Working Paper: NBER ID: w18416
Authors: Richard Hornbeck; Pinar Keskin
Abstract: Agricultural development may support broader economic development, though agricultural expansion may also crowd-out local non-agricultural activity. On the United States Plains, areas over the Ogallala aquifer experienced windfall agricultural gains when post-WWII technologies increased farmers' access to groundwater. Comparing counties over the Ogallala with nearby similar counties, local non-agricultural sectors experienced only short-run benefits. Despite substantial persistent agricultural gains, there was no long-run expansion of local non-agricultural sectors and there are some indications of crowd-out. With the benefit of long-run historical perspective, supporting local agricultural production does not appear to generate local economic spillovers that might justify its distortionary impacts.
Keywords: No keywords provided
JEL Codes: N32; N52; O10; Q10; R10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Access to the Ogallala groundwater (Q15) | Agricultural land values (Q15) |
| Agricultural land values (Q15) | Non-agricultural sales (Q19) |
| Agricultural land values (Q15) | Long-run growth in non-agricultural sectors (O49) |
| Increased agricultural land values (Q15) | Costs for non-agricultural sectors (Q52) |
| Agricultural expansion (Q15) | Broader economic development (O29) |
| Agricultural expansion (Q15) | Crowding out local non-agricultural activity (R11) |
| Short-run increases in non-agricultural sales (R33) | Long-run growth in manufacturing, wholesale, retail, or service sectors (O14) |
| Public support for agriculture (Q18) | Distortionary impacts (H31) |