YIMBY to windfarms

As more and more wind and solar farms pop up everywhere, there is quite substantial NIMBY energy in rural areas. While most people “don’t have anything against wind or solar energy” they don’t want to have windmills erected in their community because they are an “eyesore”, “threaten local birdlife”, or are “loud”. But from a financial point of view, windfarms are great for you as data from Spain indicates.

Claudia Serra-Sala from the University of Barcelona collected Spanish municipality level budget data from 1994 to 2022 to see how wind farms change the finances of a municipality. She found that on average, the revenues in municipalities that build a windfarm rise faster than the expenses and thus provide a net financial benefit to residents.

Looking at the budget data, the main driver is that municipalities increase the taxes they raise from windfarms, especially once the wind farm has been built and is active (i.e. when the operators can’t move anymore). Once a wind farm is installed, municipalities squeeze them for more revenues.

These additional revenues are then used to invest in local infrastructure, which in turn generates more growth from new residents and new businesses coming to the local area. And this, of course, increases the tax revenues for the municipalities even more, creating a positive feedback loop that increases wealth and creates jobs in the local area. It is the same growth flywheel that the trains used to provide in the 19^th century. Small towns that were connected to railway lines started to attract more residents and businesses, grew faster, and became richer. Except that in the 19^th century, there was no such thing as NIMBY. People on average welcomed the trains, dirty and loud as they were because it was an era when progress was welcomed.

But today’s rural population is too wealthy to welcome growth and jobs. Or lower taxes. The chart below shows that another beneficial effect of getting a wind farm is that property taxes decline over time because the municipality is generating other income and relies less on the income from property taxes. Being a NIMBY is a stupid and selfish attitude if you ask me (and now, cue all the emails about how the countryside needs protecting, etc.).

Change in property taxes from windfarms (top) and residents (bottom) after a wind farm is being built

Source: Serra-Sala (2024)