The Vindication of Don Quijote: The impact of noise and visual pollution from wind turbines on local residents in Denmark

In this article we quantify the marginal external effects of nearby land based wind turbines on property prices capitalized through traded residential properties located within 2,500 meters or less. We succeed in separating the effect of noise and visual pollution from wind turbines. This was achieved by using a dataset covering 21 municipalities and consisting of 12,640 traded residential properties sold in the period 2000-2011. We model the hedonic price function in two steps. First we detrend data across municipalities using a pooled cross sectional model which allows for different price trends across municipalities. Second we control for spatial autocorrelation by using explicit spatial models. Properties affected by noise and visual pollution from wind turbines are identified using Geographical Information Systems. Our results show that wind turbines have a significant negative impact on the price schedule of neighboring residential properties. The visual pollution accounts for 3.15% of the residential sales price. The price premium declines with distance by about 0.242% of the sales price for every 100 meters. The effect of noise depends on the noise level emitted and ranges from 3% to 7% of the sale price for residential properties.