Small-scale irrigation and household wages relationship: Proof from Deder district, Ethiopia

Abstract

Investment in irrigation development is an important strategy in reducing risks associated with rainfall 
variability and achieving food security. This study examines the link between small-scale irrigation and 
household income. It also presents inherent institutional challenges in water allocation and the 
unintended outcomes. It used cross-sectional data obtained using a sample of 150 respondents 
selected through multi-stage sampling techniques from Deder district in eastern Ethiopia in 2009/2010 
cropping year. The data were analyzed using Heckman-two step econometric models. The probit 
estimation shows that sex of the household head, access to credit and extension services have 
significant positive effect whereas the financial constraints restrains participation in irrigation water 
utilization. The ordinary least square using household income as outcome variable reveals that credit 
access, livestock holdings and proportion of land allocated to irrigation have significant positive effect 
on household income. This indicates that the more land is allocated to irrigation the higher will be the 
income. Moreover, the study pointed out that local institutional failure was a more important challenge 
than hydrological factors in managing the irrigation system. This has a policy implication in terms of 
strengthening the institutional environment.