Hoen's Report (selected extracts)
Potentially adverse effects of windfarm visibility on property values can represent real costs to communities, yet few studies exist on the subject. The studies that are available are contradictory, and suffer from statistical flaws. A clearer understanding of actual effects of existing wind facilities will inform future decisions. To explore this subject this report analyzes 280 arms-length single-family residential sales using a hedonic regression model. The sales took place from 1996 to 2005 and are within 5 miles of a 20 turbines - 30 megawatt (MW) windfarm in Madison County, New York. The report differentiates itself from previous studies by visiting all homes (“ground truthing”) in the sample to ascertain the actual level of turbine visibility. The analysis finds an absence of measurable effects of windfarm visibility on property transaction values. This result holds even when concentrating on homes within a mile of the facility and those that sold immediately following the announcement and construction of the windfarm in 2001. These results dispel the proposition that effects, either positive or negative, are universal. The report concludes by making recommendations to stakeholders and outlining possible considerations for further research.
Policy Implications and Recommendations
Contrary to the notion that adverse effects are universal, this report did not produce any significant relationship between distance from, or visibility of the windfarm and the sale prices of homes. These results fit with those reported in other empirical studies that surveyed public attitudes, which found that people living near turbines find them “acceptable” and, in fact, rarely spontaneously mention them (Braunholtz and MORI-Scotland, 2003). Together these studies suggest that in communities similar to the one surrounding the Fenner windfarm, the question of property value effects should be lessened in importance in the decision making process. Further, if these results are substantiated in further research as discussed below, the implications for stakeholders are significant.
Specific recommendations for many of the stakeholders in the windfarm planning process are as follows:
• Town Officials/Planners: Town planners should realize that the methods for facility approval can greatly contribute to placating community concerns. A transparent process which allows residents to address siting concerns such as the size of the project, the placement of the turbines as it relates to dwellings, and the provisions for dealing with maintenance and decommissioning are very important. If steps such as these are followed, local decision makers should be able to enjoy favorable community sentiment and avoid property devaluation.
• Community Members: This research should provide some confidence to community members that a windfarm siting does not guarantee a devaluation of property values, and that assertions to that effect should be thoroughly investigated. In fact, if more studies corroborate these findings devaluation might be considered unlikely. If residents believe their community is similar to Fenner’s, factors other than property devaluation should be concentrated on. These could include the level of payments in lieu of taxes (PILOT), the quality of decommissioning assurances and the level of transparency in the planning process. Based on the findings of this study these factors could play a more important role than potential property devaluation in a community’s proposed windfarm evaluation process. Additionally, urging local, state and federal policy makers to promote continuing research into public attitudes surrounding other wind energy facilities will allow for greater understanding of upcoming development proposals, and a larger area of transferability of results.
• State lawmakers: This report’s findings of “no effect” might indicate that the planning process used for the Fenner windfarm should be used as a model. Currently some state laws allow the review process to be entirely avoided (GAO, 2005), yet an environmental review and subsequent community involvement can help ensure that appropriate decisions are made and development is accepted by the community going forward. State regulations should require all wind developments to participate in the EIS process, to ensure that the planning process is transparent, and that community involvement is encouraged. Additionally, through an intense effort to research and disseminate findings, such as reactions of other communities to wind development in the U.S., lawmakers can give local officials the tools needed to weigh real costs and benefits. In so doing, decision makers can avoid having to rely on insufficient information and speculation.
• Wind industry representatives: Although these findings seem to show that property devaluation did not occur in the community surrounding the Fenner windfarm, it should be clear that property value effects are strongly tied to public attitudes, a cooperative planning process, and might be influenced by characteristics not present in the Fenner community. These are discussed below and include the number of second homes, the proximity to the wind turbines, and the percentage of “vista” included in the home value. Accordingly, encouraging further empirical research of public attitudes and property transaction values surrounding wind developments might provide decision makers with the information needed to make appropriate decisions regarding development proposals going forward.
8.1 Future research considerations
For communities, especially ones that are not similar to Fenner, there is an intense need for more research. With this, policy makers and other stakeholders will have better answers to this contentious issue. More information is needed regarding the following categories:
• Other windfarm communities: Roughly 90 sites in the U.S. are larger than the Fenner site (AWEA, 2005d), and many of them would be appropriate for study. Sites should be chosen with a variety of socio-economic characteristics, windfarm sizes, and population densities. Studies should analyze homes closer than 4000 feet, and include variables for “vista,” level of community cooperation in approval process, degree that farming matches sense of place (such as the percentage of large tract vs. small), and whether homes are the primary or secondary residences.
. Distance: This study contains homes only as close as 0.75 miles or 4000 feet to the turbines. HVTL studies have found effects exist only inside 500 feet. As discussed in footnote 8 on page 2 (Des-Rosiers, 2002). Future studies should find communities with homes closer than 0.75 miles, and preferably as close as 500 feet if they exist.
. Vista: This study does not include a separate measurement for “vista” (or good view) in its analysis. For example, Haughton (2004) finds that homes with a high percentage of "vista" represented in their value (such as might be found in homes on the coast) might be affected differently by wind development.
. Cooperative Process: The community studied in this report was at least partially involved in the planning process, in so far as they were invited to attend and submit comments at a number of meetings (Moore, 2005). The degree to which the project developer includes the community in the planning process of other communities might influence results (Warren et al., 2005) and should be studied.
. Sense of Place: Anecdotal evidence implies that this community still largely embraces the farming nature of its past. How well wind energy “harvesting” fits with other community’s sense of appropriate land use might also alter outcomes (Devine-Wright, 2004). Using an average tract size for a sample might be a proxy for this variable.
. Size of Project: The Fenner windfarm is 20 turbines. Because there is evidence that community’s prefer smaller windfarms over larger ones (Wolsink, 1989; SEI, 2003) studies conducted using homes surrounding facilities larger than 20 might reach different results.
. Primary Residence: This study does not include a separate variable describing if homes are primary residences or not. It is possible that homeowners of non-primary residences might be more sensitive to changes in their viewshed. Future studies should include this variable.
• Other potentially analogous structures: Although the research from HVTL is helpful in establishing potential effects of windfarms on property values, research concerning other infrastructures might be more applicable. For instance, investigating transaction value effects on coastal homes having views of offshore drilling platforms could shed light on the property value effects when a high “vista” value is present.
• Comparisons of hedonic and survey results: Because survey results are often used as a proxy for actual effects, studies to determine the appropriateness of these methods as it applies to windfarms would be very fruitful for policy makers. If combined hedonic and survey studies were conducted in communities with existing windfarms, which started before announcement and continued well after construction, policy makers and stakeholders could determine the applicability of using surveys to determine present and future property value effects.
• GIS visibility determinations: By continuing research into this area, and using the most up to date data, such as that being newly collected by light detecting and ranging (LIDAR) radar techniques, policy makers and stakeholders may find a very inexpensive method for determining visibility and therefore conducting analysis on communities.
By conducting and disseminating further research, policy makers and other stakeholders can more fully understand the subtle interaction between a view of windfarms and property values. As a result, they will have more appropriate tools to make well informed decisions regarding wind energy siting proposals. For now, it is safe to say property value effects are not guaranteed, and in fact, in the case of Fenner, do not seem to exist at all.
Hoen's Critique of the Renewable Energy Policy Project (REPP) Study
Sterzinger et al., (2003) analyses roughly 24,000 transactions near 11 windfarms in the U.S., and compared average transaction values for houses in a control area outside the viewshed of the windfarm with transactions occurring within the viewshed (a 5-mile radius). The study comes to the conclusion that, "There is no support for the claim that wind development will harm property values.” (p. 9), and even declares, “For the great majority of projects [windfarms] the property values rose more quickly in the viewshed than they did in the comparable community.” (p. 2). Although this study is often quoted,28 its methods have been criticized (e.g. ECW, 2004) for four reasons. First, the authors attempt to calculate a value for the variable “view of windmills,” without properly controlling for it. There is no attempt to discern which properties within the ten different 5-mile viewsheds can see the windfarm or not. In effect, the study makes the erroneous assumption that all properties in the 5-mile radii can see the windfarm, when many houses’ views in fact are obstructed by geological features, trees, and other houses (RBA, 1998a; Poletti, 2005).29
Secondly, the analysis does not control for distance to the turbines, thereby making the assumption that the “viewshed” effect is the same, on average, for homes five miles from the windfarm and those in immediate proximity to the turbines. Third, there are problems with how the study validates its results. The report provides readers with only R2 (or goodness-of-fit) values for its outcomes, and this is problematic, since, by itself, the R2 statistic is a poor indicator of explanatory power (Halcoussis, 2005). Compounding this problem, the report gives R2 values which are very low, for instance 0.02 for some odels, which is saying in essence the model describes only 2% of the actual movement of property values. Despite this somewhat flagrant disregard for rigor it treats these models as it does models where the statistic is high, for example 0.85. This inconsistency is not addressed by the report. The last reason this research is often criticized is that no attempt is made to sort out inappropriate transactions. Sales that are not arms-length (divorce, sales between family members, estate sales etc.) are included. By doing so the report includes transactions that do not represent the agreement between a willing buyer and a willing seller, a requirement for accurate analysis. Combined, these four omissions in rigor render the results of the report extremely weak, if not entirely misleading.
28 A “Google” internet search using all of the following words, “REPP”, “wind” and “property” generates 18,600 results. [tested 2-20-06]
29 Sterzinger et al analyze the community surrounding the Madison County windfarm, which is the subject of this report. We found 66% of the homes sampled in the 5 mile radius could not see the windfarm at all.