Topic: Basic introduction of Hydraulic Structures of Storage (Only Dams);

Worldwide, over 45,000 large dams have been built, and nearly half the world's rivers are obstructed by a large dam. The belief that large dams, by increasing irrigation and hydroelectricity production, can cause development and reduce poverty has led developing countries and international agencies such as the World Bank to undertake major investments in dam construction. By the year 2000, dams generated 19 percent of the world's electricity supply and irrigated over 30 percent of the 271 million hectares irrigated worldwide. However, these dams also displaced over 40 million people, altered cropping patterns, and significantly increased salinization and waterlogging of arable land [World Commission on Dams, 2000a]. The distribution of the costs and benets of large dams across population groups, and, in particular, the extent to which the rural poor have benefited, are issues that remain widely debated.

Dams provide a particularly good opportunity to study the potential disjunction between the distributional and productivity implications of a public policy. The technology of dam construction implies that those who live downstream from a dam stand to benet, while those in the vicinity of and upstream from a dam stand to lose. From an econometric viewpoint, this implies that we can isolate the impact of dams on the two populations, and from a policy perspective, this suggests compensating losers is relatively easy. The inadequacy of compensation in such a comparatively simple case would suggest that the distributional consequences of public policies are, perhaps, harder to remedy than is typically assumed.

Dam Construction in India:

Both the federal and state governments in India play an important role in dam construction. The Indian Planning Commission (a federal body) sets each state's ve-year water storage and irrigation targets. Given these targets and topological surveys of potential dam sites, the irrigation departments of each State proposes dam projects. Next, a federal committee examines the economic viability of these projects. The Planning Commission selects the nal projects on the basis of investment priorities and sectoral planning policies. Construction of a dam and the associated canal network remain the State's responsibility, though federal or international funding may be available.

The typical Indian irrigation dam is an earth dam: water is impounded in a \reservoir" behind an artificial wall built across a river valley. Artificial canals channel water from the reservoir to downstream regions for irrigation. The area upstream from which water and silt ow into the reservoir and the area submerged by the reservoir form the catchment area of the dam, while the area downstream covered by the canal network is the command area.

The state government agency and farmers jointly manage the irrigation system associated with a dam. The agency determines how much water to release to each branch outlet, and farmers served by that outlet decide how to share it. Farmers working on land covered by the dam's canal network are eligible for dam irrigation. In contrast, to ensure that the reservoir is filled, the government agency often restricts water withdrawal upstream from the reservoir (for instance, by cancelling water pumping sites), especially in years of limited rainfall [Shiva, 2002].

Benefits and Costs of Irrigation Dams:
Between 1951 and 2000, food grain production in India nearly quadrupled, with two-thirds of this increase coming from irrigated areas [Thakkar, 2000]. While dams account for 38 percent of India's irrigated area, estimates of what fraction of the increase in production can be attributed to dams vary from 10 percent [World Commission on Dams, 2000b] to over 50 percent [Gopalakrishnan, 2000].

Districts as the Unit of Analysis:

We will estimate the effect of dams on economic outcomes at the district level, which is the lowest level of disaggregation for which household consumption and agricultural production data is available.

A district is the administrative unit immediately under the Indian state (somewhat analogous to a county in the United States) and forms the natural unit for the planning and implementation of state policies. In 1991, India had 466 districts, with a district, on average, having a population of 1.5 million and an area of 8,000 square kilometers.

Empirical Strategy:
Our analysis exploits detailed Indian district panel data on district geography, dam placement, and poverty and agricultural outcomes. We have annual agricultural production data for 271 districts for 1971-1999, and poverty data for 374 districts for ve years: 1973, 1983, 1987, 1993, and 1999. Table I provides descriptive statistics and the Data Appendix describes the data sources and variable construction.

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