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The Role of Infrastructure in Mitigating Poverty Dynamics:The Case of an Irrigation Project in Sri Lanka

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  • Sawada, Yasuyuki
  • Shoji, Masahiro
  • Sugawara, Shinya
  • Shinkai, Naoko

Abstract

While it is known that access to physical infrastructure enhances household welfare, there are very few micro-econometric studies that analyze its role in mitigating chronic and transient poverty. This paper aims to bridge this gap in the existing literature by evaluating the impact of a large-scale irrigation infrastructure project implemented in Sri Lanka. It identifies the treatment effect of irrigation access by exploiting a natural experimental situation where the government used lotteries to randomly distribute irrigated plots. We extend the seasonal consumption smoothing model of Paxson (1993) by introducing endogenous credit constraints. By using unique household level monthly panel data over a period of two years, it is shown that the average income increases, and the probability of binding credit constraint declines with irrigation accessibility through which transient poverty is mitigated. These empirical results suggest that irrigation infrastructure has a positive impact on reducing both chronic and transient poverty directly and indirectly by improving income and relaxing credit constraints. The structural estimation results support the validity of our theoretical framework.

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Bibliographic Info

Paper provided by JICA Research Institute in its series Working Papers with number 4.

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Date of creation: 01 Mar 2010
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Handle: RePEc:jic:wpaper:4

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Keywords: Poverty Reduction ; Role of Infrastructure ; Monthly Panel Data;

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Citations

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Cited by:
  1. Kurosaki, Takashi, 2012. "Urban Transportation Infrastructure and Poverty Reduction: Delhi Metro's Impact on the Cycle Rickshaw Rental Market," PRIMCED Discussion Paper Series 24, Institute of Economic Research, Hitotsubashi University.
  2. Sawada, Yasuyuki & Kasahara, Ryuji & Aoyagi, Aoyagi & Shoji, Masahiro & Ueyama, Mika, 2012. "Modes of Collective Action in Village Economies:Evidence from Natural and Artefactual Field Experiments in a Developing Country," Working Papers 47, JICA Research Institute.
  3. Teguh, Dartanto & Nurkholis, Nurkholis, 2011. "Finding out of the Determinants of Poverty Dynamics in Indonesia: Evidence from Panel Data," MPRA Paper 41185, University Library of Munich, Germany.
  4. Aida, Takeshi, 2011. "Social Capital as an Instrument for Common Pool Resource Management:A Case Study of Irrigation Management in Sri Lanka," Working Papers 33, JICA Research Institute.
  5. Majumder, Rajarshi, 2012. "Removing poverty and inequality in India: the role of infrastructure," MPRA Paper 40941, University Library of Munich, Germany.
  6. Shoji, Masahiro & Aoyagi, Keitaro & Kasahara, Ryuji & Sawada, Yasuyuki, 2010. "Motives behind Community Participation," Working Papers 16, JICA Research Institute.
  7. Sellamuttu, Sonali Senaratna & Aida, Takeshi & Kasahara, Ryuji & Sawada, Yasuyuki & Wijerathna, Deeptha, 2013. "How Access to Irrigation Influences Poverty and Livelihoods:A Case Study from Sri Lanka," Working Papers 59, JICA Research Institute.

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