Clean Electricity, Dirty Electricity: The Effect on Local House Prices

50 Pages Posted: 20 Aug 2016 Last revised: 28 Mar 2019

See all articles by Piet M. A. Eichholtz

Piet M. A. Eichholtz

University of Maastricht - Limburg Institute of Financial Economics (LIFE)

Nils Kok

University of Maastricht - Limburg Institute of Financial Economics (LIFE)

Mike Langen

Henley Business School

Daan Van Vulpen

Finance Ideas

Date Written: March 1, 2018

Abstract

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, difference-in-difference, and repeated sales model to explain price effects, we document negative external price effects for gas plants and wind turbines, but positive effects for biomass plants, conditionally upon an ex-ante lower priced location. These external effects of power generating facilities on local housing markets are important to consider, especially with the current focus of public policies on the expansion of renewable energy generation.

Keywords: Renewable energy, energy policy, externalities, wind power, coal plants, housing markets, residential real estate

JEL Classification: O13, Q42, Q43, Q51, R31, R52

Suggested Citation

Eichholtz, Piet M. A. and Kok, Nils and Langen, Mike and Van Vulpen, Daan, Clean Electricity, Dirty Electricity: The Effect on Local House Prices (March 1, 2018). Available at SSRN: https://ssrn.com/abstract=2826508 or http://dx.doi.org/10.2139/ssrn.2826508

Piet M. A. Eichholtz

University of Maastricht - Limburg Institute of Financial Economics (LIFE) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 43 3883648 (Phone)
+31 43 3258530 (Fax)

Nils Kok

University of Maastricht - Limburg Institute of Financial Economics (LIFE) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Mike Langen (Contact Author)

Henley Business School ( email )

ICMA Centre
University of Reading
Reading, RG6 6DL
United Kingdom

Daan Van Vulpen

Finance Ideas

Weg der Verenigde Naties 1
Utrecht, 3527 KT
Netherlands

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