Loss of economic capital: what will SPENs proposal cost the region?

Yesterday I talked about negative externalities and I gave an example from a paper by Sims and Dent (2005) in relation to their research into determining the effect of power lines and pylons and how they negatively impact the value of adjacent homes.

Today I have been reading about National Well-being, something the government keeps a close eye on.  The figures are compiled by the Office for National Statistics (ONS) and the 2015 results are now available.

What drew me to this report was their comments on personal well-being and health but I was diverted when I read about economic capital.  I will take up the subject of personal well-being tomorrow.  Today I intend to concentrate on economic capital because it allows us to put an estimate on the value of the negative externality SPEN will create if they go ahead with their proposal in its current form for which we, as residents, will be expected to carry the burden.  SPEN will just pretend it doesn’t exist.

So what do we mean by  economic capital.  Well ONS publish a figure for this each year and it represents the combined value of physical and financial capital and for the UK it presently stands at £7.6 trillion.  Of this figure, physical capital represents £4.7 trillion and comprises, in the main, of dwellings – in other words, our homes.   The average price of which is £176,290.

If we now take this average house price and subject it to the fall in value that Sims and Dent found from their research, i.e. up to 17% within 100m of an overhead line and up to 21% up to 250m from a pylon we can calculate the average loss for the average property situated near an overhead power line.  This works out as £29,969 for the line and £37,020 for the pylon.  These are maximum values but note that Sims and Dent studied an urban environment so in rural areas the impact could be higher.

We also know that in Dumfries & Galloway there are 68,356 households so we can quickly estimate the fall in capital value for the entire region by assuming a % of households that will be close to SPENs proposal.

Let’s make things a bit easier by assuming no difference between a power line of pylon.  We’ll assume they both cause the average property to fall in value by £30,000.

If we assume only 1% of homes in the region are affected by this proposal then the total fall in capital value will be (1% x 68,356 x £30,000) £20.5m collectively.  On the other hand, if 5% are affected the fall in capital value will exceed £100m.

If you think £100m is an overly high estimate all I can say is that in the small glen where I stay it is likely the fall in capital value will be in the order of £2m.

And who carries the cost of this; we do of course!

We must be mad to stand for this.  We don’t want this project and we gain no benefit from it, and yet SPEN expect us to see our physical capital fall by perhaps up to £100m or more.  What age are we living in to accept this behaviour?

And the fall in the regions capital value is only one of the factors that make up the term, negative externality.  When all the factors are included what might the total value represent?


Estimates of household dwellings, Housing information briefing note Number 1 (2012) Dumfries & Galloway Council

Measuring National Well-being: Life in the UK (2015) ONS

Sims, S. and Dent, P. (2005) High-voltage overhead power lines and property values: a residential study in the UK. Urban Studies. Vol.42(4), pp.665-694.


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