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CEP discussion paper
Damned by dams? Infrastructure and conflict
Ulrich J. Eberle
May 2020
Paper No' CEPDP1694:
Full Paper (pdf)

JEL Classification: D74; H54; N40; O13; O18; Z18

Tags: dams; infrastructure; conflict; civil war; ethnicity; fractionalization; inequality

This study investigates the impact of dams on local conflict across the world with georeferenced location information on dams and conflict events for the years 1989 to 2016. The identification strategy exploits exogenous variation in the river gradient to instrument for endogenous dam placement. The results document strong and robust evidence for an increase in intrastate conflict in the immediate vicinity of newly-built dams, but no robust effect for interstate conflict can be identified. Examining the mechanisms, ethnically polarized and fractionalized regions are more likely to experience the negative economic consequences as well as a surge in violence associated with dams. Further, countries with low levels of political competition are subject to more violence, suggesting that an institutional failure to account for local preferences may lead to violent confrontations. Finally, the policy analysis reveals that organizations providing the funding for dams, usually international financial institutions, have effective tools such as transboundary water treaties to prevent an outbreak of violence by enforcing regulation and monitoring during the implementation phases of dams.