Measuring Renewable Energy Externalities: Evidence from Subjective Well-being Data

Electricity from renewable sources avoids disadvantages of conventional power generation but often meets with local resistance. We use 324,763 observations on the subjective well-being of 46,678 individuals in Germany, 1994-2012, for identifying and valuing the local externalities from solar, wind, and biomass plants in respondents' postcode district and adjacent postcode districts. We find significant well-being externalities of all three technologies that differ with regard to their temporal and spatial characteristics. The monetary equivalent of 1 MW capacity expansion of wind power and biomass installations is estimated to be 0.35% and 1.25% of monthly per capita income, respectively. (JEL D62, Q42)