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Will the locals benefit?

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  • Mauritzen, Johannes

Abstract

An important and poorly understood question when communities consider wind power investments is whether the local population will benefit financially. I examine the effect of wind power investment on wages in rural counties in the US. I combine quarterly panel data on wages with data on all wind power plant investments larger than 1 megawatt (MW). Using a Bayesian multilevel model estimated by MCMC, I estimate a significant positive effect, with a magnitude consistent with a 2% permanent increase in wages following an investment in a large wind farm of 400 MW. However, this effect has large geographic and socioeconomic variation. Counties with low employment tend to see little impact on wages from wind power, potentially because slack in the labor market prevents wages from rising. From a policy perspective, these results are most relevant for local regulators and planners, who seek to balance the benefits and costs of wind farms to the community. This research indicates that wind farms can provide, on average, a modest boost to local wages, with some areas seeing an out-sized effect.

Suggested Citation

  • Mauritzen, Johannes, 2020. "Will the locals benefit?," Energy Policy, Elsevier, vol. 142(C).
  • Handle: RePEc:eee:enepol:v:142:y:2020:i:c:s0301421520302342
    DOI: 10.1016/j.enpol.2020.111489
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    Cited by:

    1. Shoeib, Eman Ahmed Hamed & Hamin Infield, Elisabeth & Renski, Henry C., 2021. "Measuring the impacts of wind energy projects on U.S. rural counties’ community services and cost of living," Energy Policy, Elsevier, vol. 153(C).
    2. Eric J. Brunner & David J. Schwegman, 2022. "Windfall revenues from windfarms: How do county governments respond to increases in the local tax base induced by wind energy installations?," Public Budgeting & Finance, Wiley Blackwell, vol. 42(3), pages 93-113, September.
    3. Hillberry, Russell & Nguyen, Nhu, 2022. "Renewable resource rents, taxation and the effects of wind power on rural economies," Conference papers 333477, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Meier, Jan-Niklas & Lehmann, Paul, 2022. "Optimal federal co-regulation of renewable energy deployment," Resource and Energy Economics, Elsevier, vol. 70(C).
    5. Brunner, Eric J. & Schwegman, David J., 2022. "Commercial wind energy installations and local economic development: Evidence from U.S. counties," Energy Policy, Elsevier, vol. 165(C).
    6. Brunner, Eric & Hoen, Ben & Hyman, Joshua, 2022. "School district revenue shocks, resource allocations, and student achievement: Evidence from the universe of U.S. wind energy installations," Journal of Public Economics, Elsevier, vol. 206(C).

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    Keywords

    Wind power; Wages; Rural; Bayesian; MCMC;
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