Academic journal article The Journal of Real Estate Research

Wind Energy Facilities and Residential Properties: The Effect of Proximity and View on Sales Prices

Academic journal article The Journal of Real Estate Research

Wind Energy Facilities and Residential Properties: The Effect of Proximity and View on Sales Prices

Article excerpt

A b s t r a c t

This paper received a manuscript prize award for the best research paper on Sustainable Real Estate (sponsored by the NAIOP Research Foundation) presented at the 2010 ARES Annual Meeting.

Increasing numbers of communities are considering wind power developments. One concern within these communities is that proximate property values may be adversely affected, yet there has been little research on the subject. The present research investigates roughly 7,500 sales of single-family homes surrounding 24 existing wind facilities in the United States. Across four different hedonic models, and a variety of robustness tests, the results are consistent: neither the view of the wind facilities nor the distance of the home to those facilities is found to have a statistically significant effect on sales prices, yet further research is warranted.

Wind power development has expanded dramatically in recent years (WEC, 2010) and that expansion is expected to continue (Global Wind Energy Council, 2008; Wiser and Hand, 2010). The U.S. Department of Energy, for example, published a report that analyzed the feasibility of meeting 20% of electricity demand in the United States with wind energy by 2030 (U.S. DOE, 2008).

Approximately 3,000 wind facilities would need to be sited, permitted, and constructed to achieve a 20% wind electricity target in the U.S.1 Although surveys show that public acceptance is high in general for wind energy (e.g., Firestone and Kempton, 2006), a variety of local concerns exist that can impact the length and outcome of the siting and permitting process. One such concern is related to the views of and proximity to wind facilities and how these might impact surrounding property values. Surveys of local communities considering wind facilities have frequently found that adverse impacts on aesthetics and property values are in the top tier of concerns relative to other matters such as impacts on wildlife habitat and mortality, radar and communications systems, ground transportation, and historic and cultural resources (e.g., BBC Research & Consulting, 2005; Firestone and Kempton, 2006).

Concerns about the possible impacts of wind facilities on residential property values can be categorized into three potential effects:

Scenic Vista Stigma: A perception that a home may be devalued because of the view of a wind energy facility, and the potential impact of that view on an otherwise scenic vista.

Area Stigma: A perception that the general area surrounding a wind energy facility will appear more developed, which may adversely affect home values in the local community regardless of whether any individual home has a view of the wind turbines.

Nuisance Stigma: A perception that factors that may occur in close proximity to wind turbines, such as sound and shadow flicker, will have an adverse influence on home values.

Any combination of these three potential stigmas might affect a particular home. Consequently, each of the three potential impacts must be considered when analyzing the effects of wind facilities on residential sales prices.

This paper uses several hedonic pricing models to analyze a sample of 7,459 armslength residential real estate transactions occurring between 1996 and 2007 for homes located near 24 existing wind facilities spread across nine U.S. states. In so doing, the paper investigates the degree to which views of and proximity to wind facilities affect sales prices.

The remainder of the paper is organized as follows. The next section contains a summary of the existing literature that has investigated the effects of wind energy on residential property values. Then the data used in the analysis are described. Following that, a set of four hedonic models are described and estimated to test for the existence of property value impacts associated with the wind energy facilities. The findings regarding the existence and magnitude of the three stigmas mentioned above are described, as are a series of robustness tests intended to assess the reliability of the model results. …

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