Local Economic Impact of Wind Energy Development: Analysis of the Regulatory Framework, Taxation, and Income for Galician Municipalities
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sustainability Article Local Economic Impact of Wind Energy Development: Analysis of the Regulatory Framework, Taxation, and Income for Galician Municipalities Damián Copena 1,* , David Pérez-Neira 2 and Xavier Simón 1 1 Department of Applied Economy, FCEE, Vigo University, 36310 Vigo, Spain; [email protected] 2 Department of Economy and Statistics, Leon University, 24071 León, Spain; [email protected] * Correspondence: [email protected]; Tel.: +34-986-812506 Received: 13 March 2019; Accepted: 17 April 2019; Published: 23 April 2019 Abstract: Wind energy has rapidly developed in the last decades, generating economic impacts at different territorial scales and contributing to rural development. However, few research works have analysed its economic impact at a local scale, especially in rural areas. Galicia is a Spanish region in which 3300 MW of wind energy have been installed in rural municipalities with low levels of socioeconomic activity and important socio-environmental problems. In this sense, the objective of this work is to analyse the local revenues directly derived from wind power activity in relation to changes in the regulatory framework (1995–2017), as well as to quantify those revenues for the year 2017. For this purpose, information has been systematically collected from secondary sources and complemented with 10 years of field and monitoring work on site at the wind farms. This article reveals the relationship between the regulatory framework and the main sources of income associated with wind power generation (conventional and specific taxes, municipal ownership, and other revenues). In 2017, these revenues amounted to 17.8 million euros. This work discusses how the public policies implemented during the analysed time period limited the direct economic impacts of the installation of wind farms on Galician rural municipalities, and consequently hindered rural development. Keywords: municipalities; public policies; rural development; wind farms; renewable energy 1. Introduction The development of the different forms of renewable energy has, in the last decades, become a priority at both a global level [1] and at the European scale [2]. Among those forms, wind power is one of the most prominent renewable technologies, as has been widely stated in the literature [3]. Thus, this type of energy has rapidly expanded across the world [4,5], facilitating the supply of energy from local and renewable resources and contributing to the fight against climate change [6]. Besides, the installation of wind farms has generated socioeconomic impacts at different territorial levels (national, regional, local), fostering rural development to a greater or lesser extent [7,8]. For instance, Varela and Sánchez [9] have analysed the importance of wind energy impacts on employment generation and the gross domestic product of peripheral regions. Slattery et al. [10] have shown how the installation of wind farms has had socioeconomic effects at a regional and, most especially, at a local level in rural areas of Texas (United States). In addition, recent works have underlined how renewable energy can be an opportunity to create more dynamic local communities [11], to achieve sustainable development at the local government level [12], and to encourage rural development through the sustainable exploitation of local resources [13] (see Section2). Galicia is a region situated in the northwest of Spain. The number of wind farms in the region has increased exponentially in the last few decades. In 20 years, around 4000 wind turbines have Sustainability 2019, 11, 2403; doi:10.3390/su11082403 www.mdpi.com/journal/sustainability Sustainability 2019, 11, x FOR PEER REVIEW 2 of 18 Sustainability 2019, 11, 2403 2 of 18 Galicia is a region situated in the northwest of Spain. The number of wind farms in the region has increased exponentially in the last few decades. In 20 years, around 4000 wind turbines have been beeninstalled installed in more in more than than150 wind 150 windfarms farms across across Galician Galician rural areas. rural areas.These wi Thesend farms wind have farms over have 3300 over 3300MW MWdistributed distributed to 107 to 107out outof 315 of 315municipalities municipalities in Galicia in Galicia (Figure (Figure 1).1 ).In In2016, 2016, Galicia Galicia was, was, after after GermanyGermany andand Denmark, the the third third largest largest territory territory of ofthe the European European Union Union in terms in terms of wind of windpower power per perunit unit area. area. On Onthe theother other hand, hand, it is it important is important to topoint point out out that that almost almost all allof ofthe the wind wind turbines turbines are are locatedlocated in in rural rural municipalities municipalities with with serious serious structural structural socioeconomic socioeconomic problems. problems. To the lowTo populationthe low densitypopulation (98% density of wind (98% turbines of wind are turbines found inare municipalities found in municipalities with less with than less 150 than inhabitants 150 inhabitants per km 2), itper is possiblekm2), it is to possible add the to highadd the ageing high indexageing (Galicia index (Galicia is the secondis the second autonomous autonomous region region in Spain in Spain with thewith highest the highest index) index) [14], the[14], loss the ofloss agricultural of agricultur employmental employment (which (which has has reduced reduced by by 65% 65% in in the the last 15last years) 15 years) and theand increase the increase in the in numberthe number of abandoned of abandoned towns towns and and villages villages (from (from 1064 1064 to to 1726 1726 in in the 2000–2017the 2000–2017 period) period) [15]. [15]. All ofAll these of these factors factors have have led led tothe to the progressive progressive abandonment abandonment of croplandof cropland and forestand forest areas areas [16], causing[16], causing important important environmental environmental problems problems such such as forest as forest fires fires [17 ].[17]. (a) (b) FigureFigure 1.1. TerritorialTerritorial distributiondistribution of: ( (aa)) number number of of wind wind turbines turbines (2018), (2018), and and (b ()b population) population density density (inhabitants(inhabitants perper kmkm22) in municipalitiesmunicipalities with with wind wind farms farms in in Galicia Galicia (2016). (2016). As As can can be be seen, seen, most most municipalitiesmunicipalities with wind wind farms farms in in their their territories territories have have low low population population densities, densities, often often below below 50 50inhabitants inhabitants per per square square kilometre, kilometre, which which makes makes this this new new economic economic activity activity even even more more relevant relevant for for ruralrural areas. areas. MunicipalitiesMunicipalities with more more than than 100 100 wind wind turbines turbines have have an an average average population population density density of of 20.620.6 inhabitantsinhabitants perper squaresquare kilometre, while while the the dens densityity of of those those with with less less than than 10 10 wind wind turbines turbines is is 113.5113.5 inhabitants inhabitants perper squaresquare kilometre.kilometre. Source: Ow Ownn elaboration elaboration from: from: (a) (a) Socioeconomic Socioeconomic Information Information DatabaseDatabase ofof WindWind EnergyEnergy inin GaliciaGalicia (SIDWEG) [18] [18];; (b) (b) Instituto Instituto Galego Galego de de Estatística Estatística (IGE) (IGE) [19]. [19 ]. InIn thisthis context,context, windwind energy emerges as as a a grea greatt opportunity opportunity to to reverse reverse negative negative trends trends and and revitaliserevitalise ruralrural municipalities municipalities in in the the region. region. In this In thissense, sense, the new the local new revenues local revenues associated associated with wind with windpower power development development and the and corresponding the corresponding public public policies policies are two are key two aspects key aspects of the of analysis the analysis of ofpotential potential opportunities opportunities for for the the development development of rural of rural territories territories [20]. [20 The]. Theobjective objective of this of thiswork work is isthree-fold: three-fold: (a) (a)to identify, to identify, characterise, characterise, and analyse and analyse the dynamics the dynamics of the main of the direct main revenues direct derived revenues derivedfrom wind from power wind poweractivity activity and earned and earned by rural by ruralmunicipalities municipalities between between 1995–2017; 1995–2017; (b) to (b) make to make a aquantitative quantitative estimation estimation of of the the local local revenues revenues in in the the last last year year for for which which information information was was available available (2017);(2017); andand (c)(c) toto discussdiscuss thethe influenceinfluence of of the the Galician Galician and and Spanish Spanish regulatory regulatory framework framework on on the the results.results. This article article reflects reflects on on the the economic economic import importanceance of the of themain main sources sources of income of income identified: identified: the revenues obtained from singular wind farms, conventional taxes, the canon eólico (wind power tax), the revenues obtained from singular wind farms, conventional taxes, the canon eólico (wind power and the Environmental Compensation Fund, and other possible revenues such as those derived