Wind farms make noise. Coal fired power stations pollute the air and atmosphere. Coal-seam gas mines pollute underground water aquifers. All electricity generating sources, to some people, pollute the scenic landscape. Yet in NSW wind farms, and wind farms alone, will be subject to an additional assessment requirement which allows individuals living within two kilometres to veto the development.

The NSW government, following the approach taken by the Victorian government, announced draft planning guidelines two days before Christmas 2011.

These will require an extra stage of planning assessment for new wind farms. The potential operator must seek written consent from every landowner within two kilometres. If this is not forthcoming, they must go through an additional “gateway process” which requires detailed information on the visual and noise impacts of the farm (including photomontages of how the turbines will appear from each non-host residence).

The government also wants to reduce the allowable noise level to 35dB. This is far lower than Europe (55dB), the US, the Netherlands (50dB), and other Australian states (40dB) allow. The two kilometre distance is also more stringent than overseas countries. Denmark, for example, requires that wind turbines be constructed 600-800 metres away from houses, depending on the turbine height.

Justifying this policy shift is a desire to increase community consultation particularly with regard to the visual amenity losses, noise, and human health effects. The environmental impact of wind turbines is a separate issue: impacts on bird life are covered in the required Environmental Impact Statement, which, incidentally, also requires an assessment of landscape and noise effects.

However, behind the push for stricter policy is lobbying by anti-wind farm group, the Landscape Guardians. This group has strong links to the fossil fuel industry and has run a disinformation campaign on so-called “wind turbine syndrome” – psychological effects from infrasound and shadow flicker – for which there is no evidence. And perhaps behind this push is the fact that wind power is set to become cost-competitive with fossil fuel sources by 2016.

At its core, this new requirement is an environmental policy. It seeks to create an emission standard with “emissions” referring to noise and visual impacts – the externalities from producing electricity from wind power. Theoretically this is similar to emissions of sulphur dioxide, nitrogen oxides and carbon dioxide from coal fired power plants or the toxic release of chemicals into underground water aquifers, an externality from coal-seam gas production. But the externalities from wind power are treated differently from fossil fuel externalities.

Where is the industry assistance now?

When environmental policy on fossil fuels is introduced, industry argues for, and inevitably receives, assistance for the loss in competitiveness and jobs that they argue will arise. For example, consider the extent of industry assistance in the Federal Government’s carbon pricing policy. Yet assistance is not forthcoming for the wind power industry despite the uncertainty created and the limiting of optimal wind-farm locations.

The Clean Energy Council states that a similar proposal from South Australia’s opposition Liberal Party would cost $3 billion in investment and 1000 direct jobs. Since the Victorian Coalition Government’s policy was introduced there have been no new wind farm applications. In NSW, the Planning Minister, Brad Hazzard, has estimated that 13 of the 17 wind farms currently being considered will be affected by the new guidelines.

Moreover, for states to meet Mandatory Renewable Energy Targets, more expensive renewable energy sources will be required. This will ultimately increase the price of electricity.

The policy also removes incentives to establish supporting industries (such as turbine manufacturers) in Australia. These industries would greatly reduce the cost of establishing wind farms in the long run and create jobs.

Why apply the precautionary principle now?

The NSW government claims that they are adopting a precautionary approach concerning the health issues associated with wind turbines. This is despite the absence of evidence supporting wind turbine syndrome.

Yet this is not the approach taken with coal seam gas, where health effects are more conclusive. In fact, development is allowed outside of five metres to 20 metres (depending on the type of well) from the well-head of existing or potential future coal-seam gas mines. This is despite the Petroleum (Onshore) Act 1991 (NSW), which governs coal-seam gas mining, requiring under section 72 that a holder of a petroleum title must not carry on operations within 200 metres of a residence or 50 metres from a garden or orchard without the written consent of the affected party.

Moreover, it is clearly not the case that the precautionary principle is applied at the federal level in regard to carbon emissions and the potential for global warming. If it was, much deeper cuts than the 5% below 2000 levels by 2020 would apply.

Where are the neoliberals now?

Usually when an environmental policy is announced, neoliberals seek clarification on why the market can’t deal with this issue and propose market solutions such as tradeable emission permits.

The wind farm policy is an emission standard approach (where a blanket rule governs allowable emissions from all sources), rather than an incentive-based Pigouvian tax - which internalises the noise and scenic externalities - or a market-based emissions trading scheme. You would expect neoliberals to point out that the policy is not cost effective and that it would be better if potential wind farm operators could trade their right to emit noise. This would ensure that those operators who can easily restrict noise (in this case through location choices) do so and trade their rights to those who cannot.

Moreover, this is clearly a case where the Coase theorem, a favourite of neoliberals, could apply if property rights are allocated. With the number of affected parties being small, a wind power operator could pay local citizens to allow wind turbines within close proximity. Such a bargaining solution, as with a Pigouvian tax or an emission trading scheme based on decibels, would create an incentive to innovate low noise wind turbines.

But these claims are missing when it comes to wind power. Perhaps it is because fossil fuel lobbyists usually drive such debates in the case of other environmental policies. Or perhaps it is because, like everyone else, neoliberals started their Christmas break half a day early and missed the announcement.

Where is the compensation test now?

When public policies are proposed, economists draw on the Kaldor-Hicks compensation test. This test suggests that a policy is efficient if the winners can compensate the losers and all end up better off (whether or not such compensation actually occurs). Such a test is invoked when justifying, say, tariff reductions or new roads (which, incidentally, do not have the same noise requirements as other developments) or even the development of a coal-fired or coal seam gas electricity source.

In the case of a wind farm, the compensation test would look at the cost, if any, on local households and weigh this up with the greater good of reducing emissions from fossil fuel powered electricity. Thus, it seems fairly obvious that the compensation test is not being applied here.

Why are the scenic issues any different from tree removal?

Effectively, the NSW government has placed ownership of the scenic landscape in the hands of households. However, in comparable situations such as cutting down neighbourhood trees, the right to veto is held with the local council. This is also the case for wind farms in many other countries.

In the NSW policy the consent for development must come from individual property owners. This appears to go against the spirit of “consent” in the State Environmental Planning Policy (Infrastructure) 2007 which is made under the Environmental Planning and Assessment Act 1979. It defines consent with reference to the “consent authority” – the council, minister or public authority having the function to determine the application.

If requiring individual household consent is deemed a more satisfactory model, it should also be the case for tree removal and coal seam gas mines.

Support research and development and reduce uncertainty

An alternative to the neoliberal policies and the blanket veto approach is to:

support research and development into lower-noise turbines if this is proven to be necessary

support the development of offshore wind farms

support the industry in general by removing red tape (rather than increasing it)

provide clear targets for wind power to reduce uncertainty.

The requirement for more community consultation, the official justification for the policy shift, is a laudable aim. Allocating scenic property rights and noise levels to individual households is more problematic: it has the potential for manipulation (from both sides) for the aims of profit rather than electricity requirements or environmental effects.

However, the government must be consistent and this is clearly not a level playing field. The same veto rule must be placed on other electricity generating sources or the veto rule must be removed and consent placed back in the hands of council or the other relevant planning authority. Otherwise, this is another win for big mining and the fossil fuel industry. And that must raise suspicions about why governments are so set against wind.