April 2015

IZA DP No. 9025: The Local Economic Impact of Wind Power Deployment

published in: FinanzArchiv / Public Finance Analysis, 2019, 75 (1), 56-92.

Globally installed wind power capacity has grown tremendously since 2000. This study focuses on the local economic impacts of wind power deployment. A theoretical model shows that wind power deployment is not necessarily driven by locally-accruing economic payoffs, but also by other factors such as emphasis on environmentally-friendly energy production and its associated benefits. The theoretical analysis is followed by an empirical analysis using German county-level panel data. After controlling for a set of observable and unobservable factors, the results state that wind power installation has no impact on GDP per capita. These findings support the predictions from the theoretical model: local economic impacts cannot alone explain the observed increase in wind power capacity.