The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project: A Social Accounting Matrix Approach
AbstractAs demand for electricity from renewable energy sources grows, there is increasing interest, and public and financial support, for local communities to become involved in the development of renewable energy projects. In the UK, â€œCommunity Benefitâ€ payments are the most common financial link between renewable energy projects and local communities. These are â€œgoodwillâ€ payments from the project developer for the community to spend as it wishes. However, if an ownership stake in the renewable energy project were possible, receipts to the local community would potentially be considerably higher. The local economic impacts of these receipts are difficult to quantify using traditional Input-Output techniques, but can be more appropriately handled within a Social Accounting Matrix (SAM) framework where income flows between agents can be traced in detail. We use a SAM for the Shetland Islands to evaluate the potential local economic and employment impact of a large onshore wind energy project proposed for the Islands. Sensitivity analysis is used to show how the local impact varies with: the level of Community Benefit payments; the portion of intermediate inputs being sourced from within the local economy; and the level of any local community ownership of the project. By a substantial margin, local ownership confers the greatest economic impacts for the local community.
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Bibliographic InfoPaper provided by University of Strathclyde Business School, Department of Economics in its series Working Papers with number 0811.
Length: 76 pages
Date of creation: Oct 2008
Date of revision:
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More information through EDIRC
renewable energy; rural economic impacts; revenue sharing; community ownership;
Other versions of this item:
- Grant Allan & Peter Mcgregor & Kim Swales, 2011. "The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project: A Social Accounting Matrix Approach," Regional Studies, Taylor and Francis Journals, vol. 45(9), pages 1171-1186, March.
- Allan, Grant & Ault, Graham & McGregor, Peter & Swales, Kim, 2008. "The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project: A Social Accounting Matrix Approach," SIRE Discussion Papers 2008-42, Scottish Institute for Research in Economics (SIRE).
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
This paper has been announced in the following NEP Reports:
- NEP-ACC-2008-12-01 (Accounting & Auditing)
- NEP-ALL-2008-12-01 (All new papers)
- NEP-ENE-2008-12-01 (Energy Economics)
- NEP-PPM-2008-12-01 (Project, Program & Portfolio Management)
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