Principal Investigator Esther Duflo
The construction of dams is one of the most costly and controversial forms of public infrastructure investment in developing countries, yet surprisingly little is known about the economic impact of such projects. In “Dams,” which has just been published in the Quarterly Journal of Economics, Esther Duflo and Rohini Pande of Harvard University examine the evidence on the effects of dam building on surrounding areas. They find that the building of large dams in India has had significant distributional impacts across areas. The areas where the dams were built saw a rise in poverty, while areas downstream from dams saw agricultural productivity rise and poverty fall. In aggregate, dams appear to have slightly raised productivity, but this effect is small relative to the significant redistribution across areas induced by their construction.