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Loss of Property Value in Eversource Transmission Investment

Julian Silk's picture
Adjunct Professor
  • Member since 2010
  • 179 items added with 5,362 views
  • Feb 2, 2021
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This is going to be a brief comment on a particular transmission investment, proposed by the New England electric utility, Eversource.  The particular investment, a transmission line proposed between the locales of Acushnet and Fall River, both in Massachusetts.  The specifics of the proposed transmission line are detailed at

https://www.eversource.com/content/general/about/projects-infrastructure/projects/massachusetts-transmission-projects/acushnet-to-fall-river-reliability-project

The course of the transmission line is proposed to be straight, which would minimize construction costs, all else equal. 

The problem is that all else is definitely not equal in this situation.  The transmission line, as proposed, passes through what appears to be an extremely scenic and secluded area, by the Copicut Reservoir and Camp Interlocken, in Fall River.  This area contains forests, and the Reservoir is open to shore fishing.  See

savebuzzardsbay.org/places-to-go/watuppa-reservation/

This is another case, as with Northern Pass, where the engineering desire to minimize costs is ignoring feelings, and the resulting willingness of people to spend time, money and energy to preserve natural beauty, and inherently, property values.  Even ignoring any degradation in quality or expense of drinking water for Fall River as a result of the project, the project is interfering with what in essence is tourism, and with the ability of Fall River citizens to escape the trauma of the pandemic, both of which have value. 

Eversource would be extremely well-advised to re-route the project, possibly near Cedar Swamp Road in Freetown, Massachusetts, to minimize infringement in the preserved areas.  It's a general problem.  People have moved to areas with natural beauty to escape intrusion, and the people who are able to do so are people of means, who stand to lose if their property values are threatened.  This is obvious to the economist.  Eversource can learn this the hard way by having the public hearings it claims it will pursue, and arousing the wrath of environmental and citizen groups, and possibly having to cancel the whole project, since the people in the immediate area pay the whole amenities cost and get only a tiny fraction of the possible environmental benefits that may be associated with increased use of renewable energy made possible by the new transmission.  Or Eversource, and other companies in the electricity industry, can start thinking in these terms before they lose the money and time.

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Thank Julian for the Post!
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Matt Chester's picture
Matt Chester on Feb 2, 2021

This is another case, as with Northern Pass, where the engineering desire to minimize costs is ignoring feelings, and the resulting willingness of people to spend time, money and energy to preserve natural beauty, and inherently, property values. 

What's the level of cost difference that is being dealt with in this instance? 

Julian Silk's picture
Julian Silk on Feb 3, 2021

It is difficult to come up with a straight and simple answer in this case, because it depends on the total amount of the forest that would be used, and whether the Copicut reservoir use would change dramatically.  Forest estimates are often based on timber and harvest use (both softwood and hardwood), which is not appropriate in this case.  But there has been some work on general forest valuation, counting carbon sequestration or other biodiversity effects separately from those that are counted in private market values.  Two useful studies along these lines are

https://depts.washington.edu/hhwb/Thm_Economics.html

(see the section on Parks and Open Space)

and

https://aede.osu.edu/sites/aede/files/imce/images/Economic%20Valuation%2...

for Ohio - see especially Table 1., on p. 8, and notice that the first few rows are directly applicable.  Note that they use IMPLAN, which makes certain assumptions about returns to scale, but does include an estimate of the indirect effects of recreational use which are usually ignored.

Matt Chester's picture
Matt Chester on Feb 3, 2021

Thanks for the useful resources, Julian!

Julian Silk's picture
Julian Silk on Feb 4, 2021

You are welcome.  Let me add two notes. 

1) I am affiliated with Kapur Energy Environment Economics (KEEE).  Nothing stated here should in any way be associated with KEEE; these are strictly my own personal opinions and all errors are my own, too.

2) Often, contingent valuation methods (which involve various types of surveys), are used to estimate what in essence are the values of holding the option to partake of some non-market good like public forests.  Any option values for those who are not regularly and immediately involved with the forests would be an addition to the values of those who are.  Contingent valuation methods have been also applied to private land values (in Milan) and to issues of health economics.  The contingent value methods would be very difficult to apply in this case, because if there is some re-routed development that preserves most of the space, one is asking people who get surveyed to make a difficult judgement.  Magnitudes that you get have been validated to some extent, and it is conceivable that values of those who currently do not express nonzero values but might in the future could be relevant.  You have a sort of altruism issue in this latter case - "Am I willing to forego lower electricity bills in order to let someone who isn't paying now have the opportunity to partake of the forest?"  So it's complicated.  As far as the validation of the straight, "Would you pay anything for the option?", one case is https://www.sciencedirect.com/science/article/abs/pii/S0921800918320123. 

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