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Analysis: wind farms can boost local economies

New energy generation constitutes a major investment, often to the value of hundreds of millions or potentially billions of Euros. And such spending results in widespread economic development, in the form of increased work opportunities, higher salaries, and new customers for local business. PES examines the greater impact of channelling wind farm investment into the local economy.

Estimating the local economic development impacts allows decision-makers to incorporate economic development in their decision-making. And given an economic development impacts analysis, decision-makers are able to assess impacts based not only on the cost of energy but also on a project’s ability to provide jobs and economic growth within a given constituency. Furthermore, understanding the drivers of economic development as it relates to new energy projects can allow policymakers to tailor local policy so that their economic development benefits are enhanced. The following outlines a breakdown of the inherent costs and the resulting impact on the local economic community.

Landowner lease payments represent a sizable direct economic impact. Frequently in the order of Euro 3000/MW, these payments constitute millions for large-scale wind projects. In addition, they constitute a direct payment to rural landowners that on a per-acre basis is much greater than the gross revenue from common agricultural crops including, say, corn, wheat, and barley. Likewise, property tax payments are a large benefit to local communities; and these payments can increase the local tax base, allowing for budget increases or a lowering of the taxing district’s general tax rate.

While landowner lease payments and property tax payments generally constitute a moderate portion of economic development impacts, the high-profile, direct nature of these payments suggests that local communities are likely to pay increased attention to these parameters if they are thinking about policy to promote wind development.

Policymakers may have little direct influence over land lease payments. These arrangements are typically priced by the market and may depend on the local wind resource, local property values, access to transmission, and developer or corporate practice. However, policymakers may be able to enhance the value of land lease payments secondarily by establishing education and outreach programs for landowners with high-quality wind sites, or by facilitating transmission infrastructure development to wind resource areas. Such efforts may serve to increase landowner knowledge regarding the value of their property and ensure that viable resource sites are accessible to developers.


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