Ruhr Economic Papers

Ruhr Economic Papers #729

The Effect of Financial Compensation on the Acceptance of Power Lines: Evidence from a Randomized Discrete Choice Experiment in Germany

by Michael Simora

RGS, RWI, 12/2017, 29 S./p., 8 Euro, ISBN 978-3-86788-849-3 DOI: 10.4419/86788849



Despite general support for the transition towards renewable energies, local opposition may hamper the required power line construction. This paper evaluates a large randomized one shot binary choice experiment with about 10,000 observations to examine the effect of annual community compensations based on current legislation as well as the effect of household compensations on the willingness to accept new power line construction. Results reveal that community compensations have no bearing on the acceptance level, whereas personal compensations have a negative effect via crowding out intrinsic motivation to support the construction project or via signaling negative impacts for residents. Thus, policy makers should refrain from financial payments as an instrument to decrease local opposition.

JEL-Classification: M52, C93, Q40

Keywords: Not-in-my-backyard; compensation payment; willingness to accept; motivation crowding out