CHAPTER 4
PROPERTY VALUES, EMPLOYMENT OPPORTUNITIES AND FARM INCOME
4.1
In this chapter the Committee considers the effects of the establishment
of wind farms on the values of rural properties. Also included in this chapter is
information on employment opportunities presented by the development of the
wind industry and the income of landholders who host wind turbines and
landholders who live near them.
Property values
4.2
Property values tend to capture people's perceptions of the impacts of
rural wind farms, such as noise, visual amenity, biodiversity, fire risk and
social cohesion.[1]
4.3
Large-scale wind power generation is a relatively new phenomenon in
Australia and the effects of the establishment of wind farms on rural property
values are not known with any certainty.[2]
For this reason, some witnesses have relied on overseas studies for their
submissions on land valuations.
4.4
There is, however, one recent, Australian study that has been cited by a
number of witnesses.
4.5
A 'preliminary assessment' report prepared for the NSW Valuer General,
which was referred to in a number of submissions, reached several (qualified)
conclusions as to the effect of the development of wind farms on property
values. The results were qualified because wind farms 'have been developed in
locations generally removed from densely populated areas...the small samples of
sales transactions available for analysis limited the extent to which
conclusions could be drawn'.[3]
4.6
In brief, the report concluded that:
-
Wind farms do not appear to have negatively affected property
values in most cases.
-
A property's underlying land use may affect the property's
sensitivity to price impacts:
(i)
No reductions in sale price were evident for rural properties or
residential properties located in nearby townships with views of the wind farm.
(ii)
The results for rural residential properties (commonly known as
'lifestyle properties') were mixed and inconsistent; there were some possible
reductions in sales prices identified in some locations alongside properties
whose values appeared not to have been affected ...[4]
4.7
In its submission CSIRO referred to 'an earlier assessment of 78
property sales around the Crookwell wind farm in NSW over the period 1990-2006
[that] found no reductions in property values'.[5]
That study included a comparison of sales of property within six kilometres of
a wind farm with sales of those not in the 'viewshed' of the farm.[6]
4.8
The Committee heard anecdotal evidence that suggested that proximity to
wind farms may lead to lower prices in some cases. A number of submitters
referred to a document produced by an experienced Australian estate agent that
stated that land adjacent to wind farms could lose from 30 percent to 50
percent of its value.[7]
One witness informed the Committee that:
... we have an 80-acre property, so therefore it is
lifestyle. ... We had it valued originally at $380,000 to $400,000, and the
last offer we received was $230,000. That is a loss of $150,000, and for people
that have just reached the age of 30, that is a massive, massive loss and a big
drawback for us and our young family.[8]
4.9
Mrs Anne Schafer, whose lifestyle property at Berrybank in Victoria will
be in close proximity to a large number of turbines, was concerned that the
property will be devalued:
It is hard to prove this, and the wind farm companies will certainly
not let anything happen to make it look as though values have dropped, but
common sense in itself says that if you are living on a lifestyle property next
to 100 turbines surrounding you on three sides, for goodness sake, it is worth
nothing. You are out there for the ambience, for the lifestyle, and you have an
industrial complex next to you. Of course all of these properties are going to
be devalued. It is just sheer common sense.[9]
4.10
Another witness submitted that in the vicinity of Toora it had been
reported that properties had been devalued by 30 percent and were difficult to
sell.[10]
4.11
A report prepared by Access Economics Pty Limited for Residents Against
Turbines of Tooborac suggested that the use of the land (agricultural or
amenity) is important when considering the impact of wind farms on land values.
The report noted that, to the extent that land values are adversely impacted by
a wind farm, the cost is borne by a relatively few surrounding property owners.
The report reads in part:
From a policy perspective, it is debatable whether paying for
what is a genuine public good – greenhouse gas abatement – should fall so
disproportionately on so few.[11]
4.12
Acciona submitted that:
... in rural areas the main factor influencing a property's
value is the land's productivity. This is a function of its resource endowment
and its condition, both of which are unaffected by the presence of a wind farm
nearby.
...
In reference to properties hosting the wind turbines, wind
farms should have a direct positive effect on their value. These properties
receive a long term, reliable revenue stream for the placement of a wind
turbine that coexists easily with other and uses, i.e. it does not materially
affect the productivity of the land, generally occupying around 1.5-2% of the
total land area. In some cases, the provision of improved access tracks and
supply of power to remote areas of a property may also create improvements in
the land's productive capacity.[12]
Overseas studies
4.13
Origin Energy submitted that overseas studies have found there is little
to suggest that wind farms impact negatively on the value of neighbouring
properties. Origin drew the Committee's attention to a Sustainability Victoria
publication that referenced studies carried out in the USA and Denmark.[13]
4.14
The Danish study referred to above evaluated the costs to nearby
households caused by the visual effects and noise of nearby windmills. This
evaluation was done partly by means of a house price survey. The study found,
among other things, that in certain cases there are considerable costs for a
few households. Houses which lay close to a single windmill were approx. DKK
16,200 (approx. $3000) cheaper than other houses – with parity of other factors
– and houses which lay close to a windmill park with 12 windmills were DKK
94,000 (approx. $17000) cheaper – with parity of other factors.[14]
4.15
The Clean Energy Council (CEC) cited an overseas study undertaken by the
US Department of Energy's Lawrence Berkeley National Laboratory (LBNL). That
study found that even for homes situated within a one-mile distance of a wind
project, no persuasive evidence of a property value impact had been found.[15]
The study was based on site visits, data collection and analysis of almost
7,500 single-family home sales in areas where wind farms have been developed.[16]
Despite reaching the above conclusion, the report suggested that the primary
goal of further research should be to concentrate on those homes located
closest to wind facilities where the least amount of data are available.[17]
4.16
The CEC also referred to a Canadian study that concluded that 'where
wind farms are clearly visible, there was no empirical evidence to indicate
that rural residential properties realised lower sale prices than similar
residential properties within the same area that were outside of the 'viewshed'
of a wind turbine'.[18]
4.17
A study of land values in Texas (USA) indicated that values of rural
land diminished by 27 to 50 percent as the result of the establishment of a
wind farm.[19]
The study, which was presented to a Wind and Wildlife Conference in 2009,
compared direct sales of seven properties in south Texas.[20]
Interestingly, the presenter of the paper noted that the highest use of Texas
rangeland is now 'recreational use', which includes what would be described in
Australia as 'lifestyle properties'.
4.18
Another study from the USA was submitted by an experienced professional
real estate appraiser, Mr Michael McCann, to the Adams County Board (Illinois,
USA) in relation to a proposed wind farm in the county. Mr McCann suggested
that there would be a 25 percent loss factor for homes in the footprint of the
wind farm, and an average 5 percent value diminution factor for all homes in
the 2-mile zone.[21]
Mr McCann also criticised the LBNL report, stating that the study tended to
minimise the impacts, 'as the carefully crafted language in the report's
executive summary appears to indicate is the case'.[22]
4.19
Although there were conflicting views expressed, there were sufficient
indications in the evidence to suggest that the value of rural lifestyle
properties in close proximity to wind farms may be adversely affected by the
establishment of the wind farms. Agricultural properties near wind farms which
do not host turbines may not be similarly affected, although there could be
some diminution of values if dwellings on the properties are situated very
close to turbines. There might also be some negative effects on agricultural
property values if those properties could not utilise aerial applications of
fertiliser, seeds and pesticides.[23]
4.20
The value of properties that are hosts to wind turbines should increase
provided of course that the rights to rentals for the turbines are transferable
with the sale of the property. It was argued by wind farm developers that
turbines occupy only a minute percentage of the land and may improve it to the
extent that tracks are maintained and that some electric facilities might be
available in areas of properties where they had not been before.[24]
Compensation and property
guarantees
4.21
Some witnesses suggested that because wind farms devalue adjacent
properties the developers should pay compensation to those affected. Mrs Read,
Secretary, Western Plains Landscape Guardians, stated that:
Developers of wind farms have a duty to pay compensation for
loss of property value to neighbouring or affected properties.[25]
4.22
Mr Jonathon Upson, Senior Development Manager, Infigen Energy, when commenting
on the matter of compensation for neighbouring property holders, quoted at
length from a decision of the NSW Land and Environment Court in relation to the
Cullerin Range wind farm, as follows:
Commissioner Tim Moore responded to the Landscape Guardians
group’s argument that neighbours should be compensated for the blight and
perceived loss of property values by stating:
Such a proposition faces a number of insurmountable hurdles.
The first is that the wind farm, as earlier noted, is a
permissible use on all of the parcels of land upon which it is proposed to be
located ... If the concepts of blight and compensation, as pressed by the
Guardians, were to be [adopted and] applied to this private project (a
proposition which I reject) then any otherwise compliant private project which
had some impact in lowering the amenity of another property ... would be exposed
to such a claim.
Creating such a right to compensation (for creating such a
right it would be) would not merely strike at the basis of the conventional
framework of land use planning but would also be contrary to the relevant
objective of the [Planning] Act ...for the promotion and co-ordination of the
orderly and economic use and development of land.[26]
4.23
Mr Upson argued that if every proposed infrastructure development—a rail
line, a hospital, a power line, a shopping centre, a freeway—were subject to
every neighbour being able to put their hand out for compensation according to
their perceived amenity impact, the planning system would descend into chaos
and few, if any, development projects would ever proceed. He stated that:
We believe that wind farm projects are just another
infrastructure project and we should be treated with the same rules and
regulations that other infrastructure project go by.[27]
4.24
If it were decided to compensate households that experience adverse
effects from a project, it would be difficult to determine how an appropriate
level of compensation might be set, who should be compensated and who should
pay. The NSW Legislative Council Committee recommended that the state minister
should commission research into compensation options and that the research
should investigate options including the purchasing of affected properties
and/or the provision of monetary compensation by the developer.[28]
4.25
At the moment host landholders gain financial benefits but neighbours
miss out. This leads to problems within communities. CSIRO suggested that the
issue might be addressed by implementing alternative models of compensation, as
follows:
Alternative models of compensation could involve agreements
to formally share royalties between landholders whose properties host the
turbines on a sliding scale with the immediate neighbours who experience visual
intrusion (as assessed by the wind farm design). In addition, often the ‘community
fund’ established by the wind farm developer is directed into the local council’s
consolidated revenue. An alternative approach to address inequitable financial
gains would be to direct this to those community members most negatively impacted.[29]
4.26
The Clean Energy Council submitted that:
The planning and approvals systems that operate throughout
Australia provide a transparent process open to third party representations to
ensure potential impacts at regional, local and site levels are thoroughly
assessed and developments are only granted planning permits if they meet the
established planning policies and provisions or have conditions imposed to
ensure they comply. This process already provides opportunities for both
developers and land owners to enter into commercial arrangements outside of the
regulated approval process.[30]
4.27
Mr William Elsworth, a resident of Smeaton, Victoria, stated that
developers should be required to give property guarantees. He informed the Committee
that:
In America it is starting to happen where local authorities
are making wind companies provide a property guarantee for people who neighbour
wind farms to protect those people.[31]
4.28
Mr Elsworth's claim that property guarantees are given in at least some
counties in the United States of America is supported in Mr McCann's submission
to the Adams County Board.[32]
Committee view
4.29
Although the impact of wind farms on property values is unclear, the
value of some properties that are close to turbines may be adversely affected. In
most cases, the Committee understands that planning processes such as setbacks
are designed to avoid such situations. However, for such properties, government
agencies might consider including in the planning processes provisions such as
those suggested by CSIRO, which have been discussed in paragraph 4.25 above. In
this regard, the Committee notes existing arrangements in New South Wales,
whereby the planning minister can require a property acquisition clause to be
included in a planning approval, if requested by the affected landowner.
Employment opportunities
4.30
CSIRO informed the Committee that 'job creation in wind farm
construction and, to a lesser extent, in operation of the wind farm, was the
second-highest aspect cited in support of wind farm development in the CSIRO media
analysis. Financial benefits through indirect opportunities were also cited,
including tourism potential'.[33]
4.31
Mr Thompson, Director Development, Acciona Energy, informed the Committee
that the Australian wind industry provides 2148 full-time equivalent jobs,
which is expected to increase to more than 19 000 by 2020. Acciona had
projects worth in the order of $1.5 billion over the next three to four years
and expected to employ more than 500 workers during the construction of the
projects and 60 during operations.[34]
AGL stated that its wind farms at Hallett in South Australia had employed an
average of 98 construction workers at any one time from 2005 to 2010.[35]
Other developers also provided data on employment on their projects.[36]
4.32
Significant indirect employment may result from the development of wind
farms. A report commissioned by AGL on the economic impact of the Hallett wind
farms (SKM report) used a multiplier of three to estimate the numbers of
indirect jobs generated by the development of Hallett. The multiplier was based
on one that was used in an earlier report which in turn used a calculation of
the European Wind Energy Association. According to the SKM report, the figure may
be conservative because 'it is significantly lower than the national multiplier
for the electricity, gas and water sector (over 6) and the non residential
construction sector (over 4)'.[37]
Using this multiplier, the SKM report suggested that the Hallett project could
have generated an extra 2400 full time equivalent job years.[38]
4.33
Flow-on employment effects may be observed at Keppel Prince Engineering
in Portland, Victoria, which employs 150 people dedicated to wind farm
activity. The company has built wind farms in Australia and has exported parts
to New Zealand and Portugal.[39]Another
example is American Superconductor Corporation which sells solutions that help
connect wind and solar farms to the grid and which has recently opened its
first office in Australia.[40]
4.34
Not all of the jobs generated by a wind farm development will be in the
local region, although the industry attempts to employ locally wherever
possible. Workers in the regions will not have all the necessary skills, but
the following workers and businesses may benefit directly:
-
Domestic scale electricians
-
Transport operators
-
Machine operators
-
General labourers
-
Quarries
-
Concreters[41]
4.35
Indirect benefits will also accrue to local businesses, such as stores
and providers of accommodation, who provide services for the workers. Many of
these local benefits will be temporary, however, because the construction phase
is much more labour intensive that the operations and maintenance phase. Nevertheless,
employment in the regions of wind farms should increase somewhat in the longer
term and may be bolstered to the extent that rentals paid to host landholders
and rates paid to local governments remain in those regions.
4.36
Acciona submitted that 200 people were employed on the construction of
Waubra and 30 people are employed on operations and maintenance.[42]
Origin Energy submitted that a general rule of thumb is that for every 25
turbines three on-site jobs are generated.[43]
4.37
The construction of wind turbines requires some skills that are not
readily available in the rural regions where wind farms are developed and in
some cases not in Australia. However, the industry attempts to employ local
people. Acciona submitted that:
Whenever possible, we source employment locally. For example,
our Waubra Wind Farm in rural western Victoria sourced approximately 80% of the
jobs from the region during both the construction and operations and
maintenance phases of the project.[44]
4.38
Acciona also submitted that:
The wind energy sector contributes to building skilled
employment, which is particularly relevant to addressing skill gaps and
providing a pathway for industry growth in the renewable energy industry, a
long-term and worldwide industry. As an example of the upskilling of the local
workforce, at ACCIONA Energy we provide in-house training for tradespeople to
become technicians that acquire both electrical and mechanical skills.
Moreover, many of the skills are transferable to other industries, both locally
or further afield.[45]
4.39
Employment on wind farms is concentrated and hence easily measured, but
it is not easy to estimate employment effects in the wider economy. As
discussed, some of these flow-on effects will be positive, resulting from the
economic activity generated by wind farm developments. Negative effects could
result from increased electricity prices and opportunity costs (if the
investment in wind power were at the expense of other economic activities).
4.40
The Committee received little information about negative employment
effects and nothing from an Australian perspective. One submitter, the
Australian Landscape Guardians (ALG) referred to work done in Spain that found
that increased power costs from wind energy in that country caused the loss of
2.2 jobs for every job created in the wind industry. On that basis, ALG estimated
that the 84 jobs generated by the Stockyard Hill project would destroy 184
jobs—a net loss of 100 jobs.[46]
4.41
The study to which ALG referred is a Study of the Effects on
Employment of Public Aid to Renewable Energy Sources, from King Juan Carlos
University in Spain.[47]
That study has been criticised on a number of grounds, including that it
deviates from the traditional methodologies used to estimate job impacts and
that it lacks transparency and supporting statistics. The criticism is
contained in a paper produced by the National Renewable Energy Laboratory which
is operated for the US Department of Energy by the Alliance for Sustainable
Energy. [48]
4.42
In Australia it has been estimated that the cost of electricity will
increase by about 4 to 5 percent as a result of the implementation of the RET.[49]
Mr Swift, Executive General Manager Corporate Development, Australian Energy
Market Operator, told the Committee that wind power at the moment is
significantly more expensive than gas or coal generation. He indicated that the
additional cost was equivalent to the price of Renewable Energy Certificates
which were trading at about $39 per MWh.[50]
The Committee did not receive evidence that would have allowed it to estimate
the employment effects of this cost on business in other sectors of the
Australian economy.
Committee view
4.43
In the absence of relevant data it is not possible to calculate the net
employment effects of the development of the wind industry on the Australian
economy. However, the Australian industry clearly generates many jobs especially
in the regions and will continue to generate significant levels of direct and
indirect employment. The Committee supports the development and use of a
skilled local workforce both in the construction and maintenance of wind farms.
4.44
In the Committee's view, even if the net gains in employment were small,
the public good, i.e., greenhouse gas abatement, which is produced by the wind
industry, should be taken into account.
Farm income
4.45
Landholders who host turbines receive some recompense for the long-term
use of their land. Landholders who adjoin wind farms do not, although in some
cases they may be subject to as much nuisance from the facility as those who
benefit financially. This has been identified as a major issue in this inquiry.
4.46
For the hosts, the income received from rent or lease of their land to
wind farm operators may be the difference between having a viable business and losing
their livelihood. Infigen Energy submitted that several families participating
in its Lake Bonney wind farm indicated that the lease payments had been the
difference between them being able to continue farming and having to sell out.[51]
It is therefore understandable that there is an incentive for some farmers to
encourage the development of wind farms. For others who do not benefit
financially there may be costs in terms of living amenity or even financial
costs from living and working in close proximity to wind turbines.
4.47
In theory, everyone living in a region where a wind farm is established
should receive some indirect financial benefit from increased employment and
economic activity, or from the contributions made by wind farm operators to
local government and local community organisations. Acciona informed the Committee
that:
... in Victoria, a typical rate contribution from a wind farm
is $40,000 + $900 per megawatt of rated capacity per annum. Over 20-25 years of
a 100 MW wind farm, this can equate to $130,000 per year or $3.6 million
(indexed to CPI) in local rates in aggregate.
...
The Community Benefit Fund for Waubra Wind Farm, for example,
provides $64,000 per year (indexed to CPI) which will contribute over $1.6
million to that community over the initial term of the project.[52]
4.48
The Committee did not receive any detailed information in relation to
the financial benefits obtained by farmers who lease land to wind farm
operators. The operators are not prepared to make this information public and
the hosts are bound by commercial confidentiality agreements. Some host
landholders are reluctant to release this information. Some submitters provided
estimates. These estimates ranged widely, but indicated that leasing land to
wind farm operators is at the least a good supplement to other farm income.
Infigen Energy submitted that press reports had suggested that lease payments were
from $8000 to $10 000 a year.[53]
Mr Hodgson from the Friends of Collector suggested that most landholders
receive $12 000 to $15 000 per year for turbines but that at
Collector Transfield is proposing to pay $2500 per turbine which he described
as 'woefully inadequate'.[54]
Committee view
4.49
The Committee considers that the wind industry generally makes a
significant contribution to farmers' incomes either directly through the
payment of rent to individual landholders or indirectly to other landholders
through increased economic activity in the region and payments to local councils
and community organisations.
Senator Rachel Siewert
Chair
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