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Dams

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  • Esther Duflo
  • Rohini Pande

Abstract

The construction of large dams is one of the most costly and controversial forms of public infrastructure investment in developing countries, but little is known about their impact. This paper studies the productivity and distributional effects of large dams in India. To account for endogenous placement of dams we use GIS data and the fact that river gradient affects a district's suitability for dams to provide instrumental variable estimates of their impact. We find that, in a district where a dam is built, agricultural production does not increase but poverty does. In contrast, districts located downstream from the dam benefit from increased irrigation and see agricultural production increase and poverty fall. Overall, our estimates suggest that large dam construction in India is a marginally cost-effective investment with significant distributional implications, and has, in aggregate, increased poverty.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11711.

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Date of creation: Oct 2005
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Publication status: published as Esther Duflo & Rohini Pande, 2007. "Dams," The Quarterly Journal of Economics, MIT Press, vol. 122(2), pages 601-646, 05.
Handle: RePEc:nbr:nberwo:11711

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  1. Banerjee, Abhijit & Somanathan, Rohini, 2007. "The political economy of public goods: Some evidence from India," Journal of Development Economics, Elsevier, vol. 82(2), pages 287-314, March.
  2. Antonio Estache, 1994. "World Development Report: Infrastructure for Development," ULB Institutional Repository 2013/44144, ULB -- Universite Libre de Bruxelles.
  3. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
  4. Robert E. Evenson & James W. McKinsey, 1999. "Technology -- Climate Interactions in the Green Revolution in India," Working Papers 805, Economic Growth Center, Yale University.
  5. Abhijit Banerjee & Lakshmi Iyer, 2010. "History Institutions and Economic Performance: The Legacy of Colonial Land Tenure Systems in India," Working Papers id:2811, eSocialSciences.
  6. √Čtienne Gilbert, 1994. "Banque mondiale, World Development Report 1994, Infrastructure for development," Revue Tiers Monde, Programme National Pers√©e, vol. 35(140), pages 939-939.
  7. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
  8. Petia Topalova, 2005. "Trade Liberalization, Poverty, and Inequality: Evidence from Indian Districts," NBER Working Papers 11614, National Bureau of Economic Research, Inc.
  9. Petia Topalova, 2010. "Factor Immobility and Regional Impacts of Trade Liberalization Evidenceon Poverty From India," IMF Working Papers 10/218, International Monetary Fund.
  10. Deaton, Angus, 1989. "Rice Prices and Income Distribution in Thailand: A Non-parametric Analysis," Economic Journal, Royal Economic Society, vol. 99(395), pages 1-37, Supplemen.
  11. McKinsey, J.W. & Evenson, R., 1999. "Technology-Climate Interactions in the Green Revolution in India," Papers 805, Yale - Economic Growth Center.
  12. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
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