Wind Electricity Subsidies = Windfall Gains for Land Owners? Evidence from Feed-In Tariff in Germany

Peter Haan and Martin Simmler

No 1568, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

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.

Keywords: Incidence; subsidy; renewable energy; wind turbines; land prices (search for similar items in EconPapers)
JEL-codes: H22 H23 H25 Q28 Q42 (search for similar items in EconPapers)
Pages: 44 p.
Date: 2016
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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