An Analysis of Offshore Wind Development: A Non-market, Stated-Preference Approach to Measure Community Perceptions and Opinions and Estimate Willingness to Pay in Two Michigan Regions

Abstract

What socioeconomic factors are indicative of support or opposition for offshore wind development? At some distance offshore, does the local community incur a social cost or benefit from building a wind farm as measured through non-market valuation? This contingent valuation method (CVM) case study was conducted to explore the socioeconomic dimensions of opinions regarding offshore wind development in Lake Michigan and estimate willingness to pay (WTP) in two regions: 1) Evanston, Rogers Park, and Wilmette, Illinois (N=2880; n=208) and 2) Mason and Oceana Counties, Michigan (N=952; n=122). Data was collected from November 2012 though February 2013 via online surveys after mailing invitations to systematic samples that received 7% and 13% response rates, respectively. Respondents were presented with three WindPro simulations of a 400 MW wind farm at three, six and ten miles from each region’s respective shore along with one hypothetical (+ or -) monthly electricity price impact and then asked to vote ‘for’ or ‘against’ each scenario. Initial probit model results indicate that variables for the monthly increase/decrease in utility bill price, offshore wind farm siting distance, and liberal political ideology are statistically significant in determining the probability of support for the proposed offshore wind farm scenario; the logit analysis also suggests that individuals with a household income between $160,000 – $200,000/year are more likely to support the proposed offshore project relative to the most affluent respondents. Mean WTP calculations imply a negative WTP (social cost) from siting a wind farm 3 and 6 miles offshore but a positive WTP (social benefit) when setback 10 miles for the average respondent. Additional results indicate considerable uncertainty among respondents regarding not only current support for offshore wind development but also both the type and extent of subsequent impacts. These results could provide valuable insight regarding offshore wind development opinions and environmental economic implications for policymakers in coastal communities both with and without prior exposure to formalized development proposals.