property stigma - just the latest fashion wind ... -...

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School of the Built Environment

Property Stigma - Just the Latest FashionWind Farms & House Prices in the UK

Sally Sims and Peter Dent Sep 2007

Research Funded By

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ComplaintsComplaintsDamaging countryside (AONB)

Visually intrusive

NoisyFlicker from blades

UnreliableWind speed has to be 20mph+ to generate electricityResults in a 25-30% efficiency level

Uneconomical Costly to produceCampaigning groups claims -Up to 30yrs to pay for itself + annual maintenance. intermittant

Reduce property values

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Study 1Study 1

Aim:- To determine the likely impact on house value

Hypothetical valuation

Analysis of transaction data

Planning permission objections

Estate Agents experience of marketing property in case study location =Visual impact

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Perceived impact on house pricesRICS Members Hypothetical Valuation

Property 1: Unencumbered Value £595,000Perceived Impact of a Wind Farm on Houes Values

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0% 1-5% 6-10% 11-15% 16-20% 21-25% 26-30% 31-35%

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Cornwall (South West UK)Cornwall (South West UK)

Wind farm

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Tot al

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Type DET Tenure F

Average of Adj Pr ice

Post code

Drop Series Fields Here

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Real impact on Value: Real impact on Value: Transaction Data AnalysisTransaction Data Analysis

Regression Analysis.Variables = £ transaction price

• House type• Distance from wind farm • Geographical location

Significant reduction in value.Relationship not linear

Mean value = (case v control)Terraced house within 1mile = 54% lower Semi detached house within 1mile = 35% lowerNo Detached homes within 1mile - overall no impact observed

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Reason for DiminutionReason for Diminution

Planning objectionsBears Down

• 16 letters from residents in the location of wind farm• 115 rest of Cornwall• 160 rest of England• 33 Scotland• 12 Wales

Estate Agent interviewsreduction in value due to specific market conditions- not wind farms

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Initial ConclusionsInitial ConclusionsReal v Perceived = impact appear similar- but…

Marketing Agents do not attribute diminution to wind farms

Wind farm sites carefully chosen?

Possible impact on a few houses?

More detailed data needed

More research

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Focused study Focused study -------------- St St EvalEval CornwallCornwall

Wind farm

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St St EvalEval

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AnalysisAnalysis326 houses on estate

Data on 201 transactions• Semi-detached = 132 • Terraced = 69

Wind farm turbine height = 60m

Scenic Vista• houses, • playing field, • countryside, • countryside and sea.

Residents stated ‘No aural impacts’

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Regression AnalysisRegression Analysis

R2 .470

Unstandardized

Coefficients t Sig.

B (Constant)

30674.401 3.600 .000

semi 7355.794 2.089 .038

Number of beds 36409.670 9.205 .000

Front view of countryside -22261.528 -2.942 .004

Rear view of countrside 20109.055 2.515 .013

Rear view of countryside and sea in distance

-26600.369 -4.734 .000

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FindingsFindingsNo statistical relationship between value and wind farm.

No aural impact.

Possible Reasons?Agents

• Buyers not concerned• Only 1 example of concerned buyer - not in study area

Surveyors • Demand for property in Cornwall very high• wind farm has no impact on demand or value

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WindfarmWindfarm ResearchResearch

Author (Year) Location Method Test Results

Jordal-Jorgensen (1996) Denmark Hedonic Area Stigma $

Sterzinger et al (2003) 10 US cities Simple Area Stigma S

Poletti (2005) Wisconsin Simple Area Stigma nc

Delacy (2005) Washington Paired Sales Area Stigma nc

Sims & Dent (2006) U.K. Hedonic Area Stigma $ / nc

Hoen (2006) New York Hedonic Area Stigma / Scenic Vista Stigma nc

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Poor Average Premium

Below Average

Above Average

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Minor Moderate Extreme

Substantial

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Issues around Issues around WindfarmWindfarm ProposalsProposals

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LBNL StudyLBNL Study

1. Area Stigma: Concerns over ‘industrialisation’ of area leading to decreases in tourism and second home desirability

No one will move here!

2. Scenic Vista Stigma: Concerns for decreases in quality of scenic vistas from homes

It will ruin my view!

3. Nuisance & Health Effects:Potential health/well being concerns of nearby residents

I won’t be able to live in my home!

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Opposition ThemesOpposition Themes

Sacrifice and disempowerment – loss of place-based local valuesLack of trust in government, regulatory bodies and windfarm developers – creating artificial commercial environment for quick profitsLanguage of war, conflict and defence – ‘us’ and ‘them’Foreignness – ‘matter out of place’Industrialisation of the environment – destroying areas of beauty.

Ellis, Barry, Robinson 2006

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Measurement ProblemMeasurement Problem

‘…the magnitude of size of windfarm elements, and the distance between them and the viewer, are basic physical measures that affect visibility, but the real issue is human perception of visual effects, and that is not simply a function of size or distance.’

University of Newcastle 2002

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Market ContradictionsMarket Contradictions

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Penlan Fach, Mydroilyn

Asking Price: £ 390,000

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Community BenefitsCommunity Benefits

Scoraig Primary School

Cost

• Total Installation: £ 46,000

• SCHRI Grant: £13,088

Key Points

• Estimated fuel savings £770 per year;

• Estimated annual CO2savings: Approx. 5 tons

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Cost

• Total cost of the hall including heating system and turbine: £ 280,000

• HICEC/SCHRI Grant: £26,371

Key Points

• Further reducing the annual electricity bill by 4.5p/kWh

Leac A Li – Bays of Harris Community Centre Wind

Turbine

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Confrontational or Complementary?Confrontational or Complementary?

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SummarySummary

There is no clear evidence that values are affected in the long term by wind turbines.Closeness and visual impact are the critical variables.Wind farm proposals can effectively blight an area in the short term.Market demand will often decline but not necessarily price.Price impact will be dependent on significant price determinants.Community benefits can play an important part in any proposal.

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Further Research Further Research

Influence of visibility and noiseAssessment of visibility and noiseVisual and aural impact assessmentEffects of distanceReceptor sensitivityMagnitude and significance

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Thank you

property stigma - just the latest fashion wind ... -...

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