Social sustainability of renewable energy sources in electricity production: An application of the contingent valuation method

Abstract

Sustainability is frequently defined by its three pillars: environmental, economic and social. Consequently the evaluation of the sustainability of a decision, public or private, requires information on these three dimensions. This paper focuses on social sustainability. In the context of renewable energy sources, the consideration of social sustainability requires the analysis of not only the efficiency but also the equity of the welfare impacts, including spatially differentiated impacts. The present paper proposes and applies a methodology to generate the information necessary to conduct a more complete welfare analysis of the social sustainability of renewable energy production facilities, so that equity considerations are treated alongside efficiency issues. The analysis focuses on the case of investments in renewable energy electricity production facilities, where the impacts on local residents’ welfare are often significantly different from the welfare effects on the general population. We apply the contingent valuation method to specific facilities across the different renewable energy sources in operation in Portugal and conclude that local residents acknowledge the damage sustained differently depending on the type, location and operation of the facilities. The results from these case studies attest to the need of acknowledging and quantifying the negative impacts on local communities so as to be able to assess the social sustainability of renewable energy projects, alongside the two other pillars of sustainability.