The Impact of Wind Development on County-Level Income and Employment: A Review of Methods and an Empirical Analysis (Fact Sheet). Wind And Water Power Program (WWPP).

Abstract

WIND AND WATER POWER PROGRAM The Impact of Wind Development on County-Level Income and Employment: A Review of Methods and an Empirical Analysis Photo by Ruth Baranowski, NREL/PIX 16410 Introduction The economic development potential from wind power installations has been a driver of public and policy support for the industry at the local and state levels for many years. The possibility for economic development has been particularly salient in rural areas of the country where new investment, earnings growth, and employment opportunities have, in many cases, otherwise trended downward for some time. Despite frequent mention of the economic development potential of wind power projects, however, questions persist on the magnitude, distribution, and durability of these impacts. Of particular concern for rural communities is whether new investment in wind power projects stimulates long-term local economic growth and employment. Questions about the economic development and employment impacts of wind power also persist at the national level. However, such debates tend to be more concerned with potential economic losses associated with displacement of other energy sources or land uses and the macroeconomic effects of policy support for renewable energy and changes in electricity rates that might result from wind energy deployment. The present analysis focuses solely on county-level impacts. Historically, analyses of the state and local economic development potential of wind power installations have largely been based on project-level case studies and input- output modeling. The National Renewable Energy Laboratory’s (NREL’s) Jobs and Economic Development Impacts (JEDI) Wind Model is one of the more well-known input-output tools used to conduct this type of analysis. Past studies have provided notable insights into potential economic development impacts at the state and local levels from the construction and operational phases of wind power projects. Table 1 summarizes operations-period results from studies that have evaluated long-term impacts at a local or county level. However, much of this work has been based on hypothetical or proposed projects and spending patterns. Moreover, generic methodological concerns associated with input-output modeling, including the assumption that impacts are linear or insensitive to large changes in demand, the use of potentially non-representative industry and input data, and an emphasis on gross rather than net impacts (e.g., a failure to capture displacement or opportunity costs), have resulted in criticism of the results of previously published analyses. Table 1. Past Input-Output Modeling Studies: Range of Estimated County-Level Employment, Earnings, and Economic Output Impacts for the Operations Phase of Wind Power Projects 1 Employment Impacts (Jobs per MW) Annual Earnings 1 Impacts ($/MW) Annual Economic Output ($/MW) Absentee-Owned Projects Projects with a Local Ownership Component For a full listing of the data sources from which these ranges were derived, please see Science Direct, Energy Economics. 2 To gain an enhanced understanding of the long-term county-level impacts from a large sample of operating wind power projects and to understand the potential significance of methodological criticisms, the Economic Research Service of the U.S. Department of Agriculture, the Lawrence Berkeley National Laboratory, and NREL recently joined efforts. The goal was to complete a first-of-a-kind study that quantifies the annual impact on county-level employment and personal income resulting from wind power installations in nearly 130 counties across 12 states. The results of this study, as well as a comparison of those results with the prior county-level estimates generated from input-output models, are summarized here. The full study results are available at Science Direct, Energy Economics. 2 1 A measure of labor income that includes wages and employer-based benefits. 2 http://www.sciencedirect.com/science/article/pii/S0140988312001466 . For access to the full article, a subscription may be required.