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The Economic Impact of Wind Energy and its Potential







The Economic Impact of Wind Energy and its Potential

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The Economic Impact of Wind Energy and its Potential


Wind energy is recognized as clean energy because it does not harm the environment and is also a renewable energy that reduces the dependence on fossil fuels. Wind power is the most rapidly growing renewable source of energy globally. Notably, electricity plays a significant role in a country’s economic growth, and its demand is continuously rising. Therefore, it is essential to invest in more renewable and green energy to meet the increasing electricity demand. Wind energy is becoming popular globally for producing clean energy that is environmentally friendly, being a good source of income, and reducing secondary waste production (Copena, Pérez-Neira & Simón, 2019). Wind energy provides several economic benefits to any community, such as job creation, source of revenue for land owners, increased tax base, reduction of electricity bills, and other benefits such as tourist attractions (Adeyeye, Ijumba & Colton, 2020). Additionally, researchers argue that wind energy creates spillover effects. During wind power installation, money circulation results from transactions that indirectly make growth and employment in different sectors.

Wind energy can be used to supply electricity and is applicable in various areas such as businesses, hospitals, schools, ranches, farms, and other community facilities. Wind energy projects are owned by the local government or a group of people who invest in a clean energy project. Projects owned by the local community have more economic impacts because they create more economic opportunities than the project owned by companies that have less connection with the community (Adeyeye, Ijumba & Colton, 2020). Therefore, wind project developed by the local government creates more economic benefits to the community because of the local ownership, and the profits from the project remain in the area. There have been different researches on this topic that relies on input-output models. Brown et al. (2012) used econometric analysis to estimate wind energy’s economic impact, and it is the most convincing analysis to date (Adeyeye, Ijumba & Colton, 2020). This essay aims at analyzing some of the economic impacts of wind energy and its potential.

Positive Economic impact of wind energy

Creation of Employment

Notably, employment is a crucial factor in economic growth. Wind energy has created jobs for people living in areas where the energy is being used. More Jobs in the manufacturing, construction and transportation sectors have been created due to wind energy projects. However, employment created by wind energy developments depends on deployment, trade, federal incentives, and the currency’s value (Copena, Pérez-Neira & Simón, 2019). In any wind power plant’s development, people get employed in various sectors, thus creating an indirect economic impact on the community, such as manufacturing and supply chain.

Additionally, people working on the project, especially during the construction phase income will spend money on amenities such as hotels and restaurants, which also impact the economy (Copena, Pérez-Neira & Simón, 2019). Furthermore, the industry offers local support services, and also, the developers spend money locally buying materials and services during the construction phase. The local support services largely maintain the wind farms.

Sustainable income for Land Owners

Wind turbines are hosted on people’s property, and the owners get significant land rents, thus offering them long-term income. The land payments are structured in fixed payments, revenue-based payments, or a combination of both payments (Copena, Pérez-Neira & Simón, 2019). Therefore, the wind energy developers prefer negotiating the method of land payment with the landowners based on various considerations, including the economic impact of the particular project. The turbines use only a small footprint, and farmers can plant crops and graze livestock on the land. Therefore, the landowners in rural areas have some added income from cash crops.

Property Value

            Wind power brings development to an area, thus increasing the value of properties in that area. The property surrounding the wind farms has been investigated and researchers found that their value increases with time. According to Copena, Pérez-Neira and Simón (20190, property value increases after the placement of wind turbines. However, some studies, such as the study conducted by Smith and Boileau-Economics (2014), indicated no significant evidence that the value of new property wind turbines increases before or after construction.

Local Authority rates

The local authority receives tax from the property payments, which is utilized to build local amenities such as schools, bridges, health centers, roads, and other infrastructures. Additionally, this industry has helped many areas improve the local infrastructures around the areas where the wind project is being constructed. As wind farms are developed for the wind energy project, local infrastructures such as roads and power are upgraded and improved (Smith & Boileau-Economics, 2014). These upgrades are an added incentive for the local communities and authorities. Furthermore, if wind energy projects are ideally situated, they can bring net economic benefits to the local areas and the entire country.

Cost competitive

The cost of electricity has considerably gone down with the introduction of wind energy. Wind energy is currently the least expensive form of energy and is the leading competitor in price with other power sources, especially fossil fuels. Notably, there are new technologies that are making it efficient to extract wind energy. We benefit from wind energy because the wind is free. Therefore, fossil fuel prices are increasing while wind power costs are going down, thus making wind energy more efficient (Smith & Boileau-Economics, 2014). Furthermore, fossil fuels may deplete in the future, but the wind is renewable energy, thus making it easy to know the cost of power.

Boosting the local economy

The local economies develop from wind energy projects. According to Smith (2014), there is a statistically significant and positive relationship between wind turbines, per capita employment, and income (Smith & Boileau-Economics, 2014). Notably, there is an annual local expenditure during the operation and maintenance phase of the wind energy project. Therefore, capital is kept flowing within the localities, thus having energy independence remain at the local level. Some studies conducted by economists in several states in the US found that wind energy projects increase total income and employment in developing economies (Smith & Boileau-Economics, 2014). Additionally, the researchers found that wind energies created many jobs and increased individual revenues. Also, communities affected by wind energy developments increased payments for installation, operations, or leasing turbines. Researchers argue that there is also a positive impact of wind energy development on the local economy through increased GDP per capita, mainly due to increased investment.

Wind Energy Tourism

In most areas, tourism is a critical factor in the local economy, and wind energy projects are perceived as improving the tourism sector for people interested in the technology. Notably, wind energy can be perceived as an opportunity for a community to create awareness and educate people about clean energy and capitalize on renewable energy identity. Although it may be challenging to determine the economic effect of tourism, there is a positive relation. Researchers argue that wind turbines increase the tourism demand; therefore, there is a positive economic impact. However, in some economies like German, there is a negative correlation between the two, but overall, most tourists consider wind turbines to impact the landscape positively.

The negative economic impact of wind energy

Although wind energy seems to be considerably beneficial to the community, it has some drawbacks. Some of the economic issues related to wind energy development include electricity prices, housing values, volatility, and sometimes unemployment ((Dorrell & Lee, 2020).

Electricity prices: Installing wind energy is expensive, and the government uses many resources to promote its development. The cost is passed on to the consumers. There are a lot of financial constraints when developing and constructing wind energy projects, and in most places, the government works with private contractors by offering them subsidies and tariffs (Dorrell & Lee, 2020). However, the development benefits the economy in the long run.

Housing values: researchers argue that the value of homes surrounding the wind farms is reduced due to the wind turbines. Home owners reding close to wind farms are concerned about the devaluation of their property (Dorrell & Lee, 2020). The property devaluation is mainly a result of noise from the turbines, visual obstructions, and other related distractions that negatively affect people living close to the wind farms (Dorrell & Lee, 2020). Additionally, the construction phase of wind energy has been said to negatively impact the well-being of the residents residing in areas near wind farms.

Volatility: Wind energy increases the volatility in the electricity markets as it is not constant. It is impossible to predict the amount of energy generated from wind because it depends on the speed of the wind. Wind energy can be high or low and when the energy is high the prices are low and when low the prices increase in short term. Therefore, volatility in the electricity market affects consumers and the government in their decision-making (Dorrell & Lee, 2020). Notably, consumers and government benefit from market stability.

Unemployment: Although wind energy creates direct and indirect employment, it also brings unemployment to the competing industries resulting from the crowding effect. Employment in wind energy is a trade-off with other industries and after considering the losses, employment created by wind energy may have a slight negative impact on the economy. There is a lot of debate in this area because some researchers argue that the total employment impact is negative on the economy (Dorrell & Lee, 2020).

Wind energy and its potential

There has been increasing installation of wind energy globally in the recent past. Wind energy is an excellent source of renewable energy and could be the most significant source of electricity in the future. It has a lot of potentials since it is renewable and does not have adverse effects on the environment (Lu & McElroy, 2017). Currently, the world is moving towards environmentally friendly activities to minimize global warming and other negative effects of a polluted environment. Therefore, wind energy has the potential to be used as the primary source of energy supply in many areas of the world due to the growing global markets that will enhance the projects’ equipment, such as making large wind turbines.

Researchers argue that wind energy has the potential to generate electricity onshore of up to 50,000TWh annually. There is a possibility of tapping considerable offshore electricity. With advanced technologies, wind turbines are being made in large sizes, leading to the production of more wind energy. Additionally, wind energy has the potential to lower electricity costs. Engineers have started designing and creating airborne wind turbines which will possess gases such as helium to stay high where the wind is strong. The advanced equipment could be used for offshore use since it is expensive to install typical wind turbines on tall buildings and towers (Lu & McElroy, 2017). There have been talks that could consider making artificial wind-harvesting trees. All these ideas and innovations have great potential to enhance wind energy production.

Although wind energy has some great positive potential, it also has some negative potential related to environmental impacts such as reducing habitat for wildlife such as birds and bats. Furthermore, wind energy uses wind turbines that may concern people living near the wind farm due to the noise produced. However, advanced turbines are designed to have very little noise. Also, wind turbines can interfere with aircraft navigation systems (Lu & McElroy, 2017). It is necessary to address this issue with appropriate location and design. Additionally, wind energy production can interfere with some communication networks such as television and radio signals or phone networks. This effect needs to be controlled by the responsible department. Other potential includes electromagnetic radiation from the turbines. Still, so far, the effects have been identified to be weak and do not pose health risks to the people living in the areas.


Wind energy has a more positive economic impact on any economy. Installing wind energy has a positive correlation to per capita employment and income. Researchers argue that wind energy has the potential to boost local economic growth. Wind energy creates employment, but it has also been found to bring unemployment to competitors. The construction phase of wind energy projects has significant economic impacts on the local communities as it creates economic opportunities even for other industries such as hotels and restaurants. During construction, there is money transaction in the community, which is beneficial to the community. The wind is free, and using wind energy can help the government save a lot of money in the future compared to fossil fuels. Although there are negative economic impacts of wind energy, it has a tremendous economic impact on the economy. Based on the past and current research, wind energy has the potential to displace fossil fuels in the future and provide significant economic benefits to the local communities.


















Adeyeye, K., Ijumba, N., & Colton, J. (2020). Exploring the environmental and economic impacts of wind energy: A cost-benefit perspective. International Journal of Sustainable Development & World Ecology27(8), 718-731.

Copena, D., Pérez-Neira, D., & Simón, X. (2019). The local economic impact of wind energy development: analysis of the regulatory framework, taxation, and income for Galician municipalities. Sustainability11(8), 2403.

Dorrell, J., & Lee, K. (2020). The cost of wind: Negative economic effects of global wind energy development. Energies13(14), 3667.

Lu, X., & McElroy, M. B. (2017). Global potential for wind-generated electricity. In Wind Energy Engineering (pp. 51-73). Academic Press.

Smith, S., & Boileau-Economics, M. (2014). The economic impact of wind power development. University of Colorado, Boulder CU Scholar.

WIND, E. I. O. O. Potential Economic Impacts from Offshore Wind in the Southeast Region. Development95, 1-695.



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