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  • Duflo, Esther
  • Pande, Rohini

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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5325.

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Date of creation: Oct 2005
Date of revision:
Handle: RePEc:cpr:ceprdp:5325
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  1. Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters, in: Globalization and Poverty, pages 291-336 National Bureau of Economic Research, Inc.
  2. Abhijit Banerjee & Rohini Somanathan, 2004. "The political economy of public goods: Some evidence from India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 04-17, Indian Statistical Institute, New Delhi, India.
  3. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
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  6. McKinsey, J.W. & Evenson, R., 1999. "Technology-Climate Interactions in the Green Revolution in India," Papers 805, Yale - Economic Growth Center.
  7. Petia Topalova, 2010. "Factor Immobility and Regional Impacts of Trade Liberalization Evidenceon Poverty From India," IMF Working Papers 10/218, International Monetary Fund.
  8. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
  9. Abhijit Banerjee & Lakshmi Iyer, 2010. "History Institutions and Economic Performance: The Legacy of Colonial Land Tenure Systems in India," Working Papers id:2811, eSocialSciences.
  10. Robert E. Evenson & James W. McKinsey, 1999. "Technology -- Climate Interactions in the Green Revolution in India," Working Papers 805, Economic Growth Center, Yale University.
  11. Manski, Charles F, 1990. "Nonparametric Bounds on Treatment Effects," American Economic Review, American Economic Association, vol. 80(2), pages 319-23, May.
  12. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
  13. Antonio Estache, 1994. "World Development Report: Infrastructure for Development," ULB Institutional Repository 2013/44144, ULB -- Universite Libre de Bruxelles.
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