WIND FARM PROXIMITY AND PROPERTY VALUES IN CENTRAL ILLINOIS November 6, 2010Posted by Laura Arnold in Uncategorized.
Tags: Jennifer L. Hinman, Twin Groves Wind Farm, wind farm
by Jennifer L. Hinman, Illinois State University, May 2010
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 changes over the different stages of wind farm development. 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 previous methodologies found in the wind farm proximity and property value literature.
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 in “anticipation” of the wind farm after the wind farm project was approved by the McLean County Board. Wind farm anticipation stigma is likely due to the impact associated with a fear of the unknown, a general uncertainty surrounding a proposed 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 be. However, during the operational stage of the wind farm project, as surrounding property owners living close to the 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 prior to wind farm approval. Thus, this study presents evidence that demonstrates close proximity to an operating wind farm does not necessarily negatively influence property values or property value appreciation rates. The estimation results strongly reject the existence of “wind farm area stigma theory” for the area surrounding Twin Groves I and II.
Download the report HERE: 2010 Wind Farm Proximity and Property Values