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

Listed author(s):
  • Peter Haan
  • Martin Simmler
Registered author(s):

    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.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.530367.de/dp1568.pdf
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    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1568.

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    Length: 44 p.
    Date of creation: 2016
    Handle: RePEc:diw:diwwpp:dp1568
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