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Do financial incentives increase the acceptance of power lines? Evidence from Germany

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  • Simora, Michael
  • Frondel, Manuel
  • Vance, Colin

Abstract

Although public support for renewable energy promotion in Germany is strong, the required power line construction has incited a groundswell of opposition from residents concerned about the impacts on their neighborhoods. This paper evaluates a large randomized one-shot binary-choice experiment to examine the effect of financial incentives on the acceptance of new power line construction. Our results indicate that hypothetical compensations to host communities have no bearing on the acceptance level, whereas personal incentives may have a negative effect. Two possible channels through which financial compensation reduces the willingness-to-accept are (1) crowding out of intrinsic motivation to support the construction project and (2) a signaling effect that alerts residents to potential negative impacts of power lines. Both channels call into question the efficacy of financial incentives to decrease local opposition.

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  • Simora, Michael & Frondel, Manuel & Vance, Colin, 2020. "Do financial incentives increase the acceptance of power lines? Evidence from Germany," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:regeco:v:85:y:2020:i:c:s016604622030260x
    DOI: 10.1016/j.regsciurbeco.2020.103575
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    More about this item

    Keywords

    Not-in-my-backyard; Willingness to accept; Motivation crowding out; Randomized discrete choice experiment;
    All these keywords.

    JEL classification:

    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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