Working Paper: NBER ID: w30081
Authors: Eric C. Edwards; Walter N. Thurman
Abstract: The U.S. Corn Belt, relatively flat and covered with thick glacial soils, is famously responsible for the bulk of U.S. corn production. Development of this central part of the continent came with remarkable technical progress—in seed varieties, mechanization, fertilization, and pest control. Little of this development could have occurred without decades of investment in farmland itself, through the methodical application of drainage. We trace the economic forces that drove wide-scale drainage in the eastern United States and present empirical evidence that a key institutional innovation, the drainage management district, facilitated investment. Today, over 50% of corn produced in the Corn Belt comes from counties with high natural soil wetness requiring artificial drainage. States in our sample adopted drainage district laws between 1857 and 1912, and we estimate artificial drainage facilitated by management districts across all eastern states increased the value of agricultural land in counties with high natural soil wetness by 20-37% ($16.8-18.7 billion in 2020 dollars). Although the broader implications of drainage were largely unforeseen at the time, the conversion led to the loss of more than half of the 215 million acres of wetlands estimated to have existed in the contiguous United States at colonization.
Keywords: agricultural drainage; governance institutions; land value; collective investment
JEL Codes: N51; N52; Q1; Q15; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| drainage district laws (R52) | agricultural land value (Q15) |
| drainage district laws (R52) | investment in drainage (R42) |
| investment in drainage (R42) | agricultural land value (Q15) |
| drainage district laws (R52) | improved agricultural acres (Q15) |
| drainage district laws (R52) | agricultural productivity (Q11) |
| drainage district laws (R52) | collective investment (A30) |