Are Wind Turbines a Mafia Windfall? The Unintended Consequences of Green Incentives

Abstract

Over the past decades, national and supranational governments have amply incentivized wind farm power production. In this paper, we reconstruct investments in the wind sector over twenty years of national support schemes in Italy, and we uncover unintended consequences of wind incentives exploited by criminal organization groups. We show that Italian mafia-exposed municipalities register a larger take-up of incentives for wind energy production, measured with the number of wind farms. The differential effect appears when the national energy services authority started withdrawing the excess supply of tradeable Green Certificates. With the end of the national intervention in the market, when the system of incentives became more competitive, installed power capacity sharply decreased. Further, we do not observe any differential in the take-up of mafia-exposed municipalities based on local physical constraints related to the wind potential nor spillover effects in neighboring municipalities. Our analysis highlights the risks of criminal infiltration in the green energy sector, especially when incentive schemes are insufficiently competitive and overly generous.