Image by Flickr from Pexels
Clash in Rural Areas: Economic Benefits of Wind Farms Versus Quality of Life Concerns
A surge in wind power development in the central region of the country has proven to be a lucrative opportunity for struggling rural areas.
Coke County, Texas, boasting a population of approximately 3,300, experienced the most substantial rise in economic output nationwide from 2019 to 2021, as per a Stateline analysis of Bureau of Economic Analysis data. The county’s gross domestic product (GDP) skyrocketed from $128 million to $235 million, a remarkable 83% increase.
Out of the top 10 counties with the largest GDP growth, seven had recently witnessed significant wind farm construction, according to the analysis.
When considering GDP on a per-capita basis, Coke County saw an impressive jump from around $39,000 to $71,000. Similar increases were observed in rural counties in Colorado and South Dakota, reflecting a record-breaking year for wind turbine construction in 2020. Additionally, landowners receive annual royalties, typically amounting to $10,000, for hosting these turbines.
“We reside in a financially deprived West Texas county that seldom experiences economic stimulation,” expressed Hal Spain, the county judge, who serves as the highest elected official in Coke County. “We are thrilled about this development.”
Occasionally, wind farms encounter criticisms regarding their visual impact and noise, and some opponents object to the subsidies and tax advantages granted to them by local authorities. Certain states have implemented measures that make it easier for local governments to impede wind and solar projects, while others delegate the authority to approve sites to state regulators.
In rural regions like Coke County, where drought has taken a toll on ranchers’ herds and oil production is dwindling, wind farms are generating funds to address various aging infrastructural needs, such as road repairs, recreation centers, senior centers, and swimming pools, according to Spain.
This is precisely how Coke County intends to utilize the annual payment of $787,500 it will receive from the Aviator Wind Farm over the next decade. The negotiated agreement stipulates that the wind farm will be exempt from property taxes on the turbines. Aviator, which consists of 191 turbines, commenced operations in 2020, with Facebook (now Meta) and McDonald’s signing agreements to purchase its electricity.
Although the payment may be lower than what property taxes would have generated, the truth is that “if you don’t provide them with the (tax) abatement, they’ll simply move on to the next county,” Spain explained.
According to Eric Brunner, an economics professor at the University of Connecticut specializing in the economic effects of wind farms on local governments, Coke County’s spending aligns with how other counties are utilizing their wind farm payments.
According to a report from the Rocky Mountain Institute, the benefits of wind and solar power to local areas have the potential to generate annual revenue of $60 billion by 2030. This substantial amount will largely flow to rural regions and could rival the economic impact of major industries like beef, corn, and soy. The projected $60 billion figure encompasses various aspects, including $2.7 billion in annual tax revenue, $2.2 billion in yearly payments to landowners, and $6 billion in annual wages for construction and maintenance jobs.
Coke County, along with six other counties in the top 10 for GDP growth, reaped the rewards of significant wind power development. These counties include Foard County, Texas; Cheyenne County, Colorado; Hyde County, South Dakota; Shoshone County, Idaho; Clark County, South Dakota; and Throckmorton County, Texas, as noted by Ben Hoen, a research scientist at Lawrence Berkeley National Laboratory. Cheyenne County, specifically, experienced a remarkable 77% rise in GDP, ranking third in the nation, primarily attributed to the 228-turbine Cheyenne Ridge wind farm. This economic upturn has led to positive changes such as the opening of new stores and the swift sale of newly constructed homes, according to Jennifer Wells, the county’s economic development director.
It’s important to note that the GDP figures do not include turbines built in 2022, which are expected to further contribute to economic growth in rural areas. Federal data on new turbines through late 2022 indicate that counties in Nebraska, New Mexico, Oklahoma, South Dakota, and Texas are among those likely to experience economic boosts.
Significant wind farm construction is concentrated in regions identified as high-wind areas, spanning from the Dakotas southward to Oklahoma and Texas, including Kansas, Nebraska, and neighboring states. Additionally, there are notable concentrations around Iowa and the Great Lakes.
According to federal data analyzed by Stateline, Texas takes the lead among all states with 18,315 turbines as of late 2022. It is followed by Iowa (6,205), California (5,981), Oklahoma (5,370), and Kansas (3,962).
Texas has utilized tax abatement incentives to attract wind farms, including the provision that allows local governments to grant 10-year abatement agreements similar to the one employed by Coke County.
However, the conservative Texas Public Policy Foundation opposes these tax abatements, considering them as “corporate welfare.” Brent Bennett from the foundation, which receives partial funding from oil and gas interests, argues that the abatements have allowed wind farms to dominate an excessive portion of Texas’ power capacity. Approximately one-fourth of the energy consumed in Texas is generated by wind.
In Texas and other parts of the country, some local residents have organized opposition against wind farms. They have even resorted to legal action to combat nearby installations that they perceive as visually unappealing and noisy.
“This has created a significant divide among residents in rural counties. Clearly, there are individuals who are benefiting financially and receiving royalties, and they are satisfied with the situation. However, those who have to live in these areas despise it. They are vehemently opposed,” Bennett remarked.
Gregg Hubner, a real estate appraiser who owns a farm in Avon, South Dakota, can observe 13 turbines from his home. He asserts that had he known about the turbines being installed in the neighboring area, he would never have built his house there.
“In real estate, location is paramount, and who would choose to live in a place where 13 of these massive structures are constantly spinning? Nobody would want that in a million years,” Hubner expressed.
Recently, an Oklahoma state court ruling favored the Kingfisher Wind Farm’s legal challenge regarding how counties were calculating its property taxes. As a result, schools across the state are facing turmoil. Andy Evans, the finance director of the Oklahoma Public School Resource Center, which advises school boards on the matter, revealed that there will be a statewide shortfall of $32 million as they are obligated to return contested tax funds. This situation poses a significant problem for schools, as they must make difficult choices: either defaulting on payments or finding a temporary solution to reallocate funds until they can adjust tax rates based on the court’s decision. Schools have requested a reconsideration of the ruling from the courts.
Evans noted, “This issue is particularly complex due to its eventual impact on taxpayers and rural communities. They will have to make up the difference.”
In Coke County, Judge Spain expressed uncertainty about what lies ahead when the negotiated payments come to an end. After ten years, a substantial portion of the taxable value of the turbines will be depreciated or written off.
“Do you hire someone and then, what, lay them off in ten years?” Spain questioned. “We have to be cautious about how we utilize this money.”
However, royalty payments to landowners, often farmers or ranchers, continue and can assist them in purchasing equipment, implementing irrigation systems, or constructing homes, as stated by Sarah Mills, a senior project manager at the Graham Sustainability Institute at the University of Michigan.
“For communities that are fully committed to agriculture, wind power aligns well,” Mills explained. “However, for those seeking significant residential development or relying on tourism and the natural landscape, a closer examination may be necessary.”
Information Sourced From: