The Impact of Wind Turbines on Agricultural Land Values in West Texas by Courtney Baker, B.S. a Thesis in Agriculture & Appl
Total Page:16
File Type:pdf, Size:1020Kb
The Impact of Wind Turbines on Agricultural Land Values in West Texas by Courtney Baker, B.S. A Thesis In Agriculture & Applied Economics Submitted to the Graduate Faculty of Texas Tech University in Partial Fulfillment of the Requirements for the Degree of MASTER OF SCIENCE Approved Kelly Lange, Ph.D. Chair of the Committee Darren Hudson, Ph.D. Jaime Bologna-Pavlik, Ph.D. Mark Sheridan Dean of the Graduate School May, 2021 Copyright 2021, Courtney Baker Texas Tech University, Courtney Baker, May 2021 ACKNOWLEDGEMENTS I would like to acknowledge everything that Dr. Lange did to help me while conducting this research. I would not have been able to make as far as I have, if it were not for her advice and encouragement during this course of this research. She was always willing to listen and help if I had an issue even though the topic I was researching was not her usual area of expertise. Additionally, I would also like to thank Dr. Hudson and Dr. Bologna-Pavlik, who gave me great advice on how I could improve my study using the propensity score matching method. Finally, I would like to thank the Texas Tech University Office of Family and Parent Relations, The Graduate Assembly, and the Texas Tech Graduate School for providing additionally funding for my research via the Graduate Student Research Support Award. Even though I did not end up using the extra data source as much as I anticipated during the course of my research, it still allowed me to consider different alternatives for the course of my research. ii Texas Tech University, Courtney Baker, May 2021 TABLE OF CONTENTS Acknowledgements ........................................................................................................... ii Table oF Contents ............................................................................................................ iii Abstract .............................................................................................................................. v List of Tables .................................................................................................................... vi List of Figures .................................................................................................................. vii CHAPTER I Introduction ............................................................................................... 1 1.1 BACKGROUND INFORMATION .............................................................................. 1 1.2 SPECIFIC PROBLEMS ............................................................................................. 3 1.3 STUDY OBJECTIVES ............................................................................................. 4 CHAPTER II Literature Review ..................................................................................... 5 2.1 LAND VALUE STUDIES ......................................................................................... 5 2.2 THE PUBLIC PERCEPTION EFFECT ON THE IMPACT OF WIND TURBINE PRESENCE 7 2.3 PROFITABILITY AND WAKE EFFECTS ................................................................... 9 CHAPTER III Conceptual Framework ........................................................................ 13 3.1 WIND TURBINE PROFITABILITY MODEL ............................................................ 13 3.1.1 SAM’s General Modelling Approach ............................................................ 14 3.1.2 SAM’s Estimation of Wake Effect ................................................................. 14 3.2 ECONOMIC FRAMEWORK FOR WIND TURBINE AND AGRICULTURAL PROFITABILITY .............................................................................................................. 16 3.3 IN-DEPTH CONCEPTUAL FRAMEWORK ............................................................... 18 CHAPTER IV Methods & Procedures ........................................................................ 21 4.1 STUDY AREA ..................................................................................................... 21 4.1.1 Propensity Score Matching ........................................................................... 24 4.2 WIND TURBINE PROFITABILITY ......................................................................... 25 4.3 AGRICULTURAL PROFITABILITY ........................................................................ 28 iii Texas Tech University, Courtney Baker, May 2021 CHAPTER V Results ..................................................................................................... 32 5.1 SAM MODEL RESULTS ...................................................................................... 32 5.1.1 Cotton Plains Wind Farm ............................................................................. 33 5.1.2 Hale Wind Farm ........................................................................................... 34 5.1.3 Longhorn Wind Farm ................................................................................... 35 5.1.4 Lorenzo Winds Farm .................................................................................... 36 5.1.5 Old Settler Wind Farm .................................................................................. 37 5.1.6 Pleasant Hill Wind Farm .............................................................................. 38 5.1.7 Ralls Wind Farm ........................................................................................... 39 5.1.8 South Plains Wind Farm ............................................................................... 40 5.1.9 South Plains II Wind Farm ........................................................................... 41 5.1.10 Wake Wind Farm ........................................................................................ 42 5.1.11 Whirlwind Energy Center ........................................................................... 42 5.2 SUMMARY STATISTICS ....................................................................................... 44 5.3 SCENARIO ONE .................................................................................................. 46 5.3.1 Normalized Market Value Excluding Improvements .................................... 46 5.4 SCENARIO TWO .................................................................................................. 48 5.4.1 Normalized Agricultural Profit ..................................................................... 48 5.4.2 Normalized Profit ......................................................................................... 49 CHAPTER VI Conclusions ............................................................................................ 51 6.1 GENERAL CONCLUSIONS .................................................................................... 51 6.1.1 SAM Results .................................................................................................. 51 6.1.2 Statistical Analysis ........................................................................................ 52 6.2 LIMITATIONS ...................................................................................................... 52 6.2.1 Secondary Data ............................................................................................. 52 6.2.2 Kurtosis & Presence of Outliers ................................................................... 53 6.2.3 Appraised Market Value vs. Market Value ................................................... 53 6.2.4 Underestimation of Wind Turbine Profitability ............................................ 54 6.3 FUTURE RESEARCH CONSIDERATIONS ............................................................... 54 References ........................................................................................................................ 55 Appendix I Projected Profitability Results ................................................................... 58 Appendix II Study Area with CropScape Data ........................................................... 71 iv Texas Tech University, Courtney Baker, May 2021 ABSTRACT Increased wind turbine development has rapidly raised concerns about decreases in surrounding land values due to wind turbine presence. Estimations on the effect of wind turbines on surrounding land values have been mixed. Few studies have empirically examined whether agricultural land values are affected by wind turbine presence, or whether wind turbine profitability affect property values. This study examined the extent to which agricultural land values in Southern High Plains of Texas are impacted by wind turbine presence, and if wind turbine profitability results in notable differences in land value. The study's objectives were threefold; first, the System Advisor Model (SAM) was used to calculate wind turbine profitability in order to determine whether wind turbine profitability positively affected agricultural land values; second, propensity score matching and statistical t-tests were applied to investigate whether agricultural land values change due to the presence of wind turbines; and third, the potential effects of wind energy policies on wind turbine profitability and agricultural land values were discussed and reviewed. The results indicate that agricultural land values are negatively affected by wind turbine presence, while the total profit made by agricultural producers increases as a result of wind turbine presence. These results open a new direction of inquiry when considering wind turbine placement. v Texas Tech University,