Fiscal Windfalls and Electoral Politics: Evidence from Wind Energy Compensation in Spain

Does fiscal compensation shape the political sustainability of the green transition? This paper studies how the institutional design of wind energy revenues affects voting behavior in municipalities hosting wind farms. We exploit a quasi-experimental setting in Spain, where regional governments adopted staggered laws channeling wind farm canon revenues to municipalities at different times and with different degrees of redistribution — generating comparable communities with divergent fiscal experiences from otherwise identical infrastructure. Combining comprehensive data on wind farm installations with electoral records spanning four decades and four levels of government, we examine whether municipal incumbents benefit electorally from wind-related fiscal windfalls, whether neighboring municipalities bearing disamenity costs without compensation shift toward anti-establishment parties, and whether electoral effects depend on the degree to which revenues flow through elected local governments rather than bypass them. The Spanish setting provides institutional variation rarely available in a single country, offering unusually clean leverage on a mechanism — fiscal compensation design — that is central to ongoing policy debates about the political feasibility of renewable energy deployment across Europe.

Speaker: Fernando de la Cuesta. Assistant Professor, Department of Applied Economics, Public Economics and Political Economy, Universidad Complutense de Madrid. Visiting Scholar, Department of Government, Harvard University.