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Wind Turbine Hush Money

In Oregon, the “whoosh, whoosh, whoosh” of wind turbines is being partly drowned out by another sound: “Hush, hush, hush….”

What are we to think when a company starts paying people substantial sums of money not to complain about the effects of their projects? Is that illicit hush money, or is it a company facing up to its impact and paying due compensation?

Here’s the story, by William Yardley, for the New York Times: Turbines Too Loud? Here, Take $5,000.

IONE, Ore. — Residents of the remote high-desert hills near here have had an unusual visitor recently, a fixer working out the kinks in clean energy.

Patricia Pilz of Caithness Energy, a big company from New York that is helping make this part of Eastern Oregon one of the fastest-growing wind power regions in the country, is making a tempting offer: sign a waiver saying you will not complain about excessive noise from the turning turbines — the whoosh, whoosh, whoosh of the future, advocates say — and she will cut you a check for $5,000.

“Shall we call it hush money?” said one longtime farmer, George Griffith, 84. “It was about as easy as easy money can get….”

The effects that a production process (such as a wind farm) has on people other than its paying customers are what are called “externalities” — effects that are external to some voluntary transaction. And in principle, compensating those who suffer externalities is the right thing to do — it means that a company (and its customers) are paying something closer to the full cost of production. Otherwise, externalities amount to a cost foisted on someone else involuntarily.

OK: so far, so good. The company involved here is attempting to (as an economist would put it) internalize its externalities, by compensating those affected by noise from its windmills. But what about the price set? Note that the price was an apparently invariable $5,000. Why? After all, different people are likely to be affected differently, and some will be more noise-tolerant than others.
So, why one price? According to the company, the reason is fairness:

“What we don’t do in general is change the market price for a waiver,” [Caithness Energy’s] Ms. Pilz said. “That’s not fair.”

Of course, equal payment for all is one version of fairness, but it’s not the only one.

One last theme to pick up on is the tension between what’s good for the individual and what’s good for society. The company involved, here, attempted to play the “social good” card:

Some people who did not sign said that Ms. Pilz made them feel uncomfortable, that she talked about how much Shepherd’s Flat would benefit the struggling local economy and the nation’s energy goals, and that she suggested they were not thinking of the greater good if they refused.

It’s a good rhetorical move on the company’s part, not least because there’s more than a grain of truth to it. A project of this size is bound to benefit the local economy (though perhaps not as much as locals might hope). Add to that the fact that this is, after all, clean energy that’s being produced, the kind of energy that most people now figure is essential to weaning us off our collective addiction to petroleum products.

So, let’s put this on the table as a fundamental truth: there are no centralized forms of energy production, clean or otherwise, that will not have a negative impact on anyone, and that hence won’t be subject to someone’s objections. So the question is not whether anyone will be negatively affected (or even merely inconvenienced), but rather who will be negatively affected, and how much, and what to do about it.