Agriculture / DFATD / East Africa / Ethiopia / Irrigation / IWMI / LIVES / Research / Water / WLE

Does investment in motor pump-based smallholder irrigation lead to financially viable input intensification and production?

This study focused on the impact of motor pump-based smallholder irrigation in input use and production as compared to rain-fed production systems and investigated the financial viability of such investments.

Data used in this study came from the baseline and motor pump surveys of the Livestock and Irrigation Value Chains for Ethiopian Smallholders (LIVES) project conducted in five districts of four LIVES intervention zones conducted in 2014, but in reference to the 2012/2013 production season.

Results showed that as compared to rain-fed agriculture, the use of motor pump-based smallholder irrigation leads to significantly higher and financially viable input use and production.

Based on different scenarios, the estimated net present values (NPV) computed at 8.5%; 13.9%; 25.9%; 28% and 30% interest rates showed investment in motor pump-based smallholder irrigation is financially viable and robust even at high interest rate and volatile market conditions. The data also suggested that an increase in irrigated land leads to a higher profit margin/ha as a result of lower cost/ha and higher gross production values/ha.

Despite over-abstraction of water and use of agro-chemicals perhaps resulting in land degradation and reduced marginal benefits due to loss of micro nutrients and genetic diversity of crop varieties, our analyses failed to capture such external costs.

Download the working paper:

Gebregziabher, G., Hagos, F., Haileslassie, A., Getnet, K., Hoekstra, D., Gebremedhin, B., Bogale, A. and Getahun, G. 2016. Does investment in motor pump-based smallholder irrigation lead to financially viable input intensification and production? An economic assessment. LIVES Working Paper 13. Nairobi, Kenya: ILRI.

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