WILL THE MUNICIPALITIES BENEFIT? : The impact of wind power deployment on the local economy- Evidence from Sweden

Abstract: Investment in wind energy has increased rapidly in the past few decades in Sweden and is believed to be important for mitigating climate change and contributing to energy independence. Despite this, wind power projects are frequently met with local opposition, and many wind power projects are rejected by the municipal veto. While this might indicate that municipalities are not compensated enough, little evidence exists on the net impact of wind power deployment on local economies. Hence, this thesis aims to fill this knowledge gap by analysing the Swedish municipal economic impacts in terms of per capita income and employment of wind power installations from 2010 to 2021. This is done by conducting a panel data analysis that evaluates the impact of the construction as well as the operation and maintenance phases of a wind power project and which accounts for the spatial spill-over effects from neighbouring municipalities. The results suggest that for every additional MW of installed wind power capacity, total municipal employment increases by 0.24 jobs per MW and that the employment effect is greatest during the construction phase. However, no statistically significant impact is found on municipal income per capita, suggesting that Swedish municipalities do not benefit enough from wind power deployment.