Short-term economic effects of the São Francisco Inter-basin Water Transfer on the low-income population in Brazil

Abstract

Exploring the short-term effects of water supply promoted by the São Francisco Inter-basin Water Transfer (PISF) on economic aspects in benefited municipalities in Brazil is relevant for three main reasons. First, water is crucial for local development. Second, there was a large volume of resources employed. Finally, many people were affected by the project. To fill the gap in the literature, this research proposes to verify the impacts on the low-income population living in municipalities that received water from PISF in 2017. To reach this purpose, we applied a Differences in Differences identification method using three different control groups, considering 2016 and 2018 as the before and after treatment periods. We investigated the effects on individual and family income per capita, whether individuals had a paid work, and whether they participated in the Bolsa Familia Program, a Brazilian income transfer program. The main results imply that the project has generally played a positive role in low-income population lives in the short term. However, the observed improvement in the analyzed variables does not necessarily mean a rise in family well-being.