The Economics of Irrigation Water: Empirical Evidence from the Awash River Basin, Ethiopia

Abstract

Using primary data collected from Ethiopia’s Awash River basin, we study the economics of irrigation water for smallholder farmers. We estimate the impact of irrigation water on gross margin and chemical fertilizer uptake. Our results show that irrigation water has a statistically significant and positive effect on the profitability of crops and chemical fertilizer uptake. We also generate qualitative data on irrigation water returns by producing various crops in the different parts of the basin. In addition, we present the intensity of irrigation water used for various crops in the different parts of the basin as reported by farmers. In doing so, we offer some qualitative evidence on the economic trade-offs involved in irrigation water use at farm and basin levels. The policy implications of the findings are discussed.