“The Economic Costs of NIMBYism: Evidence from Renewable Energy Projects”
Stephen Jarvis (University of Mannheim)
Large infrastructure projects can create widespread societal benefits, but also frequently prompt strong local opposition. This is sometimes pejoratively labeled NIMBY (Not In My Backyard) behavior. In this paper I estimate the economic costs of NIMBYism and its role in local planning decisions. To do this I use detailed data on all major renewable energy projects proposed in the United Kingdom spanning three decades. First, I use hedonic methods to show that wind projects impose significant negative local costs, while solar projects do not. I then show that planning officials are particularly responsive to the local costs imposed within their jurisdictions, but fail to account for variation in these costs across jurisdictions. The result has been a systematic misallocation of investment, which may have increased the cost of deploying wind power by 10 -29%. Much of this can be attributed to the fragmented and localized nature of the planning process.