Project by Xiaojia Bao:
This paper initially built a theoretical model for governments’ fiscal response with respect to the distributive impacts of dams along a river basin. The model claimed that upstream counties should get compensated, while downstream counties should compensate or transfer out, if the local governments were functioning efficiently. Then the paper verified the distributive impacts of dams on different areas along a river basin using empirical data in county level in China from 2000 to 2008. Empirical analysis indicated that dam construction and finished dams mainly had distributive impacts on agricultural economic outcome variables, such as primary industry valued added per capita and grain production.  Local counties would suffer from agricultural loss due to the disruption from dam construction work and land loss for reservoir construction, but those areas were compensated correspondingly, which can be seen from the reduced deficit percentage. Upstream counties suffered from deteriorated economic outcome indicators both in agricultural and non-agricultural industries with GDP per capita decreased by 1540 RMB and net income per capita in rural households decreased by 147 RMB, while they got compensated to some extend through the revenue increase (close to 87 RMB per capita). Downstream counties benefited from dam construction on agricultural production, mainly in grain production and meat production, corresponding to a decrease in the expenditure (43 RMB per capita) and increase in revenue (122 RMB per capita).