Clean Electricity, Dirty Electricity: The Effect on Local House Prices
We study the external effects of large-scale conventional and renewable electric power generation facilities on local house prices. We compare coal, gas, biomass and wind power, combining information on all power plants and wind turbines in the Netherlands with house price data from 2.3 million housing transactions, covering a period of 30 years. Using a hedonic model and a difference-in-difference model to explain price effects, we document that homes located in close proximity to conventional power plants and wind turbines on average sell at discounts, ranging from -0.9 percent to -2.8 percent. However, there is significant heterogeneity in the documented effect, depending on generation type and model specification. We find positive opening effects for coal plants and negative effects for wind turbines. These external effects on the local housing market are important to consider, especially when considering the current policy focus on the expansion of renewable energy production.