Jarvis, Stephen “The Economic Costs of NIMBYism” (December 2020) | WP-311 | Abstract

Abstract:
Large infrastructure projects can create widespread societal benefits and are often critical to tackling major national or global challenges. However, they also frequently prompt strong opposition from local residents and businesses. This is sometimes pejoratively labeled NIMBY (Not In My Backyard) behavior, and while it is thought to be common in many settings the economic costs it imposes are poorly understood. In this paper I estimate the economic costs of so-called NIMBYism. To do this I examine the case of renewable energy in the United Kingdom, where I draw on detailed planning data for all renewable energy projects spanning three decades, including projects that were proposed but not approved. I  first use hedonic methods to estimate how the construction of a wind or solar project is capitalized into local property values. I find that wind projects have significant negative local impacts whilst solar projects do not. I then quantify the weight that planning officials place on various factors during the planning process and find evidence that they are indeed particularly responsive to local impacts. The result has been a systematic refusal of societally beneficial projects. Ultimately misallocated investment due to the planning process may have increased the cost of the UK’s deployment of wind power by 10-25%. A significant portion of this can plausibly be attributed to NIMBYism.

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