The Power of Hydroelectric Dams: Historical Evidence from the United States over the 20th Century

This paper evaluates large-scale hydroelectric dams built in the United States during the twentieth century. Combining panel event-study designs and synthetic control methods, two results stand out: First, dams constructed pre-1950 spurred short-run local growth, in large part thanks to a “cheap-local-power advantage,” and resulted in remarkable long-run growth, more than doubling local population density after 50 years. Second, dams constructed post-1950 had only modest effects on growth. The first result indicates agglomerative impacts on local economic activity. The second result suggests the cheap-local-power advantage created by hydropower attenuated after 1950, probably because of such innovations as high-tension transmission lines.