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

Discussion Papers 1568, 44 S.

Peter Haan, Martin Simmler


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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.

Peter Haan

Abteilungsleiter in der Abteilung Staat

JEL-Classification: H22;H23;H25;Q28;Q42
Keywords: Incidence, subsidy, renewable energy, wind turbines, land prices
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