Measuring the public on environmental changes: essays on offshore wind power spatial heterogeneity, economic valuation, and survey methodology

Date
2018
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University of Delaware
Abstract
As the effects of climate change are felt world-wide, exacerbated by emissions from the automotive and electricity generation sectors, the United States and elsewhere are promoting renewable technologies to transition to a clean energy future. Offshore wind power is one such option that offers significant promise, garnering notable regulatory, private industry, and stakeholder attention. But each technology has tradeoffs. This dissertation addresses the economic and policy aspects that policymakers will inevitably face when considering how to economically evaluate such projects. The three individual essays in this dissertation, one already published, offer insight into (1) how aspects of the spatial location of offshore wind turbines influence their economic desirability; (2) the economic valuation question of how much extra residents might pay for this technology; and (3) how modern survey techniques employed in the aforementioned essays offer decision makers robust data that can be relied on for policy analysis. The first essay offers an in-depth review of spatial components that will be relevant for offshore wind power development and how those matter for economic preferences. Studies in the environmental and resource economics 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 essay first reviews the methodologies of the SP wind valuation studies that have integrated measure(s) to account for spatial effects. These effects are then categorized—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 and recommendations for additional research for wind CEs are also posited. The second essay offers a discrete choice modeling approach to estimate whether Mid-Atlantic residents would be willing to pay for offshore wind power near Maryland and Delaware. While advanced forms of renewable energy tout climate benefits of presumed value to individuals, a nascent U.S. offshore wind industry faces steep levelized cost of energy (LCOE) for consumers, policy barriers to entry and local disamenities and anticipated conflict with existing ocean use. The U.S. Bureau of Ocean Energy Management (BOEM) in recent years has leased thousands of offshore km2 to wind energy developers, but an offshore wind project has yet to be built outside of the five-turbine, Block Island offshore wind project commissioned near Rhode Island in late 2016. A robust, non-market valuation literature has grown over recent decades offering improved methodologies to indirectly value environmental projects and services. We present results using one of those techniques, a stated preference choice experiment, to discern residents’ willingness to pay (WTP) to develop an offshore wind project in the Mid-Atlantic, USA. Respondents from Delaware and Maryland, USA (N=973) were asked their WTP electricity premiums for an offshore wind project near Maryland as well as preferences for specific project characteristics (number of turbines and specific location) relative to an opt-out natural gas plant. Generally, the majority of Delawareans and Marylanders support offshore wind development. Conditional logit choice model findings reveal site-explicit social welfare, with Marylanders and Delawareans WTP for offshore wind power ranging from $1.35 - $51.26 per household per month, depending on where the project is built and its size. Delaware exhibits a highest baseline WTP for smallest projects located in the South, i.e., away from them, but as these projects get larger, the more quickly their WTP erodes than if they were built in the north of the wind energy area (WEA). Compared to their baseline, residents are willing to pay $0.41 (DE) to $1.00 (MD) less per month for each additional 6 Megawatt (MW) turbine built across the entire WEA. The final essay examines the reliability and quality of data collected in the aforementioned study. There remains a gap between advancing data collection methods, including mixed-mode and online surveys, and an understanding of how mode choice affects perceptions of politically sensitive issues, such as climate change and renewable energy. With data from a 2015 tri-mode survey (mail, mixed, and online panel, N=973) across the US Mid-Atlantic region, we compare modes using unweighted, weighted demographics, total survey error (TSE), and ordered Likert regressions. We find no evidence for statistical differences across modes concerning weighted support for offshore wind power development, attitudes toward state-level renewable energy standards or climate change perceptions. The online panel performs as well or better as the mail based survey in most respects. Findings offer insights on design tradeoffs (i.e. quality, mode, and cost).
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