Economic Impact of Dams in Iran

The economic effects of large dams that were constructed during recent two decades in Iran are explored in this paper and their effects on agriculture and welfare of their own district and downstream districts are analyzed. Ordinary least squares (OLS) method is used to investigate these effects and for more accurate results, we control for geographical variables and rainfall. The results of this study show that dam construction leads to higher agricultural yield, production value and irrigated area in dam’s own district; but it doesn’t affect yield, production and irrigated area in downstream districts. Also dam construction results in planting more water-intensive crops in their own district and less water-intensive crops in downstream districts. In addition, per capita expenditures in rural regions of downstream districts decrease in response to dam construction in upstream districts, but urban regions of the downstream district and also urban and rural regions of their own district are not influenced by dam construction.