Dr. Richard Vyn and students at the University of Guelph in Dr. Brady Deaton's 4th year course in Land Economics, discuss Dr. Vyn's recent journal article, "The Effects of Wind Turbines on Property Values in Ontario: Does Public Perception Match Empirical Evidence?"

Transcript

[0:04 ] Brady: Welcome to FARE Talk, where we set out to provide enduring discussions on contemporary topics relevant to our economy, with particular emphasis on food, agriculture and the environment. My name is Brady Deaton Jr. of the Department of Food, Agriculture and Resource Economics at the University of Guelph. I'll be your host.

[0:24 ] [Introductory music fades out]

[0:26 ] Brady: Today is November 18th, 2014, and we will be speaking to Dr. Richard Vyn about his research examining the effects of wind turbines on property values in Ontario. Dr. Richard Vyn is assistant professor in the Department of Food, Agriculture and Resource Economics at the University of Guelph at the Ridgetown campus. Rich, welcome to FARE Talk.

Richard: Thanks Brady, happy to be here.

[0:50 ] Brady: Rich has written an article recently that has appeared in the Canadian Journal of Agriculture Economics examining this issue, and for those of you tuning in, we will be doing this podcast in a different way, in the sense that we are in a classroom at the University of Guelph, looking and talking with students about this issue, and they will be asking the questions to Rich about his research. So let me begin by handing over the microphone to one of the students who will begin asking the first question.

[1:24 ] Student: Hello Richard. Before we focus on the effects of wind turbines on surrounding property values, can you give us a general background of wind turbines in the province?

Richard: Sure, yea. The wind energy industry in Ontario has been developing at a fairly rapid pace, and that has come about for a couple of reasons. One of the main push, the primary push behind this would be the Ontario government with the Green Energy and Green Economy Act and that sort of spurred the push to get more energy from renewable resources. So we have seen a considerable expansion in the wind energy industry as a result. This has led to a number of issues, and we have seen this most recently, there was a study that was put out just last week by the government that looked at the impacts of the wind turbines on health, and they didn't find anything significant there in terms of some obvious linkages between health issues and the wind turbines. But, there still are some concerns. They raised the issue of the annoyance factor. Either way though, this has certainly led to a lot of controversy in Ontario. There is a lot of local residents that have complained about the impacts, either on health or on property values, on the inability to sell properties. Which, all of the issues are kind of linked. But ultimately, it has led to this escalading controversy about what the impacts of these wind turbines are. Added to the mix is the fact that a lot of places where wind farms are put up, the municipality can't really reject it. They can be called unwilling hosts, but ultimately it is up to the province to decide whether or not a wind farm application is going to go through. So that's sort of a bit of the background that's led to these concerns about the potential impacts on not only health, but also on property values and that's sort of led to my interest in this subject area too. To see, we have all of these concerns that have been raised, and you look at any story in the popular press, there's a lot of concerns that are expressed there, so what is actually happening? That’s kind of what I wanted to take a look at.

[3:41 ] Student: Can you tell us a bit about why your study focused on the Melancthon township?

Richard: Yea, the Melancthon Township, yea. That's where I started because that is what I had data for. It was data that included farm sales and rural residential sales. The time that I did the study I didn't have data for anything beyond that township, at least in terms of where a wind farm was actually sited. I do now, and so that's kind of what I am looking to do in the coming months, is kind of expand this research. But for the current study that we are looking at, yes, it was just for the Melancthon Township. It was one of the first industrial wind farms that went up in the province of Ontario, and kind of made a good place to start in terms of assessing the potential impacts of the turbines on property values.

[4:29 ] Brady: Now Rich, correct me if I am wrong, but when you are talking, Melancthon township would be a township in Dufferin County [Richard: Yes] kind of bordering Grey, is that right?

Richard: Yes, Grey country is next and also bordering Wellington County.

Brady: And this is primarily an agricultural, rural township?

Richard: It is primarily rural, yes. There is, the wind farm itself is situated pretty close to a small town but there are no large urban centres anywhere within visibility of the wind farm.

[5:00 ] Student: Sorry. Your paper reviews previous research on the effects of wind turbine on property value. So our question to you is if you can review any of this previous research to us.

Richard: Sure, yea. There has been a number of studies that have been conducted, looking at the same issue in other jurisdictions and the results of these studies have been largely mixed. We haven't seen any particular trend that has tended to occur amongst these studies. Some studies have found evidence that yes, there are significant impacts of wind turbines on property values, where others have not found any significant evidence. So, we have seen, yea, a fair bit of mixed results in the literature, and because of that, it becomes necessary to conduct research on specific wind farms if you kind of want to have an idea as to what the impacts actually are. You can't just rely on results of other jurisdictions, just because those results, you know, with both positive and no significant impacts, it is hard to tell what exactly the results might be, for in the case, the Melancthon wind farm.

[6:03 ] Student: The, some of the previous research used willingness to pay as one of the methods of analysis. Before you get into your method, the hedonic method you used, would you be able to shed some light on the willingness to pay method?

Richard: Sure, yea. The willingness to pay is basically more of a survey approach in many cases, where they'll go to local residents, and they will ask "What has been the impact?" or "What do you perceive to be the impact of these turbines on your property value?" or just to the general public, they may ask, you know, "If you were to be sited next to this wind turbine, what do you think the impact would be?" So this approach looks more at, what people think is the impact, rather than looking at any sales data. Now if you go back to the previous question, looking at the results of previous studies, there is a difference in the results when you compare certain types of studies. So, you mention the willingness to pay studies. Those studies are more likely to produce evidence of a significantly negative impact on property values, whereas studies that use sales data tend not to find evidence of impacts on property values. So there is that difference in previous studies.

[7:25 ] Student: Hi Dr. Vyn, My name is Vanessa Cipriani. My question to you is, can you explain the method that you used in this particular study, in order to find out the effects on property values?

Richard: Sure. I used the hedonic method, which is a regression approach where you basically make the price a function of the set of attributes that the property has. So, you know, if you have a house on the property it would take a whole bunch of the individual attributes of that house, you know, the square footage, number of bathrooms, number of fireplaces, look at the size of the property itself, the value of any other buildings on the property, sheds and so on. Basically, you take as many possible attributes and it basically determines how much value each attribute contributes to the total value of the property. So that is an approach that has been used for a lot of different valuation studies. It tends to be a fairly effective approach in identifying what the value is associated with a specific attribute. So in this case, I am looking at not only the attributes of the house itself, also the location, you know, how close is it to a city, and then also how close is it to a turbine, or trying to find some attribute that accounts for the potential impacts of turbines. So this approach has been used for other types of studies where you are trying to find, for example, the impact of living close to toxic waste sites, if you are living close to high voltage transmission wires. A whole bunch of different amenities, or perceived disamenities, to determine what the impact might be of living close to those types of sites.

[9:15 ] Student: Were any of the attributes you chose particularly unique to your study, versus other wind turbine studies?

Richard: Well, the method I used to account for the turbines itself was a little different than had been performed in previous studies. Typically the previous studies looked at either the distance to turbines, or distance from the turbine to the property in question, or they looked at the visibility. I kind of came up with a metric that combined those two, because if you think ab