DP15023 Wind turbines, solar farms, and house prices

Author(s): Martijn Dröes, Hans R.A. Koster
Publication Date: July 2020
Date Revised: April 2021
Keyword(s): House Prices, solar farms, wind turbines
JEL(s): L95, Q15, Q42, R31
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15023

This paper examines the effect of wind turbines - with a particular focus on turbine height - and solar farms on house prices. Using detailed data from the Netherlands between 1985-2019, the results show that tall wind turbines have considerably stronger effects on house prices, as compared to small turbines. For example, a tall turbine (\textgreater150m) decreases house prices within 2km by 5.4%, while a small turbine (<50m) has an effect of maximally 2% and the effect dissipates after 1km. Further results indicate that solar farms lead to a decrease in house prices within 1km of about 2.6%. By comparing the overall impact on house prices, we show that the external effects of solar farms per unit of energy output are comparable to those of wind turbines. Thus, building solar farms rather than wind turbines does not seem to be a way to avoid the external effects of renewable energy production.