Wind electricity subsidies = Windfall gains for land owners? Evidence from a feed-in tariff in Germany∗

In 2013, around 121 billion US-Dollar have been spend worldwide to promote the investment into renewable energy sources. The most prominent support scheme employed is a feed-in tariff, which guarantees a fixed price for electricity produced by renewable energies sources, usually for around 15 years after the installation of the plant. We study the incidence of wind turbine subsidies due to a feed-in tariff in Germany into land prices to shed light on who benefits from the subsidies. For the identification of the incidence share we exploit quasi-experimental variation in wind strength across 270 non-urban counties combined with an institutional reform and use an Instrumental Variable estimator based on administrative transaction prices. We find that between 15 and 20% of expected wind turbine profits are capitalized into land prices. Using the estimated incidence share of 15%, we find that wind turbine subsidies increase overall agricultural land owners income