Valuating the Negative Externality of Wind Turbines: Traditional Hedonic and Difference-in-Difference Approaches

23 Pages Posted: 12 May 2023

See all articles by Mats Wilhelmsson

Mats Wilhelmsson

Royal Institute of Technology (KTH)

Hans Westlund

Royal Institute of Technology (KTH)

Abstract

The local negative externalities of wind turbine establishments have been documented in research, often with the help of hedonic methodology and property values. In this study, we used mixed methods, including hedonic methodology, propensity score matching, and the difference-in-difference approach to estimate causal effects using more than 600,000 real estate transactions in Sweden from 2005 to 2018. Our results indicate that we can reject the hypothesis that proximity to wind turbines does not affect property values. This impact is relatively strong and varies over time and geographic region. The difference-in-difference with matching confirms estimates in the hedonic price equation studies. Furthermore, there is no indication of pre-event differences in house price outcomes based on distance from new wind turbines. Depending on the region, the total negative capitalisation is between 10% and 25% within 0–2 kilometres of the wind power plant. We apply these estimates to the total housing stock in three potential development areas. Although the effects per property are relatively marginal, the total effects of a wind farm establishment will be significant if it is in densely populated areas.

Keywords: wind turbine, capitalisation effect, regional, difference-in-difference, matching, property values

Suggested Citation

Wilhelmsson, Mats and Westlund, Hans, Valuating the Negative Externality of Wind Turbines: Traditional Hedonic and Difference-in-Difference Approaches. Available at SSRN: https://ssrn.com/abstract=4446410 or http://dx.doi.org/10.2139/ssrn.4446410

Mats Wilhelmsson (Contact Author)

Royal Institute of Technology (KTH) ( email )

Brinellvägen 8
Stockholm, 10044
Sweden

Hans Westlund

Royal Institute of Technology (KTH) ( email )

Brinellvägen 8
Stockholm, 10044
Sweden

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