 183–212.CrossRefGoogle Scholar
  33. Kelejian, H. H., & Prucha, I. R. (1998). A Generalized Spatial Two-stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances. Journal of Real Estate Finance and Economics, 17(1), 99–121.CrossRefGoogle Scholar
  34. Kelejian, H. H., & Prucha, I. R. (2010). Specification and Estimation of Spatial Autoregressive Models with Autoregressive and Heteroskedastic Disturbances. Journal of Econometrics, 157(1), 53–67.CrossRefGoogle Scholar
  35. Kenney v. The Municipal Property Assessment Corporation (MPAC) (2012). Ontario Assessment Review Board (ARB). File no. WR 113994Google Scholar
  36. Kroll, C. A., & Priestley, T. (1992). The effects of overhead transmission lines on property values: a review and analysis of the literature. Washington, DC: Edison Electric Institute.Google Scholar
  37. Kuethe, T. H. (2012). Spatial Fragmentation and the Value of Residential Housing. Land Economics, 88(1), 16–27.Google Scholar
  38. Lantz, E., & Tegen, S. (2009). Economic development impacts of community wind projects: a review and empirical evaluation. Conference paper no. NREL/CP-500-45555. Golden, CO: National Renewable Energy Laboratory.Google Scholar
  39. Laposa, S. P., & Mueller, A. (2010). Wind Farm Announcements and Rural Home Prices: Maxwell Ranch and Rural Northern Colorado. Journal of Sustainable Real Estate, 2(1), 383–402.Google Scholar
  40. Loomis, D., & Aldeman, M. (2011). Wind farm implications for school district revenue. Normal, IL: Illinois State University, Center for Renewable Energy.Google Scholar
  41. Loomis, D., Hayden, J., & Noll, S. (2012). Economic impact of wind energy development in Illinois. Normal, IL: Illinois State University, Center for Renewable Energy.Google Scholar
  42. Malpezzi, S. (2003). Hedonic pricing models: a selective and applied review. In T. O’Sullivan & K. Gibb (Eds.), Housing Economics and Public Policy: Essays in Honour of Duncan Maclennan (pp. 67–85). Hoboken, NJ: Wiley-Blackwell.Google Scholar
  43. Palmer, J. (1997). Public acceptance study of the Searsburg Wind Power Project - one year post construction. Waterbury Center, VT: Vermont Environmental Research Associates, Inc.Google Scholar
  44. Ready, R. C. (2010). Do Landfills Always Depress Nearby Property Values? Journal of Real Estate Research, 32(3), 321–339.Google Scholar
  45. Rogers, W. H. (2006). A Market for Institutions: Assessing the Impact of Restrictive Covenants on Housing. Land Economics, 82(4), 500–512.Google Scholar
  46. Rosen, S. (1974). Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition. Journal of Political Economy, 82(1), 34–55.CrossRefGoogle Scholar
  47. Simons, R. A., & Saginor, J. D. (2006). A Meta-analysis of the Effect of Environmental Contamination and Positive Amenities on Residential Real Estate Values. Journal of Real Estate Research, 28(1), 71–104.Google Scholar
  48. Sims, S., & Dent, P. (2007). Property Stigma: Wind Farms are just the Latest Fashion. Journal of Property Investment & Finance, 25(6), 626–651.CrossRefGoogle Scholar
  49. Sims, S., Dent, P., & Oskrochi, G. R. (2008). Modeling the Impact of Wind Farms on House Prices in the UK. International Journal of Strategic Property Management, 12(4), 251–269.CrossRefGoogle Scholar
  50. Sirmans, G. S., Macpherson, D. A., & Zietz, E. N. (2005). The Composition of Hedonic Pricing Models. Journal of Real Estate Literature, 13(1), 3–42.Google Scholar
  51. Slattery, M. C., Lantz, E., & Johnson, B. L. (2011). State and local Economic Impacts from Wind Energy Projects: a Texas Case Study. Energy Policy, 39(12), 7930–7940.CrossRefGoogle Scholar
  52. Sunak, Y., & Madlener, R. (2012). The impact of wind farms on property values: a geographically weighted hedonic pricing model. FCN working paper no. 3/2012. Aachen, Germany: Institute for Future Energy Consumer Needs and Behavior (ACN), RWTH Aachen University.Google Scholar
  53. Tiebout, C. M. (1956). A pure Theory of Local Expenditures. Journal of Political Economy, 64(5), 416–424.CrossRefGoogle Scholar
  54. Vyn, R. J., & McCullough, R. M. (2014). The effects of wind turbines on property values in Ontario: does public perception match empirical evidence? Canadian Journal of Agricultural Economics, doe:10.1111/cjag.12030.Google Scholar
  55. White, H. (1980). A Heteroskedasticity-consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity. Econometrica, 48(4), 817–838.CrossRefGoogle Scholar
  56. Wiggins v. WPD Canada Corporation (2013). Superior Court of Justice, Ontario, CA. May 22, 2013. File no. CV-11-1152.Google Scholar
  57. Wisconsin Realtors Association, Wisconsin Builders Association, Wisconsin Towns Association, Morehouse, & Selik v. Public Service Commission of Wisconsin (2014). Wisconsin 3rd District Court of Appeals, March 25, 2014. Cir. Ct. no. 2012CV1203.Google Scholar
  58. Wolsink, M. (2007). Planning of Renewables Schemes: Deliberative and Fair Decision-Making on Landscape Issues Instead of Reproachful Accusations of Non-cooperation. Energy Policy, 35(5), 2692–2704.CrossRefGoogle Scholar
  59. Zabel, J. E., & Guignet, D. (2012). A Hedonic Analysis of the Impact of Lust Sites on House Prices. Resource and Energy Economics, 34(4), 549–564.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York (outside the USA) 2014

Authors and Affiliations

  • Ben Hoen
    • 1
  • Jason P. Brown
    • 2
  • Thomas Jackson
    • 3
  • Mark A. Thayer
    • 4
  • Ryan Wiser
    • 5
  • Peter Cappers
    • 6
  1. 1.Lawrence Berkeley National LaboratoryMilanUSA
  2. 2.Federal Reserve Bank of Kansas CityKansas CityUSA
  3. 3.Texas A&M University and Real Property Analytics, Inc.College StationUSA
  4. 4.San Diego State UniversitySan DiegoUSA
  5. 5.Lawrence Berkeley National LaboratoryBerkeleyUSA
  6. 6.Lawrence Berkeley National LaboratoryFayettevilleUSA

Personalised recommendations