The effect of fossil fuel-based electricity plant location on property values: evidence from Australia

Abstract

ABSTRACT This article investigates the effect of fossil fuel-fired power plant locations on the value of neighbourhood properties in the state of New South Wales, Australia. Fossil fuels account for a significant proportion of electricity generation in Australia. Thus, there are growing community concerns regarding the possible negative environmental effects of these power plants given the high levels of emissions produced by these plants. Such concerns could potentially impact on property values. We use a comprehensive dataset with the exact location of each property to estimate the effects of existing fossil fuel-fired power plants on the value of neighbourhood properties. We use spatial econometric models to estimate these effects with controls over several property characteristics and the type of power plant. Our results suggest that coal-fired power plants have significant negative effects on property values within a specific radius. These effects are likely to be lower but still negative for properties in the vicinity of gas-fired and gas reciprocating power plants.