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Weekly UpdatesABSTRACT. This paper discusses the findings from a UK study to determine the likely impact of a wind farm on house prices using a hedonic pricing model. The Government's commitment to wind power has resulted in a massive increase in the number of wind farms sited in the UK. This has led to concerns that their visual and aural presence could have a negative impact on proximate house prices. This paper presents an analysis of 201 sales transactions from houses situated within half a mile of a 16 turbine wind farm in Cornwall, UK. Whilst no causal link was established between the presence of the wind farm and house price, there was some evidence to suggest that both noise and flicker from the turbine blades could blight certain property and that the view of countryside enjoyed by the occupier had some value which may be affected by a wind farm.
KEYWORDS: Property stigma; Residential values; Wind-power; Renewable energy; Hedonic
SANTRAUKA
Siame darbe aptariami JK atlikto tyrimo rezultatai, kuriuo, taikant hedonistini kainu modeli, siekta nustatyti galima vejo jegainiu poveiki namu kainoms. Vyriausybes parama vejo energijai paskatino naujo elemento, vejo jegaines, atsiradima aplinkoje; susirupinta, ar vejo jegainu vaizdas ir garsas galetu neigiamai paveikti namu kainas. Siame darbe nagrinejamas 201 prekybinis sandoris, susijes su namais, puse mylios nutolusiais nuo Bears Down, Kornvalyje (JK), esancio 16 vejo jegainiu ukio. Nors priezastinis rySys tarp vejo jegainiu ir namu kainos nepastebetas, yra irodymu kad jegaines keliamas triukSmas ir menciu mirgejimas kai kuriems nekilnojamojo turto objektams galetu pakenkti ir kad gyventojui patikes kaimo vaizdas gali tapti nebepatrauklus.
1. INTRODUCTION
The 2007 Energy White Paper, published in May 2007, sets out the Government's international and domestic energy strategy to respond to Climate Change with the main aim of cutting, "CO2 emissions fin the UK] by some 60% by about 2050, with real progress by 2020" (DTI, 2007). In order to meet these targets, the government expects "20% of our energy to come from renewable sources ... by 2020" (BBC Radio 4, 2007).
According to the Sustainable Development Commission (SDC, 2005), wind is a prime candidate since the UK has the "best and most geographically diverse wind resources in Europe, more than enough to meet current renewable energy targets" (ibid). However, although wind power is now the fastest growing renewable energy sector in Britain (BBC Radio 4, 2007), "experts interviewed on 'Costing the Earth,' claim that the power of the wind to deliver electricity is being overestimated" (Country Guardian, 2007). They argue that although the Government has already invested, "half a billion pounds so far" wind power has "as yet ... failed to deliver half of one per cent of our electricity needs" (ibid).
Whilst appearing to offer many advantages, there is now considerable opposition to such developments particularly with regard to their inefficiency, with many turbines producing less than 25% of their predicted output. The unreliability of wind generated electricity means that customers must have the ability to switch over from wind power to an alternative source of electricity, (produced from either nuclear, oil or coal fired power stations). In real terms, this means that "even on the most optimistic assumptions, renewable sources of energy, such as wind power, will have only a 'minor impact' on reducing carbon dioxide emissions" (Keay, 2005). The governments reliance on wind power as the main source of renewable energy has raised public concern, not just about the ability of this technology to provide sufficient energy to meet the 2020 target, but also with regard to the impact that the visual (see Figure 1) and aural presence of turbines could have on wildlife, surrounding property values and the health of residents living close by, particularly since the number of wind turbines sited around the UK continues to grow (Country Guardian, 2007; Sagrillo, 2003; WWF-UK, 2001; RSPB, 2005; Milner, 2004; BWEA, 2008).
[FIGURE 1 OMITTED]
With the current number of operational onshore wind farms standing at 167 and a further 30 under construction, 123 with planning consent and a further 225 being considered (BWEA, 2008), opposition towards wind farms seems to be growing exponentially, which would suggest that the 'wind farm' may be the latest environmental feature to stigmatise residential property (Clark, 2004; Newton and Harwood, 2005).
Previous research in the UK has generally focussed on public and professional opinions towards proposed wind farm developments or the perceived impact of an existing wind farm on house prices (Impact Assessment Unit, 2003). There has only been one previous study to attempt to quantify the real impact on value and that proved inconclusive due to a lack of available data (Sims and Dent, 2007). Therefore, further research to establish their impact on house values and amenity would be of benefit to property professionals and the wind generation industry.
This study seeks to establish whether, or not, the physical or visual presence of wind turbines influences house values or amenity by undertaking an analysis of property transactions. The report presents the results from an analysis of transaction data for homes sold in the vicinity of the Bears Down, 16 turbine wind farm in St Eval, Cornwall (turbines are 60m high). A hedonic pricing model at the micro-spatial level is applied and data analysed using multiple linear regression.
2. LITERATURE
Whilst there have been several studies in this area, most have been opinion surveys. As a consequence there is little empirical evidence on the impacts (positive or negative) of living near a wind farm and only five studies which consider the impact on value. One study found a small number of homes could suffer from diminution (Jordal-Jorgensen, 1996). Two studies found insufficient evidence to either reject or accept the claim that wind farms have an effect on value (Poletti, 2005; Hoen, 2006). One found house values increased (Sterzinger et al., 2003) and the fifth, whilst finding a reduction in house values within one mile of the wind farm, attributed this diminution to a local condition and not the presence of the wind farm (Sims and Dent, 2007).
2.1. Opinion surveys
Public perception of non-physical contamination such as visual impacts, noise and odour pollution can create property stigma which, according to Chan (2001) is "a loss to property value due to the presence of a risk perception-driven market resistance. "Previous research on the impact of environmental features such as, high voltage overhead power lines (HVOTLs) and mobile phone masts (MPBS) (both of which exhibit similar characteristics to wind turbines), indicates that, physical characteristics such as visibility, size and location can influence property stigma; especially when there is an associated health risk. However, the effect of stigma damage is difficult to quantify because it is created by opinion and perceptions which can change in response to media attention (see for example information available on the internet (1)), time and spatial proximity (McClelland et al., 1990; Chalmers and Roehr, 1993; Fischhoff, 1985; Mundy, 1992; Slovic et al., 1991; Gallimore and Jayne, 1999; Bell, 1999; Bond et al, 2003; Sims and Dent, 2005). Most wind farm studies have been undertaken as part of an impact assessment statement prior to construction (Impact Assessment Unit, 2003). Survey work undertaken by the Scottish Executive (2003) suggests that residents living near wind farms have experienced less impact than anticipated as shown in Figures 2 and 3.
[FIGURE 3 OMITTED]
The British Wind Energy Association (BWEA, 2004) commissioned Knight Frank to undertake an initial investigation into the factors affecting property values near wind farms. The findings indicated that public reactions tend to vary considerably, with more support for wind farms being observed when the public are involved in the decision making process. However, although there was a general consensus amongst estate agents that there is a 'detrimental effect on values either due to close proximity of the wind farm or its visibility'(ibid), they concluded that determining the real impact on value would require a more detailed case study using data from the Land Registry and interviews with Property Professionals.
The 2004 Royal Institution of Chartered Surveyors (RICS, 2004) members' survey found that 60 per cent of the 405 respondents thought proximate wind farms decreased property values when the turbines were in view, despite a lack of evidence from sales transactions to support this view. The majority of respondents believed that any depreciation starts at the planning stage and lessens with time. Sims and Reed (2005) reached a similar conclusion when asking valuers to speculate on which features associated with a wind farm would be most likely to reduce value. The response (76 useable responses) indicated that a 'view of the turbine' would cause the largest diminution in value followed by a 'fear of blight'. The size of the wind farm seemed immaterial.
Other research has observed some positive benefits from wind farm development. Grover (2002) found that a plot of land with planning permission for a wind farm could be worth significantly more than land without (presumably due to the potential income stream). By contrast, Jordal-Jorgensen (1996) and Andersen and colleagues cited in Damborg (2002), explored the issue of co-ownership in Norway and Denmark and found that the most important factor to influence occupiers attitudes related to whether or not they benefited directly from the electricity produced (i.e. the degree of financial benefit to be derived from this technology). On the other hand, those owning or co-owning turbines expressed little or no objection to their presence.
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