Poverty impacts of agricultural water management technologies in Ethiopia

Farmers in rural Ethiopia live in a shock-prone environment. The major source of 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 yield-enhancing modern inputs exacerbating household’s vulnerability 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 significant reduction in poverty, and if they did to identify which technologies have higher impacts. 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 1517 households from 29 Kebeles in four regions of Ethiopia. Findings indicated that the estimated average treatment effect was significant and amounted to USD 82/ household. Moreover, there was 22% less poverty among users of AWMTs compared to non-users. 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 percent reduction in poverty levels compared to the reference, i.e. rain fed system. Finally, our study identified the most important determinants of poverty on the basis of which we made the policy recommendations: i) build assets; ii) human resource development; and iii) improve the functioning of labor markets and access to markets (input or output markets) for enhanced impact of AWMT on poverty.