Thursday, September 6, 2012

Wind farms: Is NIMBY justified?

Personally, I find wind farms to be beauties. They are very elegant and even in large numbers the wind mills offer a sumptuous spectacle. But not everyone shares this point of view, and especially the windmills' neighbors are railing against their visual impact, their shade and their noise. If it is so bad, it must then have an impact on property values. It turns out that it is actually quite difficult to find a significant effect. So is all this NIMBY talk a big fuss for nothing?

Yasin Sunak and Reinhard Madlener point out that the small literature on the topic uses OLS estimates of hedonic models. That is how property valuation studies are usually done, but they find that results can change if one uses geographically weighted regressions, and one takes into account spatial autocorrelation. The analysis is performed for a particular area of Western Germany. It would have been more convincing if this study would have overturned the results of an earlier one. The study also excludes re-sales, for technical reasons. But of course, one could also concentrate on re-sales to see the impact of the windmill proposal and then its construction. Still, their specification can tease out some interesting results. OLS estimates reveal a negative impact that becomes more complex with a more general specification: the negative impact is much stronger in one city compared to the other, all else equal. Some areas even benefit. It would be interesting to see whether this is from internal migration away from the windmills.

1 comment:

MrIlir said...

Hedonic models are the past. Alex Gheg has a new framework. Quantity, quality, variety and convenience in one equation. This leads to a new scale for economic growth.