Environmental Catastrophe and the Direction of Invention: Evidence from the American Dust Bowl

Abstract

This paper investigates how innovation responded to and shaped the economic impact of the American Dust Bowl, an environmental catastrophe that led to widespread soil erosion on the US Plains during the 1930s. Combining data on county-level erosion, the historical geography of crop production, and crop-specific innovation, I document that the crisis led to a major shift in agricultural technology development toward more Dust Bowl-exposed crops and, within crops, toward bio-chemical and planting technologies that could directly mitigate environmental distress. County-level exposure to Dust Bowl-induced innovation significantly dampened the effect of land erosion on agricultural land values and revenue. These results highlight the role of crises in shaping the direction of innovation and the importance of endogenous technological progress as an adaptive force in the face of disasters.