The Economic Impact of Wind Energy
There has been a surge in wind power development in recent years, and wind energy has been promoted both as a clean supply of energy and as a way to build local economies, especially in rural areas.
Wind energy has recently become part of the presidential election, as incentives for wind development have been promoted by President Obama and dismissed by Republican nominee Mitt Romney.
What impact does wind energy have on local jobs and income? Until now, there has been no systematic analysis of how wind energy development affects rural counties.
A new paper by five researchers* attempts to measure what the wind industry means for rural counties. According to the study, published in the current issue of Energy Economics, the researchers find that wind energy development does increase both total personal income and employment in the county where the development takes place.
The economists looked at wind capacity installed from 2000 to 2008 in 12 states: Iowa, Kansas, Minnesota, Nebraska, North Dakota, South Dakota, New Mexico, Oklahoma, Texas, Colorado, Montana, and Wyoming. In all, the study area included 1,009 counties.
The researchers found that for every megawatt of wind power capacity installed, total county personal income increased by $11,150 over the 2000 to 2008 period.
And, for every megawatt of wind energy installed in a county, one half of a job was created.
Jason Brown, et al.
The most powerful wind turbine is rated at 7 megawatts. One of the world’s largest wind turbine farms is in Roscoe, Texas, where there are 627 wind turbines and a total installed capacity of 781.5 megawatts.
The researchers attempted to weed out all the other factors that determine job growth and income in a county’s economy — such as the distance from the county to a city and the presence of natural amenities (lakes, mountains or rivers).
When those economic drivers were taken into account, the effect of wind energy alone was small in some counties, but relatively large in counties with the most wind development. In the group of counties that experienced the most impact from wind energy development, county-level personal income rose a little less than one percent between 2000 and 2008.
“In absolute terms, the average estimated increase in annual personal income from wind power development for the top quartile of counties (in terms of percentage impact, i.e., 0.86% and above) was estimated to be $2,552,679 over the sample period,” the researchers found.
In the counties most impacted by wind development (those in the top quarter), employment rose an average of 1.4 percent, or 132 jobs.
Brown, et al.
By the end of 2011, roughly 47,000 megawatts of wind turbines had been installed in the U.S., accounting for about 2.5 percent of the nation’s electricity supply. From 2007 to 2010, wind contributed 36 percent of all new electric generation built in the U.S.
“Whether the local economic development impacts of wind power are sizable enough to be policy relevant on a local, state, or national level is open to debate,” the researchers conclude.
* The five authors of the report, "Ex post analysis of economic inpacts from wind power development in U.S. counties," are Jason P. Brown and John Pender of the USDA’s Economic Research Service; Ryan Wiser and Ben Hoen of the Lawrence Berkeley National Laboratory; and Eric Lantz of the National Renewable Energy Laboratory. The article appears in Energy Economics 34 (2012), pages 1743-1754.