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Wind Power Development's Economic Impact on Rural Communities

June 12, 2013

Audio with Jason Brown, Kansas City Federal Reserve Bank Economist (MP3 2.5 MB). Download Windows Media Player. Time: 00:02:45.

The U.S. Department of Agriculture's Economic Research Service recently completed a study of the effects of wind power development on county-level income and employment in 12 states of the wind-rich Great Plains and Rocky Mountain regions. Compared to prior studies of economic impacts of wind power, this study—conducted in collaboration with researchers from the Lawrence Berkeley Laboratory and National Renewable Energy Laboratory—used econometric analysis of county-level income and employment data to assess the impacts of wind power development on economic outcomes.

Economist Jason Brown, with the Kansas City Federal Reserve Bank, says other studies have used an input-output model that looks at the linkages of investing in one sector of the economy and how that transmits into spill-over into other sectors.

"So we had this idea of using county-level data and basically we knew the number of megawatts of installed capacity at the county level. We then looked at a wind-rich resource area in the central part of the United States, particularly the Great Plains and part of the Midwest. And we said, well, we know this is where the development is and we know what the wind resource potential is, so we decided to try and estimate regional growth models that would look at differences or changes in personal income and employment where this wind power development has occurred. And then we were able to hold constant other growth factors that might somehow affect the local economy."

Brown says researchers looked at wind power development's effect between 2000 and 2008 in more than 1,000 counties. The results showed each additional megawatt of installation translated into approximately $11,000 of personal income in the county during this time period, according to Brown, along with half-a-job per megawatt. He says those findings were consistent with prior literature of possible effects.

"Another way that we tried to interpret our results was to actually put it as a percentage of base period economic activity. So the year 2000 was like our base period. Essentially what we found is that in the places where there was installation, the amount of income that was represented as being generated from wind power development was about 0.2%. Likewise, for employment, the amount of employment developed by wind power development was 0.4%."

Overall, Brown says researchers concluded the effects aren't large but in places with lower levels of base income or employment the impact of wind power development was relatively stronger.