The Impact of Wind Power Projects on Residential Property Values ...

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4.2. Model Form A standard semi-log functional form is used for the hedonic models (as was discussed in Section 2.1), where the dependent variable (sales price in inflation-adjusted 1996 dollars) is transformed to its natural log form and the independent variables (e.g., square feet and acres) are not transformed. Using this form to examine the effect that views <strong>of</strong>, and distance to, wind facilities have on sales prices, the following basic model is estimated: (1) 0 1 2 3 4 5 ln P N S X VIEW DISTANCE s k v d where P represents the inflation-adjusted sales price, N is the spatially weighted neighbors’ predicted sales price, S is the vector <strong>of</strong> s Study Area fixed effects variables (e.g., WAOR, OKCC, etc.), X is a vector <strong>of</strong> k home and site characteristics (e.g., acres, square feet, number <strong>of</strong> bathrooms, condition <strong>of</strong> the home, age <strong>of</strong> home, VISTA, etc.), VIEW is a vector <strong>of</strong> v categorical view <strong>of</strong> turbine variables (e.g., MINOR, MODERATE, etc.), DISTANCE is a vector <strong>of</strong> d categorical distance to turbine variables (e.g., less than 3000 feet, between one and three miles, etc.), 0 is the constant or intercept across the full sample, 1 is a parameter estimate for the spatially weighted neighbor’s predicted sales price, 2 is a vector <strong>of</strong> s parameter estimates for the study area fixed effects as compared to homes sold in the Washington/Oregon (WAOR) study area, 3 is a vector <strong>of</strong> k parameter estimates for the home and site characteristics, 4 is a vector <strong>of</strong> v parameter estimates for the VIEW variables as compared to homes sold with no view <strong>of</strong> the turbines, 5 is a vector <strong>of</strong> d parameter estimates for the DISTANCE variables as compared to homes sold situated outside <strong>of</strong> five miles, and is a random disturbance term. As such, this model, and all subsequent hedonic models, has four primary groups <strong>of</strong> parameters: variables <strong>of</strong> interest, spatial adjustments, study-area fixed effects, and home and site characteristics. <strong>The</strong> variables <strong>of</strong> interest, VIEW and DISTANCE, are the focus <strong>of</strong> this study, and allow the investigation <strong>of</strong> the presence <strong>of</strong> Area, Scenic Vista, and Nuisance Stigmas. <strong>The</strong>se variables were defined in Section 3, and are summarized in Table 8. Both VIEW and DISTANCE appear in the model together because a home’s value may be affected in part by the magnitude <strong>of</strong> the view <strong>of</strong> the wind turbines, and in part by the distance from the home to those turbines, and both variables appear in the Base Model as ordered categorical values. <strong>The</strong> coefficients associated with these two vectors <strong>of</strong> variables ( 4 and 5 ) represent the marginal impact <strong>of</strong> views <strong>of</strong>, and distances to, wind turbines on sales prices, as compared to a “reference” category <strong>of</strong> residential transactions, and should be ordered monotonically from low to high. 51 This form <strong>of</strong> variable was used to 51 “Reference category” refers to the subset <strong>of</strong> the sample to which other observations are compared, and is pertinent when using categorical or “fixed effect” variables. 24
impose the least structure on the underlying data. 52 For the purpose <strong>of</strong> the Base Model, the reference category for the DISTANCE variables are those transactions <strong>of</strong> homes that were situated outside <strong>of</strong> five miles from the nearest wind turbine. <strong>The</strong> reference category for the VIEW variables are those transactions <strong>of</strong> homes that did not have a view <strong>of</strong> the wind facility upon sale. Among the post-construction sample <strong>of</strong> homes, these reference homes are considered the least likely to be affected by the presence <strong>of</strong> the wind facilities. 53 Table 8: List <strong>of</strong> Variables <strong>of</strong> Interest Included in the Base Model Variable Name Description Type View_None View_Minor View_Mod View_Sub View_Extrm Mile_Less_0.57 Mile_0.57to1 Mile_1to3 Mile_3to5 Mile_Gtr5 If the home sold after construction began and had no view <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after construction began and had a Minor View <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after construction began and had a Moderate View <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after construction began and had a Substantial View <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after construction began and had an Extreme View <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after facility "construction" and was within 0.57 miles (3000 feet) <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after facility "construction" and was between 0.57 miles (3000 feet) and 1 mile <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after facility "construction" and was between 1 and 3 miles <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after facility "construction" and was between 3 and 5 miles <strong>of</strong> the turbines (Yes = 1, No = 0) If the home sold after facility "construction" and was outside 5 miles <strong>of</strong> the turbines (Yes = 1, No = 0) Reference Expected Sign n/a OC - OC - OC - OC - OC - OC - OC - OC - Reference "OC" Ordered Categorical (1 = yes, 0 = no) values are interpreted in relation to the reference categorical case and are expected to have a monotonic order from low to high. n/a <strong>The</strong> three stigmas are investigated though these VIEW and DISTANCE variables. Scenic Vista Stigma is investigated through the VIEW variables. Area and Nuisance Stigmas, on the other hand, are investigated through the DISTANCE variables. To distinguish between Area and 52 In place <strong>of</strong> the ordered categorical DISTANCE variables, practitioners <strong>of</strong>ten rely on a continuous DISTANCE form (e.g., Sims et al., 2008). Similar to ordered categorical variables, continuous variables have a natural ordering, either ascending or descending, but, unlike categorical variables, these “continuous” values are on a scale. <strong>The</strong>refore, given any two <strong>of</strong> its values X 1 and X 2 and a specific functional form, the ratio “X 1 /X 2 ” and the distance “X 1 - X 2 ” have a fixed meaning. Examples <strong>of</strong> continuous variables other than DISTANCE that are commonly used include the number <strong>of</strong> square feet <strong>of</strong> living area (in 1000s) in a home (SQFT_1000) or the acres in the parcel (ACRES). A continuous functional form <strong>of</strong> this nature “imposes structure” because practitioners must decide how price is related to the underlying variables through the selection <strong>of</strong> a specific functional relationship between the two. For instance, in the case <strong>of</strong> DISTANCE, is there a linear relationship (which would imply a similar marginal difference between two distances both near and far from the turbines), does it decay slowly as distance grows, or does it fade completely at some fixed distance? Because <strong>of</strong> the lack <strong>of</strong> literature in this area, no a priori expectations for which functional form is the best were established, and therefore unstructured categorical variables are used in the Base Model. Nonetheless, a continuous DISTANCE form is explored in Section 5.2. 53 It is worth noting that these reference homes are situated in both rural and urban locales and therefore are not uniquely affected by influences from either setting. This further reinforces their worthiness as a reference category. 25
Page 1 and 2: LBNL-2829E ERNEST ORLANDO LAWRENCE
Page 3 and 4: LBNL-2829E The <st
Page 5 and 6: Table of Contents
Page 7 and 8: List of Tables Tab
Page 9 and 10: Acknowledgements The</stron
Page 11 and 12: This report builds on the previous
Page 13 and 14: Table ES-2: Impact
Page 15 and 16: Figure ES-3: Base Model Results: Sc
Page 17 and 18: In the Distance Stability Model, fo
Page 19 and 20: 1. Introduction Wind</stron
Page 21 and 22: model 7 and uses various forms <str
Page 23 and 24: A particularly useful application <
Page 25 and 26: Using different statistical methods
Page 27 and 28: Table 1: Summary of</strong
Page 29 and 30: By using a variety of</stro
Page 31 and 32: minimum of 164 fee
Page 33 and 34: 3.2.2. GIS Data GIS data on parcel
Page 35 and 36: In addition to the qualitative VIEW
Page 37 and 38: with the rest of t
Page 39 and 40: Figure 4: Frequency of</str
Page 41: 4. Base Hedonic Model This section
Page 45 and 46: of the home, home
Page 47 and 48: etween the reference study area (WA
Page 49 and 50: Figure 7: Results from the Base Mod
Page 51 and 52: 5. Alternative Hedonic Models <stro
Page 53 and 54: concentrated inside of</str
Page 55 and 56: all other components are as defined
Page 57 and 58: the distance from them might not oc
Page 59 and 60: explanation is that the additional
Page 61 and 62: 6) More than four years after const
Page 63 and 64: Table 19: Results from Temporal Asp
Page 65 and 66: Turning to the coefficient differen
Page 67 and 68: Table 21: Frequency Crosstab <stron
Page 69 and 70: 5.6.1. Dataset and Model Form Data
Page 71 and 72: with the scenic vista. In other wor
Page 73 and 74: 6. Repeat Sales Analysis In general
Page 75 and 76: Table 27: List of
Page 77 and 78: adjustment, and represent another t
Page 79 and 80: that are located within one mile <s
Page 81 and 82: 7. Sales Volume Analysis Th
Page 83 and 84: Figure 11: Sales Volumes by PERIOD
Page 85 and 86: three years before announcement), a
Page 87 and 88: 8. Wind Pr
Page 89 and 90: Drawing from the previous literatur
Page 91 and 92: Taken together, the results from al
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9. Conclusions Though surveys gener
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Davis, L. W. (2008) The</st
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LeSage, J. P. (1999) The</s
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Watson, M. (2005) Estimation <stron
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Figure A - 1: Map of</stron
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all very small communities with lit
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A.2 TXHC Study Area: Howard County
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Census Statistics Name Type 2007 Po
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Data Collection and Summary County
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A.4 IABV Study Area: Buena Vista Co
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Variables of Inter
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facilities than the towns o
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A.6 WIKCDC Study Area: Kewaunee and
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Variables of Inter
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elatively high elevations o
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A.8 PAWC Study Area: Wayne County (
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Census Statistics Name Type 2007 Po
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ural landscapes, with the largest p
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A.10 NYMC Study Area: Madison Count
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Variables of Inter
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account, combined with the determin
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Appendix C: Field Data Collection I
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Figure A - 14: Field Data Collectio
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ABOVE AVERAGE VISTA PREMIUM VISTA 1
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EXTREME VIEW 6 turbines visible fro
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5 is a vector of d
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values, that effect seems likely to
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unrestricted Home and Site Characte
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with coefficients above zero and th
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Figure A - 15: Histogram of
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The M Distance his
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sold within the preceding six month
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Appendix H: Alternative Models: Ful
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Table A - 8: Full Results for the C
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Table A - 10: Full Results for the
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Table A - 11: Full Results for the
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