How Spatial Relationships Influence Economic Preferences for Wind Power-A Review

An increasing number of studies in the environmental and resource economic literature suggest that preferences for changes or improvements in environmental amenities, from water quality to recreation, are spatially heterogeneous. One of these effects in particular, distance decay, suggests that respondents exhibit a higher willingness to pay (WTP) the closer they live to a proposed environmental improvement and vice versa. The importance of spatial effects cannot be underestimated. Several of these studies find significant biases in aggregate WTP values, and therefore social welfare, from models that disregard spatial factors. This relationship between spatial aspects and preferences, however, remains largely ignored in the non-market valuation literature applied to valuing preferences for renewable energy, generally, and wind power, specifically. To our knowledge, fourteen peer-reviewed studies have been conducted to estimate stated preferences (SP) for onshore and/or offshore wind development, yet less than half of those utilize any measure to account for the relationship between spatial effects and preferences. Fewer still undertake more robust measures that account for these spatially dependent relationships, such as via GIS, outside incorporating a single 'distance' attribute within the choice experiment (CE) referenda. This paper first reviews the methodologies of the SP wind valuation studies that have integrated measure(s) to account for spatial effects. We then categorize these effects into three dimensions-distance to a proposed wind project, distance to existing wind project(s), and cumulative effects-supporting each with a discussion of significant findings, including those found in the wind hedonic and acceptance literature. Policy implications that can be leveraged to maximize social welfare when siting future wind projects as well as recommendations for additional research to control for preference spatial heterogeneity in wind CEs are also posited.