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Wind electricity subsidies = windfall gains for land owners? Evidence from a feed-in tariff in Germany

By Peter Haan and Martin Simmler

Abstract

In 2013, around 121 billion US-Dollar were spend worldwide to promote the investment into renewable energy sources. The most prominent support scheme employed is a feed-in tariff, which guarantees a fixed price for electricity produced by renewable energies sources, usually for around 15 years after the installation of the plant. We study the incidence of wind turbine subsidies, due to a feed-in tariff in Germany, into land prices to shed light on who benefits from the subsidies. In order to identify the incidence share we exploit quasi-experimental variation in wind strength across 270 non-urban counties combined with an institutional reform and use an Instrumental Variable estimator based on administrative transactionprices. We find that between 15 and 20% of expected wind turbine profits are capitalized into land prices. Using the estimated incidence share of 15%, we find that wind turbine subsidies account for roughly 4% of overall agricultural income of land owners in 2007

Topics: H22, H23, H25, Q28, Q42, ddc:330, incidence, subsidy, renewable energy, wind turbines, land prices
Publisher: Berlin: Deutsches Institut f\ufcr Wirtschaftsforschung (DIW)
Year: 2016
OAI identifier: oai:econstor.eu:10419/130611
Provided by: EconStor

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