Spin City: Local Externalities of Wind Turbines

Sven Heim, Mario Liebensteiner and Félix Michelet

No 12478, CESifo Working Paper Series from CESifo

Abstract: Wind turbines offer significant environmental benefits but also create negative local externalities, such as noise and visual pollution, which can lead to local tensions and community resistance against the energy transition. This paper examines negative and positive externalities associated with wind turbine siting in Germany. Utilizing an instrumental variables approach, we find that wind turbine siting decreases house purchase prices by 1.9% in affected municipalities, with this adverse effect being most pronounced for the first turbines installed. Additionally, the siting of wind turbines reduces local tourism, apartment rents, and leads to fewer building permits being issued for apartments and houses, exacerbating existing housing shortages. On the positive side, each installed wind turbine increases a municipality's local tax capacity by 1.8\% through higher commercial tax revenues. Our findings suggest that the negative externalities can be mitigated by investing the increased tax revenue into local amenities and public services, thereby compensating for the adverse effects of wind turbines.

Keywords: wind power; externalities; hedonic pricing; NIMBY; local disamenities (search for similar items in EconPapers)
JEL-codes: H2 Q4 Q5 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12478

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