Direct and indirect economic impacts of the Bhakra multipurpose dam, India

Abstract

Abstract This paper presents results of a study on the direct and indirect economic impacts of the Bhakra multipurpose dam system in the northern part of India that has provided direct benefits in terms of hydropower, irrigated agriculture, water supply, flood control and drought prevention. These direct outputs from the Bhakra dam system have, in turn, generated (i) inter‐industry linkage impacts, both backward and forward linkages, resulting in increase in the demand for outputs of other sectors, and (ii) consumption‐induced impacts arising out of increases in income and wages generated by the direct outputs of the dam. Such indirect economic impacts, quantified by using a fixed‐price multiplier model based on a social accounting matrix (SAM) for Punjab, give a multiplier value of 1.90, indicating that for every rupee (Rs = 100 paise ) 1 of additional value added directly by the project in the agricultural and electricity sectors, another Rs 0.90 (90 paise ) is generated in the form of downstream or indirect effects. The results on income distribution show that the gains to agricultural labour households from the dam have been higher than the gains to other rural households and to urban households. Copyright © 2007 John Wiley & Sons, Ltd.