Precipitation, Irrigation, and Economic Growth: Evidence from U.S. Regions with Significant Groundwater Resources

There is a growing interest among policymakers and economists in quantifying the relationship between climate and economic output. Previous studies have demon- strated a clear relationship between temperature on economic growth but they generally do not report significant impacts of rainfall in regions outside of developing countries. Using gridded panel data, this paper estimates the effects of the number of days during the growing season with no rainfall on per capita gross domestic product (GDP) growth in the areas of the United States over the Ogallala and Mississippi Aquifers. Measuring precipitation in terms of growing season dry days instead of aggregate rainfall levels reveals a strong negative relationship between rainfall deficits and economic growth.