The impacts of water storage infrastructure on real property values and crop production

Water storage infrastructure is an indispensable part of many water supply systems, and its importance is experiencing a resurgence due to the increasing water irregularity induced by climate change and ever-growing water demand. Leveraging the commission of Hushan Reservoir in Taiwan as a quasi-experiment, this study provides some of the first causal evidence of the economic benefits of a reservoir from housing market and crop production for guiding sustainable water management. Using the administrative property transaction data and a spatial difference-in-differences framework, we find that the commission of Hushan Reservoir increases the values of residential property and farmlands by 4.1 and 8.9 %, respectively. We also find that enhanced irrigation water availability increases rice yield by over 4 % but has no impact on planted areas. Despite expectations of reduced groundwater use, our results show no evidence of a rebound in groundwater levels in the four years following the commission of the reservoir.