North Carolina study suggests offshore turbines may reduce rental values for holiday homes
While renewable energy has been widely promoted by policy makers in recent years as we strive to limit climate change by reducing carbon emissions, there is concern among environmentalists about the aesthetic impact of visually intrusive wind farms in important landscape areas, and tourism organizations have also expressed concern that this visual impact could negatively affect tourism in sensitive areas. Research in this area is conflicting, with some studies suggesting that the tourism impact will be small, but attracting criticism from environmental and recreation groups for their methodology and conclusions. While large on-shore farms may have the greatest landscape impact, off-shore developments can also be highly visible if placed near the coast in areas popular for tourism. A recent study by economists at North Carolina State University finds that many people say they would be unwilling to rent vacation homes that have a view of offshore wind turbines -- and that those who will rent expect steep rental discounts unless the turbines are more than eight miles offshore.
"We wanted to know what the impacts of wind farm installations would be on North Carolina coastal tourism, though our findings are also likely relevant for similar coastal vacation spots," says Laura Taylor, author of a working paper on the study and director of NC State's Center for Environmental and Resource Economic Policy.
"We found good news and bad news," Taylor says. "There was a lot of support for wind energy, but no one was willing to pay more to see wind turbines from the beach by their vacation rental property. And if turbines are built close to shore, most people said they would choose a different vacation location where they wouldn't have to see turbines. However, the good news is that our results also show that if turbines are built further than eight miles from shore, the visual impacts diminish substantially for many survey respondents and it is unlikely the turbines would negatively impact coastal vacation property markets."
To explore the economic impact of offshore wind farms, the researchers surveyed 484 people who had recently rented homes on the North Carolina coast in areas where the state has offshore leases available for wind farm development. Study participants were asked to consider renting the same vacation house they had just rented, but with one change: the view would include wind turbines off the coast.
Participants were shown various sets of photographs. Two control photographs were of a view from the beach looking over the ocean -- one taken at night, one during the day. The same photos were then altered to include up to 144 wind turbines at 5, 8, 12 or 18 miles offshore. The participants were then asked if they would still rent a vacation home at various price points, ranging from an increased rent to a 25% discount from the original price.
The results showed that study participants were split into three groups.
Fifty-four percent said they would not rent a vacation home if turbines were in view at all, no matter how large a discount was offered on the rental price.
Twenty percent would be willing to rent homes if turbines were 8 miles or closer to shore, but only if there was a discount -- and the closer the turbines were to shore, the steeper the discount needed to be. The average discount needed to be about 5 percent. If turbines were 12 miles or further from shore, the turbines would not impact this group's rental decisions. The remaining 26 percent of participants made more nuanced tradeoffs. They needed rental discounts if wind farms were as far as 12 miles offshore -- and the discounts they needed if turbines were closer than 12 miles were so high as to be completely unrealistic.
"If a wind farm was built 5 miles offshore and only 1,000 homes had impacted views -- and had to reduce rents accordingly -- we estimated the economic impact at $31 million over 20 years," Taylor says. The researchers estimated, using available data, that moving a wind farm from 5 miles to 10 miles offshore would increase construction costs by $5 million, suggesting that benefits to the rental community would outweigh the cost to the wind farm industry of moving the turbines further offshore.
The Scottish Government has been very active in promoting wind power, and large numbers of developments have been built in Scotland. A 2008 study commissioned by the Scottish Government concluded that “the negative impact of wind farms on tourism at national level is small and any reduction in employment in tourism will be less than the numbers currently directly employed in the wind power industry.” However, the Mountaineering Council of Scotland is among the groups questioning the methodology and conclusions, and its’ own survey of mountaineers found that a majority “are discouraged by wind farms and their main behavioural response is to avoid areas with wind farms.” The McoS also says that surveys of the general public also suggest a trend of rising visitor discouragement due to wind farms, from under 10% before 2008 to 17% in 2011 and 26% in 2013.
A report in Wales written in 2014 also suggested that wind farms would have negligible impact on the national tourism sector, and that there was limited evidence to date of local tourism impacts from current wind farms. The report states: “Although there was some anecdotal evidence of visitors staying away due to wind farms, the vast majority of consultees believed there had been no impact on total visitor numbers and hence on the visitor economies as a whole.”
Among the small numbers of published academic studies on wind turbines and tourism, Broekel and Alfken (2015) in Germany found a negative relationship between wind turbines around municipalities and tourism demand for municipalities not located near the coast. In coastal areas, the relationship was more complex. In France, Westerberg et al. (2013) suggest that, everything else being equal, wind farms should be located no closer than 12 km from the shore. However, the authors say that a wind farm can be located from 5 km and outwards without a loss in tourism revenues if accompanied by a coherent environmental policy and wind farm associated recreational activities. In the Eifel region of Germany, Lenz (2004) found that the average opinion towards wind turbines was neutral to rather positive, indicating a certain degree of acceptance. Other published studies include Frantal and Kunc (2011) from the Czech Republic.
Reference
Lutzeyer, S.; Phaneuf, D.; Taylor, L. (2016) The Amenity Costs of Offshore Wind Farms: Evidence from a Choice Experiment. NC State University Working Paper.