Environmental Engineering Reference
In-Depth Information
renewable energy systems, navigating the often-confusing government-
permitting scheme applicable to the project, and ultimately installing the
systems. Landowners who lease or otherwise convey interests in their real
property for such development can also incur significant costs associated
with the presence of renewable energy devices and related infrastructure
on their property. These costs borne by developers and landowners—the
primary decision makers in wind or solar energy projects—are represented
by MC p in Figure 1.4 below.
However, countless other parties, including those who own or use neigh-
boring land, can also suffer significant costs associated with new wind or
solar energy installations. These neighbors and other affected outsiders
often have limited influence on where and how projects are built, and
rational self-interested developers and landowners do not fully account
for neighbors' costs when making development decisions. This classic
negative externality problem can theoretically lead to an excessive amount
of renewable energy generating capacity. As shown in Figure 1.4 , when
developers consider only their own costs associated with installing each
incremental unit of renewable energy generating capacity in their projects
( MC p ), rather than considering the aggregate social cost of such incremental
units ( MC s ), excessive levels of development ( Q 2 ) can result.
More specifically, without government intervention, developers may
install renewable energy facilities in unjustifiable locations simply because
they do not bear all of the costs associated with doing so. Wind farms may
hazardously encroach into migratory bird paths, solar energy projects may
$
.MCS
MCp
MB
e*
a
Quantity of installed renewable energy capacity
Figure 1.4 Effect of negative externalities on quantity of renewable energy
development
 
Search WWH ::




Custom Search