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Valuating the negative externality of wind turbines: traditional hedonic and difference-in-difference approaches

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  • Westlund, Hans

    (Royal Institute of Technology)

  • Wilhelmsson, Mats

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

Abstract

Local negative externalities of an establishment of wind turbines have been documented in research; often with the help of the hedonic methodology and property values. We use mixed methods including hedonic methodology, propensity score matching, and the difference-in-difference approach to estimate causal effects, using almost 600,000 real estate transactions in Sweden from 2005 to 2018. The results indicate that we can reject the hypothesis that proximity to wind turbines does not impact property values, and this impact is relatively strong and varies over time and geographic region. 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 amounts to between 10 and 25 percent within 0–2 kilometres from the wind power plant. We apply these estimates to the total housing stock in three different potential future development areas. Although effects per property are relatively marginal, the total effects of a wind farm establishment will be significant if they are located in densely populated areas.

Suggested Citation

  • Westlund, Hans & Wilhelmsson, Mats, 2022. "Valuating the negative externality of wind turbines: traditional hedonic and difference-in-difference approaches," Working Paper Series 22/6, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    • Handle: RePEc:hhs:kthrec:2022_006
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    References listed on IDEAS

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    Cited by:

    1. Marvin Schütt, 2024. "Wind Turbines and Property Values: A Meta-Regression Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(1), pages 1-43, January.

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    More about this item

    Keywords

    wind turbine; capitalisation effect; regional; difference-in-difference; matching; property values;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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