CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

Abstract: Environmental considerations at wind power require avoidance and mitigation of environmental impacts through proper citing, operational constraints, etc. However, some impacts are unavoidable for otherwise socially-beneficial projects. Criteria for Environmental Impact Assessment (EIA) suggest that compensation be provided for unavoidable or residual impacts on species and/or habitat from wind power development. Current environmental compensation schemes for wind power fail to demonstrate a connection between the expected ecological damage and the ecological gains through restoration. The EU-funded REMEDE project developed quantitative methods known as "equivalency analysis" to assist in scaling environmental compensation. This study provides a framework for estimating compensation at wind facilities based on the REMEDE approach. I illustrate the approach with a hypothetical case study involving sea eagle impacts at the Smøla Wind Farm (Norway). I quantify the damage (debit) from sea eagle turbine collisions and scale a compensatory project (credit) that reduces eagle mortality from power line electrocution, which is quantified using hypothetical data. The framework is generalizable to on- and off-shore wind development but requires targeted and thoughtful data collection. Importantly, compensation should not be used disingenuously to justify otherwise environmentally costly projects.

Keywords: Equivalency Analysis; environmental compensation; wind power

JEL-codes: K32; Q42; Q51; Q57

50 pages, March 3, 2011

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