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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
  • Sugawara Shinya

    (Faculty of Economics, University of Tokyo, Tokyo, Japan)

  • Shoji Masahiro

    (Faculty of Economics, Seijo University, Tokyo, Japan)

  • Shinkai Naoko

    (Graduate School of International Development, Nagoya University, Nagoya, Japan)

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 situation where the government used lotteries to distribute irrigated plots. Furthermore, in order to disentangle the channels through which the irrigation reduces poverty, we extend the seasonal consumption smoothing model of Paxson (1993; “Consumption and Income Seasonality in Thailand.” Journal of Political Economy 191(1):39–72) by introducing endogenous credit constraints. Using unique household level monthly panel data over a year, it is shown that with irrigation accessibility, not only the average income increases but also the patterns of income fluctuation changes and the probability of binding credit constraint declines 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.

Suggested Citation

  • Sawada Yasuyuki & Sugawara Shinya & Shoji Masahiro & Shinkai Naoko, 2014. "The Role of Infrastructure in Mitigating Poverty Dynamics: The Case of an Irrigation Project in Sri Lanka," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(3), pages 1-28, July.
  • Handle: RePEc:bpj:bejeap:v:14:y:2014:i:3:p:28:n:13
    DOI: 10.1515/bejeap-2013-0091
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    Cited by:

    1. Dartanto, Teguh & Otsubo, Shigeru, 2016. "Intrageneration Poverty Dynamics in Indonesia: Households’ Welfare Mobility Before, During, and After the Asian Financial Crisis," Working Papers 117, JICA Research Institute.
    2. Medeiros, Victor & Ribeiro, Rafael Saulo Marques & Amaral, Pedro Vasconcelos Maia do, 2021. "Infrastructure and household poverty in Brazil: A regional approach using multilevel models," World Development, Elsevier, vol. 137(C).
    3. Ritika Jain & Shreya Biswas, 2021. "The road to safety- Examining the nexus between road infrastructure and crime in rural India," Papers 2112.07314, arXiv.org.
    4. 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.
    5. Sapkota, Jeet Bahadur, 2014. "Access to Infrastructure and Human Development:Cross-Country Evidence," Working Papers 70, JICA Research Institute.
    6. Aoyagi, Keitaro & Sawada, Yasuyuki & Shoji, Masahiro, 2014. "Does Infrastructure Facilitate Social Capital Accumulation? Evidence from Natural and Artefactual Field Experiments in a Developing Country," Working Papers 65, JICA Research Institute.
    7. Sonali Senaratna Sellamuttu & Takeshi Aida & Ryuji Kasahara & Yasuyuki Sawada & Deeptha Wijerathna, 2014. "How Access to Irrigation Influences Poverty and Livelihoods: A Case Study from Sri Lanka," Journal of Development Studies, Taylor & Francis Journals, vol. 50(5), pages 748-768, May.
    8. Majumder, Rajarshi, 2012. "Removing poverty and inequality in India: the role of infrastructure," MPRA Paper 40941, University Library of Munich, Germany.
    9. Takeshi Aida, 2019. "Social capital as an instrument for common pool resource management: a case study of irrigation management in Sri Lanka," Oxford Economic Papers, Oxford University Press, vol. 71(4), pages 952-978.
    10. Aoyagi, Keitaro & Sawada, Yasuyuki & Shoji, Masahiro, 2022. "Irrigation infrastructure and trust: Evidence from natural and lab-in-the-field experiments in rural communities," World Development, Elsevier, vol. 156(C).
    11. Sawada, Yasuyuki, 2015. "The Impacts of Infrastructure in Development: A Selective Survey," ADBI Working Papers 511, Asian Development Bank Institute.
    12. Shoji, Masahiro & Aoyagi, Keitaro & Kasahara, Ryuji & Sawada, Yasuyuki & Ueyama, Mika, 2012. "Social Capital Formation and Credit Access: Evidence from Sri Lanka," World Development, Elsevier, vol. 40(12), pages 2522-2536.
    13. Teguh Dartanto & Nurkholis, 2013. "The determinants of poverty dynamics in Indonesia: evidence from panel data," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(1), pages 61-84, April.
    14. Masahiro Shoji & Keitaro Aoyagi & Ryuji Kasahara & Yasuyuki Sawada, 2020. "Motives behind community participation: Evidence from natural and artefactual field experiments in Sri Lanka," Pacific Economic Review, Wiley Blackwell, vol. 25(5), pages 577-600, December.
    15. Yasuyuki Sawada & Ryuji Kasahara & Keitaro Aoyagi & Masahiro Shoji & Mika Ueyama, 2013. "Modes of Collective Action in Village Economies: Evidence from Natural and Artefactual Field Experiments in a Developing Country," Asian Development Review, MIT Press, vol. 30(1), pages 31-51, March.
    16. Shoji, Masahiro & Aoyagi, Keitaro & Kasahara, Ryuji & Sawada, Yasuyuki, 2010. "Motives behind Community Participation," Working Papers 16, JICA Research Institute.
    17. 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.
    18. Senaratna Sellamuttu, Sonali, 2013. "How access to irrigation influences poverty and livelihoods: a case study from Sri Lanka. Impact assessment of infrastructure projects on poverty reduction," IWMI Working Papers H045795, International Water Management Institute.

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