The Impact of Wind Farms on Property Values: A Geographically Weighted Hedonic Pricing Model
FCN Working Paper No. 3/2012 (revised March 2013)
35 Pages Posted: 21 Jul 2012 Last revised: 15 Oct 2013
Date Written: May 1, 2012
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.
Keywords: Wind power, Hedonic pricing, Spatial fixed effects, Geographically Weighted Regression
JEL Classification: C31, Q2, Q42, R31
Suggested Citation: Suggested Citation