For a long time, economists lacked an objective way to measure complicated outcomes like well-being, so this aspect of human life didn’t receive much attention in the economic literature. Heinz Welsch is part of a growing movement in research to use subjective data, such as survey responses, to understand human impacts. In a video for Latest Thinking, Welsch describes his study examining the relationship between type of energy source and citizen well-being, the results of which were published in Land Economics journal.
The study looked at German citizens’ proximity to solar, wind, and biomass plants. The authors relied on survey responses to find correlations between well-being and the presence of a particular type of power facility in the local area. Welsch and his coauthor Charlotte von Möllendorff found that while the positive financial and moral aspects of solar energy balanced out the negative, “eyesore” qualities of solar installations, resulting in no net impact for citizens, those living near biomass facilities experienced significant decrease in well-being due to the strong odors emitted by the plants. Interestingly, people who had to deal with wind turbines going up in their neighborhoods experienced negative well-being for a certain period following installation, but this changed over time into an overall positive effect.
In the Latest Thinking video, Welsch expresses the hope that his research will aid the many countries that are currently in the process of restructuring their energy supplies in response to climate change. With evidence that certain forms of renewable energy make better neighbors, governments would do well to consider citizen well-being when deciding how to power their futures.
To learn more, read the full article, “Measuring Renewable Energy Externalities: Evidence from Subjective Well-being Data,” in Land Economics.