Windfarms raise incomes and house prices in rural US, study finds

§ ‘Tremendous’ growth

The study notes that US wind power has grown “tremendously” in a relatively short space of time. 

As the maps below show, in 1995, when wind power made up 0.1% of US electricity, it was concentrated in California. It has now spread across much of the nation, particularly in Texas and some of the Great Plains states where wind speeds are particularly high. 

Much of US wind power capacity is located in counties classified as rural areas. For wind-power advocates, besides their climate benefits, these installations are a potential source of income for communities that are often struggling economically.

Windfarms can provide jobs to those building and maintaining the turbines, as well as income to local landowners and greater demand for local goods and services.

There is also evidence that the increase in property taxes being paid as a result of these installations in rural areas leads to benefits such as increased school spending by local governments.

However, in some quarters of the US there have been concerns that wind turbines could harm communities, chiefly by lowering property prices. This echoes backlashes seen in the UK and France, although in both nations onshore wind power is, in fact, broadly very popular.

The authors note that despite these concerns, most research on the matter has found “insignificant” effects on the prices of homes in close proximity to turbines.

§ Economic benefits

Researchers Prof Eric Brunner of the University of Connecticut and Dr David Schwegman of the American University assessed 2,971 counties over the period 1995-2018, of which 465 installed wind turbines.

The study concluded that, on average, US counties where wind energy was built saw increases in per-capita income of 5% and per-capita gross domestic product (GDP) of 6.5%, relative to the average trends seen in counties that did not have new wind turbines. Furthermore, they concluded that the economic impacts were directly caused by the installation and operation of the windfarms.

Unlike some previous studies, they also found a positive impact on home values in counties where wind power was built – a boost of 2.6% compared to the average outcomes in counties with no turbines built. 

These are average annual increases for the eight years after turbine construction, relative to the year prior to construction starting. 

As an example, Schwegman tells Carbon Brief that, according to his findings, building a 100 megawatt (MW) wind farm – close to the average once the smallest installations of less than 2MW are excluded – would increase county-wide incomes in an average-sized county by more than $300 per capita and median home values by more than $400.

However, the study also showed that the size of these effects depended heavily on the size of the windfarms being built, with the positive results skewed towards those with larger capacity installations. 

Extra space for large installations could also explain why rural areas that built windfarms saw a GDP boost around three times larger than urban areas adding wind capacity, according to the study. Schwegman adds:

“It’s unclear if the economic benefits are inherently greater for rural counties, versus the fact that there is just more ability to put wind turbines into rural counties.”

§ Modelling

The researchers employed a model that allowed them to use the variation in wind-power installation across the US as a natural experiment to compare those counties with and without the technology. 

It used a “difference-in-differences” method which allowed them to compare economic outcomes in counties before and after they built wind turbines, against counties that did not build wind turbines but were otherwise similar.

Their model also used an “event study”, which checks that the counties being compared were following the same economic trajectories prior to the time when wind power was built. 

This ensured that the counties were comparable and allowed the authors to establish that building wind installations was having a causal effect on boosting economic outcomes, according to the paper.

Wind speeds were used as a way of finding comparable counties. For example, counties in North Dakota, with high wind speeds but not much wind power, could be compared to counties in Colorado, with high wind speeds and lots of wind power, as Schwegman explains:

“The idea is that we use wind speed to predict the likelihood of adopting turbines and then use that to look at the impact on outcomes, with the idea that wind speeds should only affect things like property values or income through their effect on wind turbines adoption.”

Experts who were not involved in the study tell Carbon Brief that this approach is common in such studies and the paper’s findings make sense. Ben Hoen, an energy policy researcher at the Lawrence Berkeley National Laboratory, notes:

“Is it possible that some other driver that occurred simultaneously was the cause of increases in income? Yes, but that would be surprising. I am not sure what else could explain this relationship.”

§ Value added

The results were not uniformly positive, with no evidence that wind projects stemmed the population decline seen in many US rural areas. There was also little impact on total employment, but a small shift away from farm work towards construction. 

However, overall, the authors say their findings provide evidence of the economic boost that wind turbines can provide to communities, particularly those in rural areas. 

Eric Lantz, a renewable energy policy expert at the National Renewable Energy Laboratory who was not involved in the study, tells Carbon Brief the results are in line with other work in this area:

“Although the level of impacts we typically observe likely won’t address or resolve every socioeconomic issue faced by a given community, the increases are often meaningful.”

Hoen agrees, although he notes that the new paper shows a larger economic boost than has been previously demonstrated. He says this could be because more of the local economy is being mobilised to build projects, rather than relying on capacity elsewhere, or because tax revenues and local incomes from these projects have increased over time.    

Schwegman says that their results also push back against the “often-cited” concerns among homeowners that wind turbines will drive down property values. In fact, their results provide evidence that wind power may increase property values in the wider area. 

The researchers note that while past studies did not find such an effect, they tended to look at the impact of homes in close proximity to new turbines rather than at a county-wide level. 

Hoen says this is a “very interesting” finding that will require further interrogation. “It makes sense, in that tax amounts, school quality and other local spending likely do get capitalised into home prices,” he tells Carbon Brief.