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.
In the first 100 days of the New Deal, the Tennessee Valley Authority (TVA) was created by an act of Congress to improve navigation and improve flood control on the Tennessee River and its major tributaries. To achieve these goals, the TVA constructed a series of hydroelectric and sold surplus electricity to municipal governments, cooperative utilities, and private utilities. This grant provided the resources needed to study the TVA along multiple dimensions such as its treatment of landowners in the valley, the potential for unintended environmental and health impacts, and the study of TVA’s power program. First, this project focused on TVA’s land purchase policies and its use of eminent domain. To construct the system of dams, TVA had to acquire over 600,000 acres of privately held land from several thousand landowners. The grant allowed the research team to digitize and encode records held in the National Archives that provided detailed property level data of homeowners living in areas that were purchased by TVA. Additionally, the grant made it possible for the team to visit TVA offices where original records of property transactions were held. Combined, these two resources made it possible to determine how frequently the TVA used eminent domain and how property owners faired when they were taken to court. This study also made it possible to examine why certain landowners refused to sell to developers privately when it was certain that there property would be transferred to the TVA. The results showed that individuals who were taken to court received prices that were about 5 percent higher than initial offers, and these individuals were those that were rooted in the community, or were least likely to find a property of equal quality. The lessons learned from this project are particularly salient following the U.S. Supreme Court’s recent Kelo vs. New London decision. The second aspect of this study focused on changes in health and living conditions near newly completed dams in sub-tropical climates. In particular, this study focused on changes in malaria mortality and morbidity rates following the completion of TVA dams from 1930-1950 in rural Alabama and Tennessee. While malaria has not been problematic in the South since the 1950’s, it was, at its peak, as large a problem as it is in portions of Africa today. Thus, the study of malaria in the United States in this period may shed light on currently occurring problems in Africa today. For this portion of the project, the grant was used to collect, digitize, and encode records from state level health agencies in Alabama and Tennessee. This work revealed that newly completed TVA dams led to an increase in the malaria mortality rate of approximately 40 percent, and an increase in the morbidity rate of over 100 percent. While the increase in rates spiked initially, they declined over time as more dams opened in the system as a result of a clever scheme to vary the water levels in the reservoirs. As storage capacity in the entire system increased, the TVA could accurately control water levels helping to mitigate the problems associated with sitting water. The cost of malaria resulting from TVA dams, in terms of lost life and illness, was large enough to eliminate most of the fiscal stimulus associated with the TVA. This project also sought to evaluate TVA’s electric power programs and their effect on economic growth in the South. The grant was used to collect data regarding the timing of TVA contracts and the electric prices during the early TVA period. Historically, the TVA power programs have been a shining example of economic development, however, as this project showed, much of this praise may be associated with the general trend in southern electrification, and not the TVA. This project showed that the TVA did not stimulate retail or manufacturing activity within counties that received power from the TVA. This is likely a result of the large presence of private utilities in the region prior to the creation of the TVA, who sold their transmission and distribution assets to the TVA. Furthermore, this study demonstrated that prices paid by retail consumers were not significantly lower than those of private utilities, as previously believed.
