The Impacts Of High Voltage Overhead Transmission Lines Commerce Essay

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This section summarises and reviews the literature on the impacts of high voltage overhead transmission lines on residential and other property values. More specifically the review focuses on the impacts of EMF on residential property values.

Virtually all of the literature that has been reviewed in the following section focuses on the impact of new HVTLs on property values. The studies attempt to estimate the values of the affected properties with and without the HVTL. In general the studies analyse the impacts of new lines and intuitively we would expect the impacts of an upgrade to be lower than the results suggested by these studies. Nevertheless we believe these studies are useful starting point in the absence of anything dealing directly with HVTL upgrades.

Gregory and von Winterfeldt (1996) highlight three primary reasons why siting a transmission or distribution line could adversely affect the value of a house or property:

A possible reduction in the visual attractiveness of a property, compared to comparable properties, stemming from the adverse visual impacts of transmission line towers

A possible restriction in local land use and zoning decisions, to provide minimum distances between electric transmission lines and schools, daycare centres, subdivisions, hospitals or other relatively high-density housing;

A possible increase in the level of a homeowner's fear or concern about potentially increased health (and, specifically, cancer) risks stemming from exposure to EMFs.

Gregory and von Winterfeldt go on to describe the mechanism by which these factors are translated in to value affects. In general siting an HVTL results in:

A possible reduction in the pool of buyers who might be interested in buying or renting the affected property;

A possible reduction in the number of buyers, and an increase in the costs of selling due to a requirement that EMF exposure levels be made part of standard disclosures in real estate transactions;

A possible increase in the length of time required for the sale or development of the property.

Similar relationships are described by Kinnard and Dickey (1995) and Sims (2001) who observe that decreased price, increased marketing time and decreased sales volume have been claimed, singly or in combination, as consequences of the siting of HVTLs.

HVTLs and property rights

The majority of the studies in the last 30 years have taken place in the US, although more recent work has been undertaken in New Zealand, Canada and the United Kingdom. The studies highlight significant differences in the way that property rights are apportioned between the land owner and the utility operator. In the US, utilities acquire a right-of-way over private land. The rights of way are of varying width and Tesh and Haskell (2008) provide a useful discussion of the c urrent conflict in the US over exactly what rights the utility companies have. In the US and Canada, HVTL right-of-way corridors are in effect 'sterilised' insofar as there are no buildings or housing within them. Therefore properties adjacent to the right-of-way have the benefit of backing onto vacant land. As well, lots next to the right-of-way are sometimes larger.

In New Zealand, as highlighted by Bond and Hopkins (2000) and Elliot and Wadley (2002) the arrangement is different as, in general, lines have been established over private land without rights of way. New Zealand transmission line easements are rights to construct, operate and maintain a power line and lines often pass directly over residential housing. The easements do not involve ownership of the land over which the line passes but do give rights of access and occupation to the line owner.

In general the studies reviewed in this section attempted to answer the question, "does the presence of high voltage overhead transmission lines on, or near a property affect the value of that property? " In their review undertaken for Edison Electric, Kroll and Priestley found that the results varies widely and about half of the reviewed studies HVTLs had no effect on property values and in the balance values fell by between 2% and 10%.

Kroll and Priestley, in summarising the literature up to 1992, found that:

HVTLs had the potential to reduce sales prices.

The value impact on single family homes was zero to 10%.

Other factors (eg neighbourhood, section size, size of house) are likely to have more impact on value than proximity to HVTLs.

Effects are most likely to occur on property crossed by or adjacent to HVTLs.

Positive impacts may occur where properties are next to rights-of-way which have been attractively landscaped.

Impacts may be greater for smaller, compared to larger, properties.

Impacts on value of HVTLs diminish with time.

Earlier literature tended to focus on the visual impacts of the lines. More recent literature, particularly since the publication of a number of Swedish studies on the health effects of EMFs in the early 1990s, appears to concentrate on the impact on value of health fears. In fact Gregory and von Winterfeldt (1996) identify 1979 as the turning point following the publication of the first study by Wertheimer and Leeper (1979) linking EMF exposure to possible human health effects.

As noted by Kroll and Priestley (1992) the literature can be split into three broad categories:

Econometric studies

Attitudinal surveys, and

Appraiser studies.

Econometric studies

The econometric studies of HVTL impacts on land values have used hedonic pricing models to evaluate the contributions that various land attributes such as size, location, views, elevation, proximity to the HVTL etc make to the overall value of the residential property. Hedonic techniques are based on the premise that goods traded in a market are made up of different bundles of attributes or characteristics. The application to residential valuation attempts to model the emphasis and weighting that buyers place on each of the various property attributes. The results of a number of studies undertaken since 1967 are summarised in Table 2.

As noted by Des Rosier (2002) most studies conclude that proximity to a HVTL as such, does not necessarily lead to a drop in the value of surrounding properties. As noted negative impacts vary between 1 and 6% of total value at a distance of around 60 metres from the easement (Ignelzi and Priestley, 1991) and 6% and 9% at around 15 metres (Colwell and Foley, 1979).

Elliott and Wadley (2002) report that Hamilton and Schwann's 1995 study has been cited as one of the most reliable. The study, which examined the impact of proximity to HVTLs for 12,907 Vancouver single detached homes, showed that proximity to HVTLs was a significant factor in depressing house prices. Hamilton and Schwann reported that HVTLs reduced values of properties adjacent to the line by 6.3%. Hamilton and Schwann found no discernable impact for properties further from the

line (at around 200m).

Two New Zealand Studies were undertaken by the Massey University Real Estate Analysis Unit (MUREAU) in association with Transpower in the mid 1990s. Callanan and Hargreaves (1995) and later Bond and Hopkins (2000) examined the impacts on property values in Newland, Wellington of two 110 kV lines. The only previously published New Zealand study had been published by the then Valuation Department in 1968 which concluded that in Christchurch and Auckland HVTLs had little or no impact on property values in "average" localities. The study did find that HVTLs had negative impacts in "superior" localities. 31. The Callanan and Hargreaves study evaluated the impact of the pylons and lines on residential property values. The HVTLs reduced the value by around 27% at 10 metres from a pylon with the impact falling to 2.7% at 100 metres. Most interestingly the impact on value was less than 1% for properties directly under the line. However, as came to light after the study was completed, some property owners were possibly aware that one of the lines was to be removed in the near future. The Bond and Hopkins (nee Callanan) study largely reiterated the Callanan and Hopkins research.

In one of the few references to the impact of upgrading existing lines, Ignelzi and

Priestley (1991: as reported by Des Rosiers) note that properties in their study

affected by upgrading an existing line suffered a 9% loss in value. Overall,

detrimental effects tend to disappear beyond 122 metres. As well, where new lines

are installed, or existing lines modified, the drops in value lessen over time and then

tend to "fade away after four to ten years" (Kroll, 1994; referred to in Des Rosier

2003).

33. Des Rosier's 1998 and later 2003 study was based on a sample of single family

house sales. The study demonstrated that a direct view of pylons or lines resulted in

a significant negative impact on property values. However, Des Rosier emphasises

that "being adjacent to the easement will not necessarily cause a house to

depreciate. It may even increase it value". In this case the advantage of landscaping

around the easement, and distance from other houses, cancel out the negative

proximity effects.

34. Des Rosier's study also highlights the differential impacts of HVTLs on higher priced

housing, versus more moderatel y priced housing. In general, higher priced houses

suffer larger percentage drops in value than lower priced housing. This suggests, in

line with intuition, that owners of higher priced housing are more sensitive than others

to potential visual encumbrance from a nearby HVTL.

Attitudinal studies

35. Econometric studies use sales and other data for a sample of properties to estimate

statistical relationships between property values and various hypothesised

explanatory variables. Attitudinal studies, on the other hand, study the perceived

effects on property values and are seen as being less robust than econometric

studies using hedonic models. Attitudinal studies use questionnaires, often mailed, to

property owners, real estate agents and valuers, seeking their views on the impact of

HVTLs on property prices. A number of recent studies are summarised in Table 3.

36. By way of example, Delaney and Timmons (1992) surveyed valuers and found that,

on average, they would expect properties to be around 10% lower due to proximity to

the HVTLs. The most common reasons given for the decline in value were visual

unattractiveness, health problems, disturbing noise and general lack of safety.

37. Bond and Hopkins (2002) found that residents close to the HVTLs had more negative

perceptions of the lines than those further away. As well, real estate agents were

more negative than valuers. However, both groups suggested a similar value

reduction of around 10%, which was comparable to the outcome of an analysis of

transaction data.

38. Overall there is a widely held belief that these types of studies overestimate the

negative impacts of the lines (Elliott and Wadley, 2002). As well, as noted by

Gallimore and Jayne (1999) the questions often asked about hypothetical situations

in surveys do not necessarily reveal what respondents would actually do in real-life

situations.

39. Gallimore and Jayne go on to test whether there may be circularity in the valuationmarketing

cycle insofar as valuers' misjudgements about market participants'

observed behaviour over HVTLs impact upon subsequent market behaviours making

the misjudgements self-fulfilling. Gallimore and Jayne sampled 130 occupiers of a

residential area affected by an HVTL as well as 70 valuers operating in the West

Midlands area in the UK.

40. To test the hypothesis that the groups had differing perceptions of risk, they asked

the respondents to rank HVTL risks alongside other risks such as smoking, driving on

the motorway, having an x-ray, using pesticides, drinking alcohol etc. The study

found that valuers perceived HVTLs to be more risky than the property owners did.

Gallimore and Jayne suggest that this was probably because of the Royal Institution

of Chartered Surveyors guidance note issued in 19966. In this note valuers were

required to take into consideration that

"public perception that higher than normal electromagnetic fields caused by

the presence of high voltage cables…may affect marketability and future

value"

41. In any event, Gallimore and Jayne concluded that there was the "danger that valuers

may amplify the public's level of fear in formulating their advice". Albeit that they then

state that there is no empirical evidence to suggest that this actually happens.

42. As noted by Kinnard and Dickey (1995) attitudinal surveys are a form of contingent

valuation (CV) approach. CV studies generally involve an assessment of the

willingness to pay for the avoidance of a hazard, for example, prevention of pollution,

or noise, rather than in this case, "the desire to be compensated" to live in proximity

to an HVTL. The studies also focus on what potential sellers (most usually) say they

6 See Royal Institution of Chartered Surveyors, 1996, GN1.13(e), subsequently amended in 1997

pointing out the National Radiation Protection Board's conclusion that "there was no clear evidence of

adverse health effects at the level of electromagnetic fields to which people are normally exposed"

18

will do, rather than on what buyers and sellers (the market) actually does.

43. Furthermore, while quantitative econometric modelling studies tend to focus on

revealed buyer behaviours, most opinion or attitude studies tend to focus on the

attitudes of householders or the potential property sellers. In fact, as noted by

Kinnard and Dickey, opinion studies usually treat sellers as satisficers who are

assumed to accept whatever the questionnaire results indicate will be offered. The

approach ignores the concept of willing buyer-willing seller which is the basic

assumption of the definition and determining market value. Therefore there is

potential for an upward bias in the surveyed compensation which option surveys use

as a proxy for property value loss.

Appraiser Studies

44. As described by Elliot and Wadley, appraisal studies use small samples of data and

attempt to use comparisons of groups of sales and "paired sales analysis" to estimate

the effects of proximity to HVTLs. In effect sales of properties close of HVTLs are

compared to sales of comparable properties with no HVTL effect. As noted by

Kinnard and Dickey (1995) two problems arise:

a. Identifying what constitutes a pair of comparable properties involves a high

degree of subjectivity, and

b. There may no be enough pairs of comparable data to make the analysis

representative of the market.

45. Few, if any, of these studies are reported in refereed journals and are therefore

generally unavailable.

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