Doctoral Dissertation Research in Economics: The Economic Impact of the Tennessee Valley Authority: An Econometric Analysis 1933-1950

University Of Arizona, Tucson AZ

Investigators

Abstract

During the first 100 days of President Franklin D. Roosevelt's administration, a flurry of new legislation was passed in the hopes that the economy and people's lives would turn around. The Tennessee Valley Authority (TVA), a government sponsored corporation, was targeted to improve the livelihood of those living in the rural Tennessee River Valley. In the first six years of its existence, the TVA accumulated assets of over $3 trillion in year 2000 dollars. These assets included budgeted monies from Congress, spending on construction projects such as dams and reservoirs, electric distribution equipment, and land (1939 TVA Annual Report). With such large amounts of money being pumped into the Tennessee Valley it is natural to try and measure the benefits of the project relative to the cost. Between 1933 and 1939, per capita retail sales spending at the county level increased 68% across the entire country and 72% in the Tennessee Valley. Part of this increase may be due to the natural turnaround in the economy, but with such significant spending the turnaround might also be attributable, at least in part, to the TVA. The TVA provided electricity, flood control, recreational facilities, malaria control, and improved river navigation. During construction at some reservoirs, the TVA constructed towns and schools. The first director of the TVA, Arthur Morgan, began to implement other practices, such as fertilizer experiment stations, agricultural experiment farms, replanted forest, and bean canning operations. The TVA had a hand on almost every part of the Tennessee Valley in some shape or form. Today, similar river management projects have been established around the world. The most notable being China's damming of the Yangtze River, which includes a series of eight dams controlling the flow of water along the river system. The most notable of these dams is Three Gorges Dam. The entire project has boasted claims of improving navigation, reducing the impact of floods, and generating hydro electricity. However, the construction has raised issues over the removal of families from the land, and has the potential to change the disease environment in the construction zone. By studying the TVA, which experienced many of the same concerns during its construction, insight may be gained on the long lasting economic effects of these projects that are being considered or currently brought online. The long range goal of this research is to examine the impact of the TVA on the American economy using cost-benefit analyses. The broad range of TVA activities requires the assessment of its impact in several key areas and then the aggregation of measures of its impact. The PI's initial research examines specific features of the TVA that can be merged into the longer term goal. These include studies of the TVA's program for purchasing or using eminent domain to acquire property, measuring the impact of the TVA on broad measures of economic activity, and determining the number of lives saved by the TVA program to combat malaria. These initial studies serve two purposes. They provide new empirical tests of the impact of specific types of policies while also serving as building blocks for the long range study of the overall impact of the TVA. Intellectual Merit: The TVA provides a backdrop to study many problems in the economics literature. These fields include multilateral bargaining, long term contract analysis, and public health program evaluation. Data that are available only in paper form will be computerized into usable files. This will include 1930's individual level survey data, 1930's and 1940's historic property purchases, 1920's and 1930's war mobilization plans, disease specific county level mortality and morbidity data between 1925-1950, and county level financial data over the same period. Broader Impact: The TVA provides a long standing history of regional water management. Many of the current concerns existed during the creation of the TVA: removal of residents from flooded areas, property purchase practices, the broader economic impact of dam construction, and unintended consequences, such as increases in infectious disease rates. By examining the TVA, light will be shed onto whether or not comparable massive projects are economically justified over their lifetime.