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VISUAL DISAMENITY COSTS OF OFF-SHORE WIND FARMS PowerPoint Presentation
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VISUAL DISAMENITY COSTS OF OFF-SHORE WIND FARMS

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  1. VISUAL DISAMENITY COSTS OF OFF-SHORE WIND FARMS

  2. Visual Disamenities of Off-Shore Wind Farms • Visual intrusions/disamenities of off-shore development cause external costs to society. • It is difficult to identify optimal location of off-shore wind farms, as visual disamenities have no market price. • In-optimal location induce welfare economic loss

  3. Externalities Cost/kwh Expected marginal benefits functions True marginal benefits function Marginal cost function Welfare loss A B â ã a Distance from shore (km)

  4. Valuation of External cost • Visual disamenity is a non-market good • Preference based economic valuation methods • Revealed preference: Actual economic behaviour • Property prices • Recreational impacts • Stated Preferences: Stated economic behaviour • Direct elicitation: How much are you willing to pay ? or are you willing to pay XX euros ? (Contingent Valuation) • Indirect: Choice between outlays of different off-shore wind farm alternatives (Choice Experiments)

  5. Choice Experiments • Choice Experiments is based on the attribute theory of Lancaster (1966) • Goods are defined by their attributes and the levels of the attributes. • By varying the levels of the attributes different goods (alternatives) are ”generated” • If a price is included as an attribute, the maximum willingness to pay for achieving/avoiding the other attribute levels can be estimated • Respondents are presented to two or more alternatives, a choice set, and choose the one preferred. • Using Maximum Likelihood Techniques, a preferences/utility model and Willingness to Pay (WTP) estimates can be derived

  6. The study • Three Samples • National: 700 respondents • Nysted (local): 350 respondents, Off-shore wind farm located at app. 10 km from the coast • Horns Rev (local): 350 respondents, Off-shore wind farm located at app. 14-20 km from the coast

  7. The Valuation Scenario (I) • 3600 MW off-shore wind power development • 5 MW turbines • Generic- not site specific • Minimised impact on biodiversity and life in the sea

  8. The Valuation Scenario (II)- Attributes/Characteristics and their Levels Distance from the coast: 8, 12, 18 and 50 km Number of turbines pr farms: 49, 100 and 144 turbines Number of farms: 5, 7 and 14 wind farms Increased electricity cost/household/year 0, 12.5, 23, 40, 80 and 175 (Euro)

  9. The Valuation Scenario (III) – Example of a choice set Distance: 8 km. Turbines: 144. Wind farms: 5. Cost pr household: 12.5 €. Distance: 50 km. Turbines: 100. Wind farms: 7. Cost pr household: 175 €.

  10. Results - Willingness to Pay (household/year)

  11. Discussion (I) - Difference in WTP • Experience and WTP: WTPHORNS REV< WTPNATIONAL< WTPNYSTED

  12. Discussion(II)- Marginal Willingness to Pay

  13. Conclusion • Danish households have significant preferences for reducing the visual disamenities. • Preferences covariate negatively with experience with off-shore wind farms • Respondents subjected to low level of visual disamenities have smaller willingness to pay than respondents subjected to higher levels of visual disamenities. • Marginal WTPs point towards that the marginal benefits of moving wind farms to larger distances than 18 km are small