Renewable Energy and Negative Externalities: The Effect of Wind Turbines on House Prices

Tinbergen Institute Discussion Paper 14-124/VIII

31 Pages Posted: 19 Sep 2014

See all articles by Martijn Dröes

Martijn Dröes

University of Amsterdam

Hans Koster

VU University Amsterdam - Department of Spatial Economics

Date Written: September 16, 2014

Abstract

In many countries, wind turbines are constructed as part of a strategy to reduce dependence on fossil fuels. In this paper, we measure the external effect of wind turbines on the transaction prices of nearby houses. A unique house price dataset covering the period 1985-2011 is used, including the exact location of all wind turbines built in the Netherlands. We find that house prices within a two kilometer radius of a turbine, after it has been constructed, decrease by about 1.4 to 2.3 percent on average. We find anticipation effects up to three years in advance of the construction of a wind turbine. We provide further evidence that the external costs of a wind turbine are at least 10 percent of its construction cost.

Keywords: renewable energy; wind turbines; externalities; house prices

JEL Classification: R31, Q42, Q15, L94

Suggested Citation

Dröes, Martijn and Koster, Hans, Renewable Energy and Negative Externalities: The Effect of Wind Turbines on House Prices (September 16, 2014). Tinbergen Institute Discussion Paper 14-124/VIII. Available at SSRN: https://ssrn.com/abstract=2497881 or http://dx.doi.org/10.2139/ssrn.2497881

Martijn Dröes (Contact Author)

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Hans Koster

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands

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