Abstract:
“Gone with the Wind: Renewable Energy Infrastructure, Welfare, and Redistribution”
Milan Quentel* (Stanford University)
Electricity production from wind and solar energy is becoming increasingly cheap. At the same time, development of new parks is often slow, in part because residents who dislike the impact of energy infrastructure on their communities protest and delay the construction. In this paper, I use economic theory and empirical analysis to better understand residents’ concerns. I infer residents’ preferences with a revealed preference approach. Intuitively, depending on how many residents move away after a wind turbine is built close to their neighborhood, their perceived cost of the wind turbine, be it from the visual impact or noise, may be larger or smaller. Using comprehensive data from Germany, I estimate this preference as well as how much money a policy-maker or developer would have to pay residents to fully compensate them for the negative utility of living close to a wind turbine. Given the estimates, I show that current wind turbine projects in Germany come with high implicit costs because they are often located too close to too many residents. Alternative placements of wind turbines further away from residents can substantially lower implicit costs, but they also shift the burden to rural and poorer regions. I argue that this trade-off between implicit costs and inequality is a core challenge for the transition to renewable energy. To overcome it, I discuss scenarios that allow Germany to achieve its wind energy development goals with low impact on residents, and I calculate how much policy-makers would have to pay to compensate residents for their concerns and to incentivize and speed up future development.
*Denotes presenter