Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I’m your host, Daniel Raimi. If you’re a regular listener to this podcast, you know that local opposition to clean energy projects is one of the biggest challenges facing the energy transition. Today, we talk about just that with Stephen Jarvis, an assistant professor of environmental economics at the London School of Economics.
Stephen recently published a paper on this topic called “The Economic Costs of NIMBYism.” In the paper, he compares the local costs of wind and solar projects in the United Kingdom, such as impacts on property values, with the benefits that they create, such as avoided greenhouse gas emissions and local air pollution. He also examines whether and to what extent local policymakers account for these benefits and costs when deciding whether wind and solar projects should be built in their communities. Perhaps most importantly, we discuss how to overcome some of this local opposition to enable a faster and fairer energy transition. Stay with us.
Stephen Jarvis from the London School of Economics, welcome to Resources Radio.
Stephen Jarvis: Glad to be here.
Daniel Raimi: Stephen, we’re going to talk about a really interesting new paper that you’ve published about wind and solar, which projects people want in their backyards, and how those projects affect costs and benefits, both locally and globally. Before we do that, we always ask our guests how they got interested in working on environmental issues—whether you had childhood inspiration or whether you found the calling later in life. What steered you into this field?
Stephen Jarvis: It’s a good question. I don’t think I have deep childhood stories to draw on. Definitely lots of being outdoors, hiking, and things like that. I did take an environmental economics class in my undergraduate—I now teach the same course, which is kind of funny. The main thing, I think, was my first job. I finished my undergrad degree, and I started working at the United Kingdom energy regulator, Ofgem, and I just really loved it. I loved working on policy, I loved getting to a real sense of the energy sector, and I think that spurred a lot of my subsequent research in this space.
Daniel Raimi: That’s really interesting. Where did you grow up?
Stephen Jarvis: My family’s mostly up in the northwest of England, a little city called Lancaster.
Daniel Raimi: Great. As I mentioned, we’re going to talk about wind and solar projects. In this case, we’re going to talk about them in the United Kingdom. We’ve talked about this topic before, the idea that people don’t always welcome wind and solar development in their communities. Can you give us a little bit of flavor for what are the factors that lead people to oppose these types of projects?
Stephen Jarvis: I think it can be a range of different things. And for sure, not everybody welcomes these things. Some people do. Some people are very much in favor, but for sure, there’s some stiff opposition sometimes. I think some of the most common complaints that you see in surveys of local residents—or, in my case, you can actually see it in the letters that the local planning officials write as to why they’re turning something down—often mention the visual impact; that’s a really common one. It ruins the view, or they’re inconsistent with this nice rural landscape. Beyond that, it could be things like the noise from the turbines, impacts on wildlife and birds, even recent complaints I’ve seen are about taking productive agricultural land out of use. There’s a range of different things that come up. I think the visual one is often the most prominent.
Daniel Raimi: Yeah, that’s pretty consistent with what we’ve heard in the United States, as well. Tell us a little bit about the data that you gathered to carry out your analysis, and also how you estimate specifically the benefits and costs of different wind and solar projects.
Stephen Jarvis: Yeah. For this paper, I was really interested in trying to understand a little bit about the process by which some projects get built and some projects don’t. Often, that’s quite challenging to study. You can see the ones that made it, but it’s pretty rare that you can see the ones that didn’t. The main data set I was using for this work is this really fantastic database that the United Kingdom government maintains of, essentially, all the renewable energy projects that have at some point submitted themselves for the permitting process, to get a permit to be built. You can obviously see the ones that got built, but you can also see the ones that didn’t. So, you can do this comparison between the two.
I was looking at about 4,000 utility-scale wind and solar projects dating back to the mid-1990s, and then combined that with a wide range of other data sources to essentially, for each project, come up with a project specific measure—of the capital costs, the operating costs, the value of the electricity that’s going to be produced, and also even some of these environmental impacts, like the value of the carbon emissions abated, local pollution abated, things like that. The goal was really for each one of these projects in the database to come up with an estimate of all these different costs and benefits and then potentially add on some of these local impacts, as well.
Daniel Raimi: That’s great. I’d love to ask just a couple of follow-up questions on the data. First, you mentioned the benefits of pollution abatement. What are some of the metrics that you use to estimate those benefits?
Stephen Jarvis: Yeah. This is a tricky one, but essentially, first you’ve got to figure out how much each of these projects is going to produce over their lifetime. Part of that was coming up with an estimate of the capacity-factor based on information about how productive these projects have been. What’s the local wind resource? What kind of solar or wind turbine have they installed? That was one part of it, of actually estimating the amount of electricity production. But to get to what that means for environmental impacts—essentially it was using data from the UK government—to come up with an estimate of the emissions intensity and the local pollution intensity of the other electricity generation on the grid that is being displaced when you build one of these new projects.
That was the main way of going about piecing together that part of it and coming up with an estimate of, this is how much local pollution, this is how much carbon emissions is being offset over the lifetime of this project, and then valuing that using the social cost of carbon and equivalent metrics for local pollution impacts, as well.
Daniel Raimi: That makes sense. Just one more background question before we dig into the results. You mentioned permits. I’m curious, as we continue our conversation, we’re going to be talking about projects that are permitted or projects that are refused permits. Can you tell us who is making that decision? Are we talking about the national-level government? Are we talking about local governments? Are we talking about both? Who are we talking about? Who’s in the decisionmaking position?
Stephen Jarvis: Yeah, it’s a great question, and I think it can vary a little bit across projects. In general, the UK process historically has been pretty locally driven. You could think of local county officials, like a local planning and permitting board, making the decisions on the vast majority of these projects. There is a process whereby, if a project is big enough that it gets classified as being nationally significant, then it gets kicked up to the national planning agency, and even the minister can get involved in some extreme cases. But in general, the vast majority of these are being decided at this kind of local county level. That’s the case in the United Kingdom, but I think you see similar things in many other jurisdictions, as well—in Europe or in the United States. It can vary a bit from state to state, but there’s still often quite a lot of local involvement from county officials. I think there’s some commonalities in the way that things are set up across many different countries, but that’s how it works in the United Kingdom.
Daniel Raimi: For sure. That does sound very consistent with what I know of the United States. Let’s talk a little bit about one of your early findings in the paper, which is how the development of wind and solar projects affects local property values. I’m curious what you found there and then again, how your finding compares with other studies that have looked at the same topic, whether in the United Kingdom or other countries.
Stephen Jarvis: Yeah, I think the goal with looking at this particular impact is … I mentioned all these other costs and benefits that you would think of more traditionally being with these projects—capital costs, the value of the electricity—but of course, there are these local impacts, as well. There’s been quite a few studies that have tried to quantify how big these local impacts are, maybe this sort of visual disamenity, by looking at things like the impact on local property values. So, I had a component of this study that does exactly that and looks at changes to local property values. When one of these projects gets built, what happens to the value of properties nearby? I think kind of consistent with some prior research—for the wind projects, at least—I find that there is this negative impact on property values, something on the order of around, say, an 8 percent reduction if you are pretty close—within four kilometers—which general order of magnitude is pretty similar to what some other studies have found.
I think there’s been some other recent research that’s also looked at maybe how these effects dissipate over time a little bit. But key things that you would expect tend to be the case—the effects are bigger near larger projects, the effects are bigger if you’re closer to the project, and the effects are bigger if there’s this direct-line-of-sight visibility that you can actually see the project from where the house is. Those were the key findings, and it’s that effect that I’m then going to use to add in this extra cost that these projects might impose that has this particular local component to it.
Daniel Raimi: Right. Let’s dig into that a little bit more. Can you tell us a little bit more about the variation that you see in terms of the costs, but also the benefits based on the project’s characteristics, right? You mentioned different-sized projects might look different in terms of costs and benefits. I’m also curious how things vary when you get further or closer to a metropolitan center or something like that.
Stephen Jarvis: For sure. All these different costs and benefits, including these more localized external costs on nearby property values, they’re very heterogeneous across all the different projects. And there’s a lot of different projects in the database. As you might expect, if a project is closer to a population center where more people live, or if it’s closer to a wealthier area where property values are higher, then perhaps unsurprisingly, once you add all this up, you can come up with a bigger aggregate impact on these local property values. The reverse is true if it’s in a really remote location or in a more extreme case if it’s completely offshore. In fact, I think in the United Kingdom, there’s been a big deployment of offshore wind, even when a lot of onshore wind projects have run into difficulty. My gut sense is there’s a real out-of-sight-out-of-mind component to this that’s driving a lot of that. Beyond the property-value stuff though, some of these other costs and benefits really do vary over location, as well.
The transmission costs, if you are close to where people live, might be lower. Whereas if it’s a very remote project, that could show up in these higher operating costs of transmitting power over long distances. The same with where it’s windy and where it’s not. All of these things can drive this real variation in these different costs and benefits and create these trade-offs across different projects.
Daniel Raimi: Yeah. I’m curious how much the benefits vary across projects in terms of their location. I would imagine that, at least for the greenhouse gas–reduction benefits, those are probably going to be pretty uniform no matter where you cite the project. Am I right in thinking that way, or is there quite a bit of variation actually with variation in electricity generators in different parts of the grid? I don’t know much about the way that the UK grid operates.
Stephen Jarvis: It’s a good question. I think in a world in which the grid is very integrated and there aren’t many transmission constraints, then yeah, plugging in some renewables pretty much anywhere is not going to have a radically different effect. There’s going to be a similar sort of value in terms of the wholesale price. There’s going to be a similar value when you think of the emissions that are being displaced. There are some constraints in the United Kingdom, particularly transferring power from the north in Scotland down to population centers in the south. There is some sort of incremental, slightly higher value if you could locate one of these projects maybe off the south coast, like an offshore project down there. In general, I don’t think it’s a huge source of variation in the cost and the benefit estimates that I come up with. I think, if anything, the key one that drives a lot of this is variation in the wind resource and there just being some really nice windy areas that are much more productive, be it further north in Scotland or offshore up in the North Sea.
Daniel Raimi: Right. There’s some nice maps that you produce in the paper, Figure 1 of the paper that people can check out. It’s got locations and size in terms of capacity of different wind and solar projects, and you can really see that a lot of the big wind projects are in the north or offshore, whereas most of the solar projects are sort of clustered toward the south central part of the country, where I imagine it’s sunnier. Is that true? Is it sunnier down south? I don’t know.
Stephen Jarvis: It’s all relative in the United Kingdom, I would say. To the extent that you can get away with a solar project, it’s much more likely to be in the south of England. As solar gets cheap enough, it’s even profitable to do it in the United Kingdom, which I think is saying something.
Daniel Raimi: It is saying something.
Let me ask you now about the permitting decisions that you examine. What are the relationships that you find between the project costs that local landowners or residents might face from one of these projects and the likelihood that their elected officials, the local permitting authorities, might actually approve or disapprove those projects?
Stephen Jarvis: Yeah, I think this was a key that I really wanted to get into in this paper. As I said, there’ve been quite a few studies looking at things like these impacts on local property values. I think when I’d seen those kinds of studies and that sort of analysis, a key thing that I was left with was also, What does this mean for efficient policy when we think about renewable energy? Because I think if you see that it causes this reduction in property values, it could be very easy to just think, well, these things are bad and we shouldn’t be building them. But I think the key thing with all things in economics is there are trade-offs. How do those costs weigh up against some of these other things? I think a key goal in the paper and what this next part of the analysis was to try and go a bit further and say—how are these different costs and benefits, including these localized ones, accounted for in the permitting process? How are planning officials and policy makers paying attention to these different factors?
For this, the main way I did the analysis was to really take advantage of seeing these projects that didn’t get built, as well, and essentially doing this comparison between the costs and benefits we see for the ones that did and the costs and benefits we see for the ones that didn’t. What I find is, perhaps somewhat unsurprisingly, local planning decisionmakers that are driving a lot of this process seem to pay quite a lot of attention to these local impacts on nearby property values, much more than other costs and benefits that are much broader and more diffuse and accrue to society more broadly.
Daniel Raimi: That totally makes sense, and it’s really interesting. I’m wondering if you can put the costs and benefits on the same ledger for us. If we’re thinking about a big wind project that gets rejected because people are concerned about property values, can you give us a sense of what is the scale of the costs that local folks are objecting to, and then what are the benefits that are foregone from failing to build that project? We don’t need specific numbers, but I’m just wondering if you can give us a sense of the order of magnitude of these benefits and costs.
Stephen Jarvis: Yeah. Just looking at the responsiveness of the planning process, I think one of the headline numbers they came out with is when you think about these local planning officials, and they’re weighing up different projects, some of them might be more locally costly than others. This is particularly true in wealthier areas that they seem to pay attention to. If there’s a £10-million increase in these local property-value impacts for a given project, then approval probability goes down by 2 or 2.5 percent, something like that.
Whereas if you look at these other costs and benefits—these broader societal benefits from tackling things like carbon emissions—the decision doesn’t seem very responsive to these at all. If anything, you can go in this wrong direction with these more beneficial projects almost being less likely to be approved. So, I think that was some of the takeaway numbers I had from the actual planning officials and how they think about weighing up these different things.
Daniel Raimi: Right. And then if we zoom out to the aggregate level, and we think about the total amount of greenhouse gas emissions and other pollutants that are not reduced because of these projects not getting built, how significant are those costs in the aggregate?
Stephen Jarvis: Yeah. Nontrivial is the short answer.
If we think that the planning process has these biases in it, where it pays more attention to certain factors like these local impacts—often at the expense of considering the wider social benefits of these projects—then that’s a real recipe for the process producing some pretty inefficient outcomes, where these lots of very beneficial projects are just not going to make it through the process.
One way of quantifying that I explore in the paper is to essentially look at all the projects that were proposed as this basket of feasible projects that could have happened and think about, If we could reorganize amongst these projects, and if I could choose which ones got approved in some more efficient version of the world, how much money could we have saved? How much more capacity would it have been efficient to build?
The main takeaway I came out with was you could have reorganized amongst these projects and just approved a different set of them, and you could have achieved the same deployment of renewable energy that we’ve already seen to date, but you could have done it at about 25 percent lower cost. You could have saved about one-quarter of those costs in the process.
Daniel Raimi: Can you give us a sense of how much money is 25 percent? Are we talking about a few million dollars? Are we talking about a few billion dollars or pounds?
(I can’t remember. Do you still use euros in the United Kingdom, or are you on pounds again?)
Stephen Jarvis: We’re stubborn people. We are still on pounds, for sure.
But yes, in terms of scale, I think we’ve spent close to £150 billion on the wind and solar projects to date, as of me writing this paper, and we’re talking about cutting off about 25 percent of that. It’s real money. That’s if we were to hold things fixed and just try and preserve that existing rollout.
What I’ve also hinted at is, potentially, we’re just not building enough in the first place. If we were to go back and actually approve all the projects that looked like they were really socially beneficial, even accounting for these local impacts, then that would have suggested that ideally, we would’ve built 50 percent more capacity than we actually built. So, broadly speaking, at least based on this analysis, having this very localized permitting that pays more attention to some things than others creates real costs, and it really slows down the clean energy transition.
Daniel Raimi: Right. Let’s think about solutions for a minute. Recognizing that government structures are sticky and they’re unlikely to change dramatically overnight, I’m curious what you think some of the solutions might be to making it more likely that these beneficial projects get built more quickly.
Stephen Jarvis: Yeah. Do not despair, I think, is the first thing to say. I think there are some real solutions on the table, and these aren’t necessarily new things that I’ve come up with.
There’s actually a lot of these things being tried already. Number one is, let’s try and better align the incentives and the outcomes for these local residents with these goals for wider society, right? Let’s allow people to really share in the benefits if there’s a project that’s going to come and be situated in that area. You can see this already with quite a few developers creating things like community benefit funds and making payments to local organizations. Or even more directly, it might be providing reductions on the energy bills for residents who live nearby. This can make everybody better off; local residents benefit more directly. And the developer, after paying these additional costs, is essentially able to get projects over the line that are still pretty productive and worthwhile pursuing. A natural economist’s solution is to try and align these incentives and have some of these site-transfer payments to essentially get people on board.
The main other one that comes to mind is just instituting some reforms to the permitting process itself, maybe having greater state or national control or oversight over some key aspects of it. Having a very locally driven planning process to try and solve national or global problems like climate change is always going to run into these issues. So, potentially, there’s a greater role for national ministers, regulatory agencies, and things like that. It’s not an easy thing to pull off, for sure, and I think there’s always a challenge here in balancing local consent with decisionmaking, but also keeping these wider national and global needs in mind.
Some combination of aligning these incentives and making these potential payments to local residents, and then combining that maybe with some reforms to the process to try and streamline things a bit more. Both of those could probably go a long way to addressing a lot of this.
Daniel Raimi: Right. Both of those are commonly discussed issues here in the United States, and we’ve seen some states take more control from local governments in recent years, and other states are continuing to leave most of the decisionmaking power to the local authorities.
One of the questions that I was thinking about as you were describing the benefits to communities is … Again, just wondering about differences between the United States and the United Kingdom. Here in the United States, when a wind developer builds a project, typically they will pay a substantial lease payment to the owner of the land, and then that landowner will receive revenues in the form of royalties. The wind-project developer will also typically pay taxes that support local schools, or they might pay a payment in lieu of taxes that support local schools in their services. Is that a similar model to what you see in the United Kingdom, or are there very different kinds of local public-finance schemes?
Stephen Jarvis: On the point about taxes and financing, the United Kingdom is a little unusual here. We’re sort of a very centralized country in terms of the way a lot of revenue is collected and where it ends up. Actually, a lot of the money that’s raised from taxing these projects does not end up going to the local authority in the local county. A lot of it goes just directly into central government revenues, which, if you’re thinking about trying to align these incentives, is maybe not a particularly optimal way of setting these things up. You’ve actually seen, in some other countries, there’s some research looking at Germany where they made some changes to the tax rules so that more of that money went to local county officials and local counties, rather than it going outside the region. That, actually, in some other research, reduced some of these measures of local opposition, because more of this money was staying in the local area. I think the United Kingdom is a little odd and a little bit of an outlier in this respect, relative to somewhere like the United States or other parts of Europe, but potentially somewhere that it might be nice to make a few more changes on our end.
The other thing you mentioned was landowners. The landowners thing is interesting. For sure, lots of local residents and people who live nearby might not be thrilled about these things, but there’s at least one person who’s thrilled about a new project coming, and that’s the landowner, because they get a lot of money from having this project sited on their land. I’ve been doing a little bit of work as a follow-on to this project, starting to dig into who these landowners are. What are some of the negotiation dynamics that might emerge as to why some landowners have projects on their land and others don’t?
It’s proving interesting, getting a bit of a better sense of who these people are, but this is real money on the table for them. I think in the United States, the US Department of Energy had some estimates that lease payments from landowners in the United States or something on the order of about a billion dollars a year last year. In the United Kingdom, at least by my estimates, just looking at Scotland, it’s, again, a significant amount of money, maybe about £100 million a year, which is significant money going to at least one individual. I guess a key question is, who is that individual? Are they a local individual, or maybe a firm, or a very wealthy person who lives elsewhere?
Daniel Raimi: Right. Here in the United States, there’s been a really interesting series of reports from the US Department of Agriculture. They have an economic research service that does work estimating how much farmers receive from energy development, both in terms of renewables, like wind and solar, but also oil and gas and other extractive industries.
Stephen, one last question, maybe, to ask you, and I know this is not really the focus of your study. I’m going to ask you to speculate a little bit, if you don’t mind, but it’s about the role of misinformation. In some quarters, there are pretty wild conspiracy theories about the relationships between things like wind turbines, solar farms, cancer, and things that, at least as far as I know, have no real basis in fact or evidence. And the things that you observe in your paper, they’re all very rational, right? It’s like real effects on property values that you can observe pretty clearly. I’m wondering how much—if at all—you think misinformation might be playing a role in some of the local opposition that you observe?
Stephen Jarvis: Yeah, it’s definitely there. Whenever I’ve talked about this research with others, this topic really comes up, because you see evidence of it: Facebook campaigns, some of them sort of grassroots, and some of them, potentially, these astroturf operations where there’s real money going in to try and drum up this kind of concern and opposition. I’d love to see some more systematic research on this. I think it’s a fertile area for an enterprising graduate student to look into if you can get access to some of this data or to these different groups and social media collaborations that emerge when one of these projects comes to town. There’s some really interesting scope to look into how much this actually matters in decisionmaking. Potentially, it really does. At least it’s not perfectly related, but it maps on a little bit, at least in this work, just to really sense some of the findings around these local impacts on property values and things like that actually mapping through into county officials’ decisionmaking.
I did a bit of work gathering some information on the local public comments that show up at these county hearings. Unsurprisingly, projects that have a lot of negative comments are much less likely to get approved, and you could definitely see how misinformation and some pretty wild things that people are hearing online might cause people to show up at those hearings and raise their objections. Be it wind turbines or any kind of infrastructure, really, where you can see these kinds of issues come up.
Daniel Raimi: Yeah. Unfortunately, a more and more common role in our discussion about climate policy—this misinformation issue.
Stephen Jarvis, this has been a really fascinating conversation. I’ve learned a ton, and I’m sure our listeners have, too.
I’d love to ask you now the same question we ask all of our guests, which is to recommend something that you’ve read, watched, or heard that you think is great and that you’d recommend to our audience. So, what’s at the top of your literal or your metaphorical reading stack?
Stephen Jarvis: Sure. I’ll quickly flag just two books. I don’t think they’ll be groundbreaking for this particular audience. Isabella Tree’s book Wilding is a slightly older one that I’ve read a while back. A really nice kind of sense of the beginning of the rewilding movement in the United Kingdom.
I think someone else might’ve mentioned on a previous podcast Richard Powers and The Overstory. He’s got a new book out last month, called Playground, that I just bought, but I haven’t read yet, so it’s very much on the top of my stack.
The main thing I was going to flag up is actually an exhibition I went to see earlier this year for a photographer called Edward Burtynsky. I think he’s a Canadian photographer. It was a big sort of retrospective of his work. If you get a chance to go and see this—I assume it will be touring around different places, but it was in London first—I would highly recommend it. It’s got lots of these amazing photographs: often, aerial photography of different extractive industries, different natural landscapes, lots of tailings from mining operations or strange salt pannes and weird steppe patterns that you might get in a rice paddy or something like that. Super fascinating, really beautiful work, and picks out these very abstract patterns from the air. If you get the chance to go see it, I highly recommend it. It has a nice kind of environmental component to it. If you can’t go see it, there’s a very nice book, so you can get a great coffee table book out of it.
Daniel Raimi: Yeah, I just found it online. This is amazing. There’s a whole section on oil, as well, at least on the website.
Stephen Jarvis: He goes through lots of different environments, such as lithium mining all the way through to marble and stuff like that. It’s cool. I’d recommend checking it out.
Daniel Raimi: This is very cool. All right, I’m going to spend some time with this.
One more time, Stephen Jarvis, from London School of Economics. Thank you so much for this really fascinating work and for coming on the show and sharing it with our listeners. We really appreciate it.
Stephen Jarvis: My pleasure. Thanks for having me.
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