Economic and Agricultural Impacts of Building a Dam—Evidence from Natural Experience of the Three-Gorges Dam

Abstract

As the largest dam in the world, the impacts of the Three-Gorges Dam (TGD) on economy and agriculture in the counties along the Yangtze River in China have been subject to debates for a long time, but no conclusions have been made. This paper employs panel data with a wide variety of economic and agricultural variables for 751 counties over the period from 1997 to 2010, which covers the whole building period of the TGD. By calculating the distance of these counties to the dam site and applying the differences-in-differences (DID) method, the results generally imply that the TGD negatively affected economic growth in the downstream counties along the mainstream river. Conversely, counties located closer to the dam site in the upstream received economic benefits. Regarding its effects on agricultural productions, cotton yields of the upstream were negatively affected by building the TGD, while oil production planted in the upstream region were stimulated to grow since the functioning of the dam in 2003. This study proves both the economic and agricultural advantages/disadvantages of the dam in different construction periods for different locations of counties, and sheds light on policy implications for compensating the counties from economic and agricultural lenses due to the TGD construction.