Industrial Water Pollution and Agricultural Production in India

We study how industrial water pollution affects agriculture in India, focusing on 48 industrial sites identified by the central government as “severely polluted.” We exploit the spatial discontinuity in pollution concentrations that these sites generate along a river, comparing villages immediately downstream and upstream of each site. To overcome data limitations, we use hydrological modeling to compute spatial relationships and machine learning to predict crop yields from satellite data. We find a large, sudden rise in pollutant concentrations in nearby rivers downstream of sites, but we do not detect lower crop yields on average. Yields do fall in specific areas, but aggregate impacts are small. Likely reasons are that not all farms are exposed, pollution dilutes before reaching crops, and industrial effluent can include beneficial nutrients. Water pollution may have other social costs, but damages to crop yields is probably not one of them.