Effects of the Construction of Wind Farms on Municipal Economic and Fiscal Indicators - case of the Central Region of Portugal

In recent years, there has been a significant increase in the construction of wind farms in Portugal, increasing energy capacity and providing positive impacts on internal industrial development, export of equipment, generation of jobs, and income at national and local levels. This substantial investment in wind energy not only reduces dependence on imports of energy sources but also exerts a positive influence on sectors Gross Value Added (GVA). Furthermore, the installation of wind farms has the potential to boost municipal revenues. Despite these benefits, there is a notable lack of research work that comprehensively addresses the economic and fiscal impact at the municipal level. This study, based on data from municipalities in the Central Region of Portugal from 2009 to 2019, evaluates the impact of wind energy on the Gross Domestic Product (GDP), as well as on employment, average income, and tax revenue. The analysis also disaggregates the impact on different areas, such as agriculture, industry, and services, as well as tax revenues, considering a detailed breakdown of taxes. The results obtained from statistical inferences reveal that the construction of wind farms have a significant impact on the revenue of municipalities, as well as on the services sector in the Central Region of Portugal. The research findings offer insights to policymakers and researchers regarding the impact of wind energy penetration, aiding in the implementation of policies and strategies for new investments in wind generation capacity, thereby promoting sustainable economic growth in municipalities.