KWRRI Research Reports


This study analyzes the effects of multi-purpose reservoir projects on the economic development of areas contiguous to the dam and reservoir. The study concentrates on the development potential in a humid region where the provision of agricultural water is not critical to the economy. Can a reservoir project be a major part of a development program for a local area? How can the favorable effects of the project on the contiguous area be increased? These questions are answered by this study.

The study is divided into three major phases. The first phase is a theoretical analysis of the determinants of the location of economic activity and the effect of multi-purpose reservoirs on the important location factors. This analysis shows that reservoir projects affect only a subset of the total number of factors that determine the desirability of the contiguous area for economic development; therefore, the development promoted in the contiguous area by the project is a function not only of the characteristics of the project but also of the pre-existing characteristics of the area.

The second phase of the study is an empirical investigation of the economic growth in the contiguous areas of twenty existing projects in a study area of Kentucky and Tennessee. The development of these contiguous areas is compared to the development of selected control areas over the period 1940-1960. These comparisons indicate two points. First, that overall projects there is little evidence that the projects have promoted rapid development in the contiguous areas and second, that there is a wide variation in relative development from project to project with some of the projects promoting rapid growth and others seemingly having little effect.

The third phase of the study is a series of individual case studies of the twenty projects to determine the reasons for the wide variations in the development of the contiguous area. Two of the contiguous areas, one which has experienced rapid development and one which has experienced virtually no development, are studied in detail to better understand the causes of this wide variation among projects in impact on the contiguous areas.

These case studies lead to the conclusion that economic development emerges from a synthesis of the location features of the local area and the factors provided by the reservoir project. If the area is otherwise desirable for industrial location and the reservoir project provides key factors which were previously missing, the area will experience rapid development; however, if the area is deficient in location factors that are not provided by reservoir development, the project will not stimulate the local economy.

The study concludes that multi-purpose reservoirs have the potential to be a major element in development planning, but these projects are rarely sufficient to produce rapid development unless other programs are initiated to remove shortcomings of factors not directly affected by the water project. If reservoir projects are to produce development benefits in the contiguous areas, the planning of these projects must be coordinated with other projects designed to eliminate shortcomings of the local area which would not otherwise be eliminated by the reservoir project.

Publication Date


Report Number


Digital Object Identifier (DOI)