By Kennedy Maize
Washington, Feb. 15, 2010 — Local opponents of wind farm developments often claim that the energy projects depress their property values. It’s a difficult issue to settle. The Department of Energy’s Lawrence Berkeley National Laboratory claimed last December in a $500,000 study, three years in the works – “The Impact of Wind Power Projects on Residential Property Values in the United States: A Multi-Site Hedonic Analysis” – that the fear of property value declines is bogus.
The DOE study concluded that there was no evidence property values near wind farms were “consistently, measurably, and significantly affected by either the view of wind facilities or the distance of the home to those facilities.” A Lawrence Berkeley press release quoted the study’s author, consultant Ben Hoen, “Neither the view of wind energy facilities nor the distance of the home to those of the homes to those facilities was found to have any consistent, measurable, and significant effect on the selling prices of nearby homes.”
The study team collected data on 7,500 single-family home sales for residences within 10 miles of 24 current wind projects in nine states, according the LBNL press release. The sales took place between 1996 and 2007.
The study drew praise from wind developers. Denise Bode, head of the American Wind Energy Association, the industry’s Washington lobbying group, said, “The conclusions of this study could not be more definitive—wind farms do not weaken property values. These important research findings offer good news for those communities that might be considering the location of wind farms nearby. Wind energy has multiple benefits: it creates jobs, reduces greenhouse gases, and delivers direct economic benefits to rural communities. Now we can also say that wind energy has no impact on property values.”
Not so fast, Denise. Albert R. Wilson, a national expert on real estate valuation, got wind of the study, looked at it, and found its methodology dodgy. His target was the way the LBNL researchers used “hedonic analysis” in their paper.
The LBNL study rests on regression analysis, which is what hedonic analysis means. In a private paper – “Wind Farms, Residential Property Values, and Rubber Rulers” – Wilson explained: “A regression is a statistical process that attempts to quantify a hypothetical relationship between certain factors (explanatory variables) and the value of an outcome (dependent variable).”
Economists Fritz Roka and Raymond Palmquist at North Carolina State University note, “Hedonic techniques have attracted the interest of economists as a means of measuring values of non-market goods. By studying the market transactions of differentiated products such as automobiles and houses, implied values and corresponding demand schedules can be estimated for underlying characteristics such as automobile safety features, two-car garages, and air quality of residential neighborhoods.”
Wilson adds that there are “literally thousands of possible real estate regression models.” There is also “a well developed and tested set of standards” to guide model choices, he says. For the LBNL report, Wilson says, “There is no evidence whatever” that the researchers “employed any standards.”
It also appears, Wilson says, that the LBNL report omitted important variables. The LBNL model may include sales prices in areas of declining population, where prices are not comparable to areas of increasing population, demand, and housing prices. The LBNL analysis, says Wilson, aggregates sales data nationwide, which is “a gross oversimplification that cannot provide for the specificity required to answer a micro-question such as an influence on sales price from a highly localized condition – distance to or view of a wind energy project.”
Wilson says he has “no opinion on the influence of wind farms on residential sales prices.” But his concerns with methodology lead him to argue that the LBNL report “should not be given serious consideration for any policy purpose. The underlying methods cannot be show to be reliable or accurate.”
So where does that leave us on the question of whether windmills reduce property values? After three years and half-a-million in research, the question, in my mind at least, remains unanswered.
I’m pasting below the remarks made in my Maryland PSC wind hearing testimony (the applicant was Synergics Wind LLC) vis a vis another “government sponsored” wind property values assessment document published in 2003, infamously known as the Renewable Energy Policy Project. It too was easily discredited. The effort of government to use public resources as it bends reality to sell its brand of wind soap, as it did again with the Hoen report, is truly disgusting–and more than contemptible. Here’s what I said in 2005 in response to the REPP “study” that should that wind projects would not only not decrease property values but would, in some cases, actually increase them.
“One of the most validated real estate precepts is the idea that significant natural views have premium value, and intrusions which restrict that view erode value. Realtors doing business near windplants in the western United States and in Europe understand that property will sell for between ten and thirty percent less than previous market value, depending upon how close it is to the windplant. The few “studies” which appear to support the claim that windplants don’t devalue property are extremely flawed in fact and methodology, often surveying people and evaluating property miles away from a wind site, then “averaging” these results with properties adjacent to windplants.
“The Renewable Energy Policy Project (May, 2003) study that Synergics offers on behalf of the claim that its project will not diminish property values contains serious methodological flaws:
1. The study covers just ten projects, only one of which comes close to the size and scope of Synergics’ project—and this site (Madison County, NY—the Fenner Site), with 20 turbines situated on farm fields—not atop tall ridgelines– interestingly showed significant decreases in property values.
2. The time frame of the study was so short that even the study’s authors were compelled to state the data was insufficient to offer compelling conclusions.
3. The study did not verify whether individual properties had a direct view of the windplants, making the use of the term “viewshed” something of a misnomer in this context, since the viewshed properties were actually all properties within a five mile radius of the turbines regardless of whether they had a direct line of sight. To mitigate this problem, the researchers conducted phone interviews with tax assessors and other local authorities to get estimates on the number of properties in the defined viewshed that might have had views of the turbines. However, under scrutiny, these interviewees provided inaccurate estimates.
4. The analysis used in this study did not incorporate distance from a wind development as a variable or weighting factor, so that a viewshed property sale five miles away from a development counted the same as one a quarter mile away. It is at least plausible that if wind developments do have an effect on property values, it would be strongest close to the turbines and decline with distance. Simple geometry suggests that the majority of properties in the area of a five mile circle are likely to be fairly distant from the wind development: 64% of the area of this circle is three miles or more from the center – and only 4% lies within the first mile. Though properties are not necessarily distributed evenly about the landscape, and property values conceivably can be affected by other things in the vicinity, the REPP study confuses substantially the proportion of properties that either have only a distant view of wind turbines or no view at all.
5. The study relied on average rates of sale prices before and after the wind development and between viewshed properties and properties in a comparison group. Therefore, if one calculates that sale prices among viewshed properties increased $50/month faster than sale prices in the comparison group, then it makes a difference whether the statistical uncertainty in the point estimate is plus or minus $25/month or $500/month. The former leads to a conclusion that the wind development unlikely had a negative effect on property values while the latter intimates that the data are inconclusive – there could be a large negative impact, a large positive impact or no impact at all. These “smoothed” average sale prices against a very small time variable creates a regression analysis which is, for prediction purposes, almost beside the point, suggestive of nothing.
The REPP “study,” although its basic methodological approach holds considerable promise, is severely flawed. To say, as Synergics does, that the study demonstrates its proposed windplant will have no effect on property values, that it may in fact enhance them, is disingenuous.”
Russell Bounds, one of Garrett County, Maryland’s leading realtors in large property transactions, has lost sales in the area of proposed windplants. He has stated that huge industrial windplants “would be devastating not only to the real estate values in the targeted viewshed, especially to neighboring properties, but they would also negatively affect the entire county economy, since so much of that economy is tied up with tourism drawn by the county’s natural views.”(Personal communication.)
I have no doubt that if a wind LLC proposed a huge wind complex near Sugarloaf Mountain southeast of Frederick, MD, Mr. Maize would be able to answer the question about what such a project more authoritatively.
Perhaps the correct comparison for property values near a wind farm is not to the value of property with a pristine natural view. Compare them instead to the value of properties near a coal-fired electrical plant, or near a nuclear power plant, or properties submerged by building a dam for hydro power. There is no such thing as electricity without locating some electrical generator somewhere.
Compare property values near a wind farm to the value of those same properties without electrical service. Certainly, those wires strung on poles and running all the way to the house are, to some people, unsightly. I’ll give some weight to the objections of homeowners who do not themselves use the electrical grid, but practically no weight to those who want the generator in someone else’s back yard.
Will you give weight to those of us who watched the devastation of the mountain top with mud running into the road because erosion control measures were inadequately employed if employed at all. will you give weight to those of us who have watched quasi municipal entities…electric power consortiums..attempt to take land by eminent domaine . will you give weight to those of us who watched the landscape change irrevocably in an area ranked amongst the top 10 in the country by National Geographic.
Not only do I not want the wind turbines on the mountain ridge behind my home I don’t want them anywhere. The cost benefit ratio or lack thereof boggles the mind.
American manufacturers are NOT receiving the bulk of the orders for the towers and the blades .Tthe amount of electricity produced is negligible for the dollar spent.
Let’s spend the stimulus money here at home and on products that will help CONSERVE energy. Let’s teach energy conservation tricks and tactics to our children.
I live in the state of Vermont known for the green mountain state. Currently, we are faced with a wind farm project that insists putting 420 foot towers on our beautiful untouched mountain ridge. Not only do we have laws to not have bill boards and not to log over 2500 feet, but these wind projects are governed by the public service board with only 3 members. All the data submitted is swayed and no one will understand the impact for 5 years. That being too late to do anything about it. Why is wind so superior to solar?? Why is geo thermal not talked about for the new home construction. If we are giving( we the govt) 15,000.00 towards a 50,000.00 private net metering wind turbine, why is wind the forfront of all the answers. I woke up to a 140 foot private wind turbine and let me tell you, the high pitch whine that sounds off from that is not good. I am now selling my home which has been in my family for over 100 years. And I sell real estate for a living. Do you know what I hear from people, yeah, I guess I would not want that in my back yard. Now if my neighbor would have put up 50,000.00 worth of solar panels, we would all be having free power now!
that’s really a fantastic post ! added to my favourite blogs list.. I have been reading your blog last couple of weeks and enjoy every bit. Thanks.
Jon great factual information. Cindy so true — it seems like everyone has drank the “green” kool-aid and accept everything the wind guys tell them as truth. They offer county board members leases and township trustees leases. Of course they may find they will be the “neighbors” to the turbines after they are built; without the big money promised.
We ignore environment laws and allow these industrial machines to be placed on once beautiful mountains, near historic areas, pristine areas, good, fertile farm land for something that at best (industry figures) is 30% efficient.
The world has gone crazy with this.
Wind farms do not really lower real estate value because that lower taxable value of the land and the county would not want to loose the tax base. True or false. What happens is the desire to buy the home is reduced. What I am saying is there are less buyers that want to live by them and raise thre family.I know this for a fact, Iive in a very nice spot called Elk Hieghts in the state of Washinton a very pristine view,farm land area and I see two wind farms from my house. One is 40 miles away the other is less than 5 miles away and the closes one to me I see out three sides of my home. It is true that there own impact report says there can be some issue,But the powers that be in the wind farm just tell you to kiss off. My home has no value because no one will buy it so, My 20 year investment is 100% worthless. You see it is not about people it’s about money. Has the world gone crazy, Only a select few. As for the wind farm,Tear it down or pay me! You did not build it for the people,You built it for money.