n 1933 President Franklin Roosevelt signed legislation creating the Tennessee Valley Authority (TVA), one of the world's first comprehensive watershed development projects. The TVA was created to construct a series of dams on the Tennessee River and its major tributaries. These dams were intended to improve flood control and navigation. As a byproduct, electricity was generated and distributed throughout the region. Electric rates, advertised by TVA, were among the lowest rates in the country. The low rates and TVA's commitment to extending service have historically been cited as a winning strategy for economic development in locations with abundant water resources.The classic TVA story, as told by its champions, such as David Lilienthal (1944), describes how the agency both lowered electricity prices for existing customers and extended service to those without
To isolate the impact of access to electricity on local economies, we examine the impact of the Rural Electrification Administration low-interest loans in the 1930s. The REA provided loans to cooperatives to lay distribution lines to farms and aid in wiring homes. Consequently, the number of rural farm homes electrified doubled in the United States within five years. We develop a panel data set for the 1930s and use changes within counties over time to identify the effect of the REA loans on a wide range of socio-economic measures. The REA loans contributed significantly to increases in crop output and crop productivity and helped stave off declines in overall farm output, productivity, and land values, but they had much smaller effects on nonagricultural parts of the economy. The ex-ante subsidy from the low-interest loans was large, but after the program was completed, nearly all of the loans were fully repaid, and the ultimate cost to the taxpayer was relatively low.
How effective are policies aimed at integrating isolated regions? We answer this question in the context of a highway system in one of the poorest regions in the United States. With construction starting in 1965, the Appalachian Development Highway System (ADHS) ultimately consisted of over 2,500 high-grade road miles. We use a simple model of interregional trade to motivate our empirical analysis, which quantifies the relationship between market access and income. We then calibrate the model to evaluate the aggregate impact of the ADHS and compare this with alternative counterfactual proposals. We find that removing the ADHS would have reduced total income by $53.7 billion in the United States, with $22 billion of the losses in Appalachian counties. Our findings highlight the potential aggregate benefits of transportation infrastructure policies and suggest that leakage outside the targeted area may be substantial.
The TVA has been applauded for its anti-malaria programs in the Southeast during the 1930s and 1940s. However, the TVA developed their anti-malaria programs because they created lakes suitable for mosquito breeding. To estimate the relationship between the TVA and malaria, I construct a county-level panel data from the Southeast United States. I find that the net effect of the TVA was to increase malaria rates following its construction. Using statistical life value estimates, I find that the hidden malaria cost of the TVA offset 24 percent of the fiscal stimulus multiplier generated by the TVA.
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