Investment in irrigation as a poverty reduction strategy: analysis of small-scale irrigation impact on poverty in Tigray, Ethiopia

The regional government of Tigray has invested in millions of Birr to develop irrigation schemes as a strategy of poverty reduction. The study was based on a representative sample of 613 farm households (331 irrigators and 282 non-irrigators) drawn using three stage stratified sampling with probability proportional to size. The main aim of this paper is to study the impact of irrigation on household income, therefore, to contribute to the scant literature on irrigation-poverty reduction nexus in Ethiopia, which policy makers can use it as an input to make informed policy decisions in their future endeavors. We found that farming income is more important to irrigating households than to non-irrigating households, while off-farm income is negatively related with access to irrigation. We also found that irrigating households’ average income is above the regional average, while non-irrigating households’ average income is 50 percent less than the average income of irrigating households. Although there can be other factors, which may contribute to the difference in income, these results are in line with our expectation and supports the decision of the Tigray government to use irrigation as a poverty reduction tool. We have used a stochastic dominance analysis and found that the results are consistent. This result differs from a previous study by Pender et al. (2002), which argues that irrigation has less impact in agricultural yields than expected, reducing returns to investment in modern irrigation.