PR - WIND TURBINES IN GERMAN AGRICULTURE - NO RISK, NO GAIN? CURRENT SITUATION AND ECONOMIC VIABILITY

Clemens Fuchs, Karl Marquardt, Joachim Kasten and Katharina Skau

No 345861, 22nd Congress, Tasmania, Australia, March 3-8, 2019 from International Farm Management Association

Abstract: Only a small number of German farmers invest into wind turbines on the land they own. In contrast to that they tend to rather lease land for that purpose to investors. An explorative qualitative study on the reasons for this investment pattern was conducted. Calculations of the economic efficiency (e.g. net present value, pay off) of wind turbines build the foundation of the study. In addition, farmers in the North-East Federal State Mecklenburg- Western Pomerania were interviewed for their motives of their capital expenditures. A considerable amount of equity capital is required for setting up a wind turbine. The capital invested frequently competes with the purchase of agricultural land. Building wind turbines involves risks. In advance substantial financial means for a planning permission and other examinations precede the construction of a wind turbine. Only in the very end of these costly investigations a construction permit will be issued, facing a farmer with a high level of uncertainty during the whole process. Fluctuations in wind yield and therefor volatile revenues confront farmers additionally with financial uncertainties. Risk taking behaviour of farmers was assessed normatively by the Hurwicz criterion. Results showed, that only farmers, with the necessary funds at their disposal and a high level of optimism were more likely to take the risk to set up a wind turbine on their land. They take this decision despite the fact that leasing once own land to other investors is of predictable profit and clearly less risky.

Keywords: Resource/Energy Economics and Policy; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 19
Date: 2019
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/345861/files/PR-2019-IFMA_Fuchs_4.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:ifma19:345861

DOI: 10.22004/ag.econ.345861

Access Statistics for this paper

More papers in 22nd Congress, Tasmania, Australia, March 3-8, 2019 from International Farm Management Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search (aesearch@umn.edu).