Working Paper: NBER ID: w20389
Authors: Sheila M. Olmstead; Hilary Sigman
Abstract: This paper examines whether countries consider the welfare of other nations when they make water development decisions. We estimate econometric models of the location of major dams around the world as a function of the degree of international sharing of rivers. We find that dams are more prevalent in areas of river basins some distance upstream of foreign countries, supporting the view that countries free ride in exploiting water resources. We find some evidence that international institutions, in particular multinational financing and international water management treaties, may mitigate this free riding.
Keywords: dam location; international cooperation; water resources; econometric analysis
JEL Codes: F53; Q25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Dam construction (L74) | International sharing of rivers (Q25) |
| Upstream location (R53) | Dam construction (L74) |
| Proximity to downstream border (F55) | Dam construction (L74) |
| Multilateral financing (F39) | Mitigation of free riding (H40) |
| International treaties (F53) | Mitigation of free riding (H40) |
| Presence of downstream country (F55) | Number of dams (Q25) |