Illinois study positive on property values
A new study of property values on land near a major wind farm in Illinois has come up with some interesting findings. Broadly summarized, the study finds that property values were negatively affected before the wind farm was built, but rebounded after it was in place. The study thus adds to a fairly consistent set of findings over the years to the effect that wind development does not damage property values, though with the caveat that there may well be a temporary negative impact.
"Wind Farm Proximity and Property Values: A Pooled Hedonic Regression Analysis of Property Values in Central Illinois, 2010" was authored by Jennifer L. Hinman, a graduate student in the Illinois State University Department of Economics. I quote here from the study’s abstract:
“The objectives of this study are to examine whether proximity to the 240-turbine, Twin Groves wind farm (Phases I and II) in eastern McLean County, Illinois, has impacted nearby residential property values and whether any impact on nearby property values remains constant over different stages of wind farm development with the different stages corresponding to different levels of risk as perceived by nearby property owners. This study uses 3,851 residential property transactions from January 1, 2001 through December 1, 2009 from McLean and Ford Counties, Illinois. This is the first wind farm proximity and property value study to adopt pooled hedonic regression analysis with difference-in-differences estimators. This methodology significantly improves upon many of the methodologies found in the wind farm proximity and property value literature.”
and its conclusions:
“The estimation results provide evidence that a location effect exists such that before the wind farm was even approved, properties located near the eventual wind farm area were devalued in comparison to other areas. Additionally, the results show that property value impacts vary based on the different stages of wind farm development. These stages of wind farm development roughly correspond to the different levels of risk as perceived by local residents and potential homebuyers. Some of the estimation results support the existence of wind farm anticipation stigma theory, meaning that property values may have diminished due to a fear of the unknown: a general uncertainty surrounding a wind farm project regarding the aesthetic impacts on the landscape, the actual noise impacts from the wind turbines, and just how disruptive the wind farm will actually be.
“However, during the operational stage of the wind farm project, as property owners, living in close proximity to Twin Groves I and II wind turbines, acquired additional information on the aesthetic impacts on the landscape and actual noise impacts of the wind turbines to see if any of their concerns materialized, property values rebounded and soared higher in real terms than they were even before wind farm approval. Thus, this study presents evidence that demonstrates close proximity to an operating wind farm does not necessarily negatively influence property value appreciation rates or property value levels (in percentage terms). The estimation results strongly reject the existence of wind farm area stigma theory for the area surrounding Twin Groves I and II. The results from this study are consistent with the results from a recent survey conducted surrounding Twin Groves I and II. A random sample of residents of the Ellsworth, Saybrook, and Arrowsmith communities were surveyed in 2009, during the time period that Twin Groves I and II were operational; and approximately sixty percent of respondents claimed they were not concerned about their property values declining because of the wind farm (Theron, 2010).”
Ms. Hinman caveats the results of her study, noting that they may depend on particular local factors such as the degree of initial opposition to a wind farm, the apparent interest of residents in keeping the area as farm land rather than having a nearby city expand into it, good neighbor payments to neighboring properties not hosting wind turbines, etc. Still, it’s encouraging to know that a clean, pollution-free energy source that provides income to landowners and rural counties need not damage property values.