Distributional Effects of Agricultural Infrastructure in Developing Countries: Large Irrigation Dams and Drought Mitigation in Nigeria

Despite the past investments and continued interests in public infrastructure like large irrigation dams, there has been limited evidence for their effects on household level consumptions and agricultural production, and how these effects are spatially distributed, depending on the locations of households in relations to the dams. Using a panel household survey, information of the locations of large irrigation dams, drainage basins, and drought index, we assess how large irrigation dams benefit households' consumptions and agricultural production, mitigate the effects of drought, and how these effects are distributed across drainage basins in Nigeria. We classify households into dam-basins (basins that contain large irrigation dams), downstream basins (those located downstream of dams), and other non-dam basins. Multinomial inverse-probability weighting method, combined with difference-in-difference methods, construct appropriate counterfactual samples, through which the effects of large irrigation dams and their variations across drainage basins are identified. We find that large irrigation dams largely benefit the downstream basins, rather than dam-basins or other basins. Households in downstream basins, for whom suitable matches can be found in other types of basins, are less affected by the drought and enjoy relatively stable growth rates of real per capita income and food consumption, compared to what they would experience if they were in other types of basins. Such relative stability in incomes and food consumption in downstream basins, despite the droughts, are partly due to the stable food production that is enabled by the supply of irrigation waters from the dams in the event of drought. These findings are robust against the effects of drought on water supply to the dams, proxy of state level political factors, and drought timing. The findings have important policy implications. Drainage basins have only been recently estimated relatively accurately in countries like Nigeria, while most irrigation dams in Nigeria had already been built by the 1990s. Locations of the new construction or rehabilitation of irrigation dams in Nigeria should carefully consider not only the agroecological and socioeconomic conditions, and weather-risks like droughts in the drainage basins where dams are located, but also these conditions of downstream drainage basins.