Renewable Energy and Negative Externalities: The Effect of Wind Turbines on House Prices

SUMMARY ― In many countries, wind turbines are constructed as part of a strategy to reduce fossil fuel dependence. In this paper, we measure the external effect of wind turbines on the transaction prices of nearby properties. Using a unique transaction price dataset covering the period 1985-2011 and the exact location of all wind turbines built in the Netherlands, we find that property prices within a 2 km radius of a wind turbine, after it has been constructed, are on average 1.4 percent lower than property prices in comparable neighborhoods. We provide further evidence that the external costs of wind turbines are at least 10 percent of construction costs.