Measuring the indirect costs associated with the establishment of a wind farm: An application of the Contingent Valuation Model

Working Paper 258
Author(s): 
M. Du Preez, G. Menzies, M.C. Sale and S.G. Hosking
Publication date: 
November, 2011
Journal: 
2012, Journal of Energy in Southern Africa
Classification-JEL: 

Although a green energy source, the location of electrical generating windmills may cause a disamenity effect (negative externality). The establishment of a wind farm is known as a locally undesirable land use (LULU) and leads to the not-in-my-backyard syndrome (NIMBY). In an application of the contingent valuation method, a willingness-to-accept framework was used to estimate the aggregate annual compensation required to allow the construction of a wind farm near Jeffrey’s Bay, South Africa. This compensation amounted to R490 695. A binary choice logit analysis found that retirement status, concern about climate change, concern about view-shed impacts and the offer amount are important predictors of voting for or against the project.

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