Poverty impacts of agricultural water management technologies in Ethiopia

Farmers in rural Ethiopia live in a climate-related shock-prone environment. The major source of climate shock is the persistent variation in the amount and distribution of rainfall. The dependence on unreliable rainfall increases farmers’ vulnerability to shocks while also constraining farmers’ decisions to use yieldenhancing modern inputs, exacerbating the vulnerability of households to poverty and food insecurity. As a response, the Government of Ethiopia has embarked on massive investment in low-cost agricultural water management technologies (AWMTs). Despite these huge investments, their impact remains hardly understood. The main focus of this paper was to explore whether access to selected AWMTs, such as deep and shallow wells, ponds, river diversions and small dams, has led to a significant reduction in poverty and, if they did so, to identify which technologies have higher impacts. The study also calculated the net present value of the selected AWMT, to assess which of the AWMTs are worth investing in given that they have the promise of reducing poverty. In measuring impact we followed different approaches: mean separation tests, propensity score matching and poverty analysis. The study used a unique dataset from a representative sample of 1,517 households from 29 Peasant Associations (Kebeles) in four regions of Ethiopia. Findings indicated that the estimated average treatment effect on per capita income was significant and amounted to USD 82. Moreover, there was 22% less poverty incidence among users of AWMTs compared to nonusers. The poverty impact of AWMT was also found to differ by technology type. Accordingly, deep wells, river diversions and micro-dams have led to 50, 32 and 25%, respectively, reduction in poverty incidence compared to the reference, i.e., rain-fed systems. Although, the selected AWMTs were found to contribute to poverty reduction, we found that ponds, deep wells and small dams were not attractive from a social cost-benefit analysis perspective, implying that choices need to be made considering their relative financial viability and poverty reduction impacts compared to other available options that could improve rain-fed agriculture. Finally, our study identified the most important determinants of poverty, on the basis of which we made policy recommendations: i) build assets (AWMT, livestock, etc.); ii) human resources development; and iii) improve the functioning of labor markets and access to these (input or output) markets for enhanced impact of AWMT on poverty.