Does irrigation have an impact on food security and poverty?

Transcription

1 WORKING PAPER 04 June 014 SUMMARY APRIL 010 Does rrgaton have an mpact on food securty and poverty? Evdence from Bwanje Valley Irrgaton Scheme n Malaw Rudolf Nkhata

2 TABLE OF CONTENTS Abstract Introducton Theoretcal and Emprcal Strategy Data Sources, Descrptve Statstcs and Assumptons Emprcal Results Conclusons and Polcy Recommendatons... 1 Annexes References LIST OF TABLES Table 3.1 Descrptve statstcs of study households... 6 Table 3. Parwse correlaton coeffcents of selected varables... 7 Table 4.1 Average treatment effect for annual household agrcultural ncome for rrgaton scheme partcpants, MK... 9 Table 4. Average treatment effect for daly per capta calorc ntake from maze and rce, kcal Table 4.3 Average treatment effect for annual household agrcultural ncome for margnalzed group member households partcpatng n rrgaton scheme, MK... 11

3 ABSTRACT The purpose of ths study was to assess the mpact of rrgaton on household food securty and poverty usng a case study of Bwanje Valley Irrgaton Scheme n Malaw. Data used n the analyss were collected from 41 households 169 partcpants n the rrgaton scheme and 43 non-partcpants. Due to the non-random selecton of partcpants nto the rrgaton scheme, the study used endogenous swtchng regresson to correct for sample selecton bas. Propensty score matchng was then used to measure the mpact of rrgaton on food securty and poverty. Daly per capta calorc ntake and agrcultural ncome were the proxy measures used to measure food securty and poverty, respectvely. Despte farmers sellng paddy rce at the farm gate on an ndvdual bass and operatng n an envronment wth nadequate water supply, the fndngs revealed that rrgaton had a postve mpact on annual agrcultural ncome and daly per capta calorc ntake. The mpact of rrgaton on household annual agrcultural ncome was dfferent among the partcpants, wth those cultvatng both rce and maze under rrgaton earnng more agrcultural ncome than ther counterparts growng rce only. The results also showed a postve mpact of rrgaton on daly per capta calorc ntake, wth both groups of rrgatng farmers realzng smlar mproved levels of calorc ntake over farmers that dd not partcpate n the rrgaton scheme. In addton, tradtonally margnalzed groups households headed by youth, female-headed households, and low-ncome households earned more agrcultural ncome than what they would have earned f they dd not partcpate n the rrgaton scheme. The recommendatons from the study are that rrgaton nterventons should be up scaled to other areas wth potental rrgable land and should promote the growng of more than one crop. In addton, rrgaton schemes should promote bulk marketng of processed rce through contract relatonshps wth nsttutons (.e. schools, prsons, hosptals) and prvate traders. 1. INTRODUCTION Numerous emprcal studes across the world have shown that rrgaton has a postve mpact on household food securty and poverty (Dllon 007; Mangson 008; Omlola 009; Gebregzabher and Namara 009). Wth ths n mnd, many developng countres affected by droughts and floods promote rrgaton nterventons to reduce poverty and to promote food securty. Malaw s one of the countres that has promoted rrgaton through the Malaw Growth and Development Strategy (GoM 011).However, despte large nvestments n rrgaton projects, Malaw contnues to suffer from chronc food nsecurty due to recurrent droughts and floods. Seven major droughts and more than eghteen floods occurred n Malaw between 1967 and 008 whch affected n total approxmately 1.7 mllon people (Sedenburg et al. 010; Lunduka et al. 010). Economcally, the country loses US$ mllon or 1.7 percent of ts gross domestc product (GDP) on average each year due to the combned effects of droughts and floods. Severe droughts can lead to more than a 10 percent loss n natonal GDP (Pauw and Thurlow 009). Whle the studes mentoned above have quantfed the postve mpact of rrgaton on household food securty and poverty, many of the authors dd not control for sample selecton bases n ther evaluatons. Sample selecton bas may arse due to systematc dfferences n unobserved characterstcs between partcpants and non-partcpants n an rrgaton scheme. For nstance, motvated farmers mght partcpate n rrgaton and are lkely to gan more annual agrcultural ncome and have hgher daly per capta calorc ntake than ther less motvated counterparts. Falure to control for selecton bas arsng from unobserved characterstcs may result n overstated or understated estmates of the mpact of rrgaton on household ncome and daly per capta calorc ntake. In addton, most of these evaluaton studes dd not dsaggregate ther results to examne the mpact of rrgaton on margnalzed households female headed households, the youth, and low-ncome households. Usng the Bwanje Valley Irrgaton Scheme n Malaw as a case study, the evaluaton study reported here goes beyond many of the other studes n the lterature on the mpact of rrgaton on food securty and poverty as t controls for sample selecton bas and examnes the effect of rrgaton on margnalzed households. Specfcally, the study addressed the followng three questons: Does growng crops under rrgaton mprove the food securty status of partcpant households? Moreover, for those households that use rrgaton, does growng two crops under rrgaton versus growng only one crop mprove household food securty status? Does growng crops under rrgaton reduce poverty of partcpant households? For those households that use rrgaton, does growng two crops under rrgaton versus growng only one crop reduce poverty? Do margnalzed households beneft from usng rrgaton? For those groups of margnal households usng rrgaton, who beneft more or less among the groups? 1

4 Addressng these questons provdes emprcal evdence on the effectveness of rrgaton n mprovng household food securty and reducng poverty. Furthermore, ths study provdes mportant nsghts and lessons for mprovng the current program of rrgaton development n Malaw. In addton, the fndngs of the study can be used n desgnng better nterventons n the future as exstng rrgaton schemes are rehabltated and new ones are constructed. Ths study uses propensty score matchng (PSM) after controllng for sample selecton bas to assess the mpact of growng crops under rrgaton on annual agrcultural ncome and daly per capta calorc ntake and, f rrgaton s used, of growng one crop versus growng two crops under rrgaton among households farmng both wth and wthout rrgaton n the Bwanje Valley Irrgaton Scheme and the surroundng area. The paper further employed PSM to assess the mpact of rrgaton and growng one rrgated crop versus growng two crops for female headed households, the youth, and low ncome households, whch are tradtonally margnalzed groups Background to Bwanje Valley Irrgaton Scheme Bwanje Valley Irrgaton Scheme (BVIS) s located n the central regon of Malaw wthn Mtakataka Extenson Plannng Area on the Lake Malaw lakeshore plan n Dedza dstrct. BVIS was establshed n January 000 at a total cost of US$ 15 mllon and targeted 1,000 households n 14 vllages. The scheme covers an area of 800 hectares and benefts over,000 smallholder farmers (Demer 1990; Boldng 004). BVIS was bult wth the goal of mprovng household food securty and ncreasng ncome levels of benefcares through ncreased agrcultural producton of rce and other crops such as maze, soybean, and cowpea (GoM 013). After constructon of BVIS, the Japanese Internatonal Cooperaton Agency fnanced the further rehabltaton of BVIS n November 005 at a cost of US$ 30,000. Ths rehabltaton exercse nvolved headwork and settlng basn rehabltaton, man canal relocaton, and land levelng. These works were completed n 006 (Johnstone 011). Intally, BVIS was managed by agrcultural extenson offcers from government. Between 003 and 004, however, the farmers on the scheme were organzed nto a cooperatve and assumed all responsbltes for managng the scheme (Johnstone 011). The management structure of the cooperatve s made up of the executve commttee, general commttee, and sub-commttees. The executve commttee s the board for the scheme and s made up of 7 farmers from the scheme who provde oversght on scheme operatons. The members of the executve commttee are voted nto offce every three years by all farmers partcpatng n the rrgaton scheme. The general commttee s responsble for managng the day-to-day affars of the cooperatve. Ths general commttee s made up of nne members who hold the postons of presdent, vce presdent, secretary, vce secretary, treasurer and four fnance commttee members who serve two year terms. The general commttee s dvded nto sub-commttees. The water management sub-commttee s responsble for the operaton and mantenance of the scheme. The dscplnary sub-commttee s responsble for settlng dsputes or conflcts amongst members of the cooperatve based on establshed by-laws. The agrcultural sub-commttee s responsble for the tranng of farmers n the use of new methods of cultvaton and montorng ther performance. The marketng sub-commttee s responsble for procurng of nputs to be sold to partcpants and searchng for markets for the rce cultvated n the scheme. The fnance sub-commttee s responsble for ensurng that the cooperatve mantans good fnancal standng. Fnally, the ad hoc land allocaton sub-commttee was establshed to reallocate land durng the rehabltaton phase n 006. Accordng to the desgn of the scheme, all farmers that helped wth scheme constructon were allocated land wthn t by the chefs. Some vllages had more land than others and ths allowed the respectve vllage chefs to allocate a larger porton of the land to ther subjects. For nstance, some farmers were allocated.0 hectares of land and found that they were not able to usng all of the rrgated land allocated (Veldwsch et al. 009). Durng the rehabltaton of the scheme, an agreement was sgned by 1601 farmers n early 006 to reallocate the land wthn the rrgaton scheme. The work of reallocatng the land was facltated by the Japanese Internatonal Cooperaton Agency and the ad hoc land allocaton sub-commttee. Ths sub-commttee was comprsed of offcals from the Department of Irrgaton, chefs from the area, and representatves from the BVIS cooperatve. Under ths agreement, all responsbltes for managng the land n BVIS were transferred to the cooperatve. Ths gave powers to the cooperatve to allocate the land to farmers and also to dsmss any member f he or she does not abde by the by-laws of the cooperatve (Johnstone 011). BVIS cooperatve then allocated 0.4 hectares of land to every member of the cooperatve (GoM 013). Partcpaton n BVIS s voluntary, provded the farmer lves wthn the 14 vllages targeted by the BVIS and s over the age of 18 years wth no crmnal record (Johnstone 011).However, farmers have to abde by the by-laws of the cooperatve and pay varous fees to the cooperatve at the start of each agrcultural season n order to partcpate n the scheme. These fees ncludes an annual subscrpton fee of MK 500 (US$ 3.00 n 01) and water fees at MK 300 per 1 Youth are regarded as those benefcares less than 35 years of age (Afrcan Unon 006), whle low ncome households are those earnng less than US$1.5 per person per day (Ravallon et al. 008).

5 plot. These are pad to assst n the operaton and mantenance of the scheme. In addton, farmers buy shares n the cooperatve at MK 1500 per share (GoM 013).. THEORETICAL AND EMPIRICAL STRATEGY It should be emphaszed that partcpants self-select themselves nto BVIS. Hence, t s not possble to drectly compare the agrcultural ncome or daly per capta calorc ntake of partcpants and non-partcpants because of selecton bas. Ths selecton bas can be as a result of both observed and unobserved characterstcs. Ths secton provdes the theory and methods for carryng out a counterfactual analyss n order to control for the selecton bas as a result of both observed and unobserved characterstcs. The counterfactual analyss estmates the agrcultural ncome or daly per capta calorc ntake that ndvduals would have earned or consumed, respectvely, f they dd not partcpate n rrgaton. Ths secton starts wth a descrpton of the theory behnd partcpaton decsons that farmers make usng the utlty framework. Second, we develop the counterfactual groups based on the farmer s decsons, and, fnally, the emprcal strategy behnd an endogenous swtchng regresson method to correct for sample selecton bas s dscussed. The am of BVIS s to mprove food securty and ncrease household ncome for scheme partcpants. In ths regard, household annual agrcultural ncome and daly per capta calorc ntake are the outcome varables used n the analyss here. Household agrcultural ncome s the sum of both ncome from rrgaton and from ran-fed agrculture. Followng Hoddnott (1999), per capta calorc ntake per day was used as a proxy to measure food securty. Due to data qualty ssues, t was not possble to assess total calorc ntake from all foods consumed. Here we use the calorc value of daly per captal consumpton of the two man staple cereals, maze and rce, as our measure of food securty. Quanttes n klograms of maze and rce that study households reported consumng wthn the past 7 days were converted nto standard calorc conversons 100 grams of maze s equvalent to 334 calores; whle 100 grams of rce, 333 calores. For each household, the total amount of calore ntake from these two cereals for each household was then dvded by the household sze to obtan daly per capta calorc ntake from maze and rce. Followng McFadden (1974), a random utlty framework was used to model the partcpaton decson of a household n BVIS. Accordng to the desgn of BVIS, farmers face a two-stage decson process. In the frst stage, farmers voluntarly decde whether to partcpate or not. Once the frst decson s made, farmers then decde on the crops to be grown. Farmers have a choce to grow rce only or to grow rce wth a combnaton of other crops, such as maze, soybean, or cowpea for the sake of ncreasng agrcultural ncome and promotng food securty. In ths regard, farmers partcpate n BVIS f they perceve that rrgaton wll provde them wth more utlty than ran-fed agrculture. The general utlty functon can be expressed as: U j= U(Y j, K j, X j, Z j, ε j), where j= 0, 1 and = 1,, 3,, N (1a) where U j denote the utlty that household obtans from choosng crop producton alternatve j (.e. j=1 mples partcpaton n BVIS and j=0, mples non-partcpaton n BVIS). Ths utlty s a lnear functon of agrcultural ncome or daly per capta calorc ntake condtonal on observed characterstcs X and Z correspondng to agrcultural ncome (Y) and per capta calorc ntake (K), respectvely. X and Z are vectors of observable soco-economc and farm varables of the study households. ε s a dsturbance term that s assocated wth household and alternatve j and accounts for unobserved factors,.e., socal, poltcal, developmental, ecologcal, or envronmental factors. The decsons to partcpate and, f so, whch crops to grow s observed as a bvarate outcome and s mutually exclusve. Therefore, the general utlty functon can be expressed as a two stage decson framework as follows: J j 0 * f N 1 f M* 0 * 3 f N otherwse * L L where ndcate the choce of benefcares to grow rce only, whle 3 ndcates the choce to grow both rce and maze. M*, N*, and L* are dfferences n utlty between the two decsons expressed as follows: M* = U 1 U 0; N* = U U 3; and L*= U 3 U. Equaton (1b) states that farmers wll choose to partcpate n BVIS f rrgaton provdes more utlty than ran-fed agrculture. Farmers then decde on the crops to grow. Thus, farmers wll grow rce only f the antcpated utlty derved from agrculture ncome and daly per capta calorc ntake s more from growng only rce than that of growng both rce and maze. It s assumed that the decson to grow rce or both rce and maze s nfluenced by observed soco-economc characterstcs of the study households. These nclude the prce of rce; prce of maze; gender, age, and educatonal level of household head; famly sze, farmng experence, and total land sze. (1b) 3

6 From equaton (1b), the probabltes that farmers partcpate n BVIS can be expressed as: p p 1 0 pr( U 0 pr( U 1 U U 1 0 ) ) (a) The probabltes that farmers who choose to engage n rrgated crop producton n BVIS choose to grow rce or to grow rce and maze can be expressed as: p p a b pr( pr( U U 0 0 U U 3 ) ) (b) As earler stated, agrcultural ncome (y j) and daly per capta calorc ntake (k j) are derved from both ran-fed and rrgaton agrculture. Therefore, we express these outcome varables as follows: y1 ( 1 j) y1 ( j) y1 X f 1 y0 ( 1 j) y0 ( j) y10 X o0 00 f 0 k1 ( 1 j) k1 ( j) k1 X f 1 k ( k X f j) k9 ( j) 0 o j (3a) j (3b) j (3c) j (3d) Where β 1 and β 0 are coeffcent parameters, σ 1 and σ 0 are standard devatons, whle μ 1 and μ 0 are the random components wth E( x ) = 0. 1 Partcpaton n BVIS s endogenously determned as shown n equatons 3a through 3d. In other words, the decson to partcpate n BVIS s a choce and ths choce s nfluenced by expected agrcultural ncome or daly per capta calorc ntake from rrgaton and ran-fed agrculture. We let denote the dfference between the outcomes of partcpants and non-partcpants expressed as: = y y ) ( X X ) ( ) y k ( (4a) = k k ) ( X X ) ( ) ( (4b) However, due to the non-random selecton of partcpants nto BVIS, t becomes unrealstc to take the dfference between the outcomes of partcpants and non-partcpants n order to measure the mpact of BVIS on agrcultural ncome and daly per capta calorc ntake. Ths s the case consderng that for any partcpant, t s mpossble to observe the agrcultural ncome and per capta calorc ntake smultaneously under two mutually exclusve states of nature (wth versus wthout BVIS). In other words, ths creates a mssng data problem. In addton, the systematc dfferences n the observed and unobserved characterstcs of partcpants and non-partcpants may also yeld based mpact estmates, snce ther characterstcs are not balanced. The mssng data problem s elmnated through developng counterfactual outcomes for partcpants based on observed covarates assumng that the study households were not partcpatng n BVIS. Ths s expressed as E(y 1 X, j=0) and E(k 1 X, j=0). In addton, a treated outcome was developed for partcpants based on observed covarates expressed as E(y 1 X, j=1) and E(k 1 X, j=1) as E( y 1 X, j 1) and E( k 1 X, j 1). To measure the mpact of BVIS on agrcultural ncome and daly per capta calorc ntake, the dfference between the treated and the counterfactual outcomes was used. Ths s expressed as: E(Y)= E(K)= E ( y1 X, j 1) E( y1 X, j 0) Treated outcome (5a) Counterfactual outcome E ( k1 X, j 1) E( k1 X, j 0) Treated (5b) outcome Counterfactual outcome 4

7 However, estmaton of E(Y) and E(K) condtonal on observed covarates n equaton (5a) and (5b) leads to a dmensonalty problem (Henrch et al. 010). In other words, as the number of covarates ncreases, t becomes cumbersome to dentfy the observatons whch are close to each other among partcpants and non-partcpants. A soluton to ths s to use the condtonal probabltes commonly referred to as propensty scores (Rosenbaum and Rubn, 1983). Therefore, propensty scores estmated n equaton (a) and (b) were used. Equaton (5a) and (5b) can be re-wrtten as: E(Y)= E(K)= E ( y p 1) E( y1 p0 ) Treated 1 (6a) outcome Counterfactual outcome E ( k p 1) E( k1 z, p0 ) Treated 1 (6b) outcome Counterfactual outcome Equaton (6a) and (6b) were estmated usng the Propensty Score Matchng (PSM) technque followng Rosenbaum and Rubn (1983); Calendo and Kopeng (005); and Khandker et al. (010).The study also assumed that there may be sample selecton bas whch, f not addressed, may result n based E(Y) and E(K). In ths regard, the methodology was extended to control for endogenety and sample selecton bas. To account for selecton bases descrbed n the theoretcal framework, the choce of partcpaton of the study household and the outcome equatons for household agrcultural ncome or daly per capta calorc ntake were modeled smultaneously n a two-stage framework usng an endogenous swtchng regresson model. In the frst stage, the choce equaton for partcpatng n BVIS was modeled usng equaton (1b). In the second stage, farmers face two regmes to partcpate, or not to partcpate defned n equatons 3a through 3d. In order to smultaneously model the selecton equaton (1b) and outcome equatons (3a and 3b), a full maxmum lkelhood estmaton method was used. The method was used because the estmaton of the selecton and outcome equatons usng maxmum lkelhood estmaton and twostep least square provdes neffcent estmates (Lokshn and Sajaa 004). We assumed a trvarate normal dstrbuton, wth zero mean and a covarance matrx represented by Σ,.e., (ε, u 1, u 0) ~ (0, Σ). Ths assumpton was made consderng the correlaton between error terms n the selecton equaton and outcome equatons, respectvely, due to systematc dfferences n agrcultural ncome or per capta calorc ntake wth and wthout BVIS. The covarance matrx Σ s expressed as follows: (7) where s the varance of the error term n the selecton equaton (1b), whch can be assumed to be equal to 1, snce the coeffcents are estmable up to scale factor (Maddala 1983); and outcome functons; and are the varances of the error terms n the are covarances between u s n the outcome functon and n the selecton equaton. The covarance between u1and u 0 s not reported snce y 1 and y 0 are not observed smultaneously. Followng Lokshn and Sajaa (004), the full maxmum lkelhood estmaton analytcal approach was defned based on the trvarate normal dstrbuton, wth zero mean and covarance matrx, as follows: 1 ln L { j [ln ( ) ln 1 ln ( 1 )] (1 j)[ln ( ) ln ln ( )]} 1 1 (8a) where (.) s the standard normal probablty densty functon, (.) s the standard normal cumulatve densty functon, and: j ( Z j / ) j 1 j j j j=1,0 (8b) 5

8 where 1 ( u ) 1 s the coeffcent of correlaton between u1 and ; and between u1 and always postve. ( u ) 0 0 s the coeffcent of correlaton. To make sure that the estmated 1 and 0 are bounded between 1 and 1, the estmated 3. DATA SOURCES, DESCRIPTIVE STATISTICS AND ASSUMPTIONS j are The study purposvely selected BVIS because t s one of the oldest modern rrgaton schemes n Malaw. Despte ths, the operatons and welfare mpact of the rrgaton scheme have not been evaluated snce the completon of the rehabltaton works n 008. Ths study used smple random samplng to come up wth a representatve sample of 41 households (169 partcpants and 43 non-partcpants) to be used n the matchng analyss. A household questonnare was used to capture nformaton from study households on ther demographc and socoeconomc characterstcs, ncomes, asset and lvestock ownershp, benefts and costs assocated wth BVIS and ran-fed agrculture, marketng of agrcultural produce, access to credt, access to extenson servces, and food securty status n the 011/1 agrcultural season. Both quanttatve and qualtatve approaches were used to collect the data. Key nformant and nformal ntervews were also used to gather n-depth nformaton on the operaton of the scheme. The descrptve results n Table 3.1 show that there were statstcally sgnfcant dfferences n soco-economc characterstcs between partcpants and non-partcpants, youth and adults, female headed and male headed households, low and hgh ncome households. Dfferences are notced for varables such as age and gender of household head, famly sze, total land sze, rce yeld, maze yeld, farmng experence, annual agrcultural ncome and daly per capta calorc ntake from maze and rce. Table 3.1 Descrptve statstcs of study households Age (years) Famly sze Varables Credt amount (MK) Total land sze (ha) Rce yeld (kg/ha) Maze yeld (kg/ha) Farm experence (years) Annual agrcultural ncome (MK) Daly per capta daly calorc ntake from maze and rce Male headed households Proporton of household heads wth some prmary educaton 40.5 (0.81) 5.1 (0.09) 9,183 (981) 0.7 (0.08) 754 (5) 1395 (65) 17.3 (0.65) 83,318 (5,16) (49.3) 0.73 (0.0) 0.74 (0.0) All study households Nonpartcpants n scheme 41.1 (1.08) 5.0 (0.11) 10,541 (1,411) 0.8 (0.1) 198 (65) (96.9) 19.5 (0.93) 58,197 (5,49) (45.5) 0.88 (0.0) 0.79 (0.03) Irrgaton Youth Gender Income status Partcpants growng rce 37.4 (1.33) 5.6 (0.19) 8,386 (1,903) 0.5 (0.11) 3170 (1) (117.6) 14.3 (1.03) 110,83 (1,038) (80.) 0.59 (0.05) 0.77 (0.04) Partcpants growng rce & maze 40.8 (1.84) 5.4 (0.4) 5,975 (1,60) 0.4 (0.07) 3057 (119) 1050 (55.4) 13.8 (1.19) 18,801 (15,16) (186.6) 0.4 (0.05) 0.57 (0.06) 8. (0.35) 4.8 (0.11) 8,733 (1,15) 0.7 (0.10) 545 (80) (0) 10. (0.49) 87,094 (7,991) (78.8) 0.7 (0.03) 0.77 (0.03) Youthheaded households Adultheaded households 5.1 (0.98) 5.6 (0.13) 9,65 (1,536) 0.7 (0.1) 604 (68) 1940 (13.8) 4.3 (0.98) 79,616 (6,74) (58.1) 0.73 (0.03) 0.71 (0.03) Male headed households 38.7 (1.49) 5. (0.10) 6,615 (1,150) 0.8 (0.10) 616 (63) 1509 (8.9) 18.3 (0.79) 8,388 (6,009) (147.5) Female headed households 40.9 (0.93) 5.1 (0.19) 10,154 (1,76) 0.5 (0.08) 463 (93) (56.1) 14.6 (1.08) 85,781 (10,473) (36.7) (0.0) 0.7 (0.04) Low ncome 41. (1.06) 5.0 (0.11) 8,437 (1,119) 0.6 (0.08) 177 (31) (38.5) 17.4 (0.87) 3,48 (1,366) (48.) 0.70 (0.03) 0.76 (0.03) Hgh ncome 38.7 (1.1) 5.5 (0.15) 10,487 (1,853) 0.8 (0.17) 4839 (95) 169 (170.4) 17. (0.94) 9,16 (11,873 ) Observatons (105.9) 0.77 (0.03) 0.71 (0.04) For rrgaton status, the results n Table 3.1 show that there are statstcally sgnfcant dfferences between partcpants growng rce and non-partcpants. These dfferences are notced for varables such as famly sze, rce yeld, 6

9 maze yeld, and annual agrcultural ncome, wth hgher mean levels for all of these varables n favor of partcpants growng rce. Statstcally sgnfcant dfferences were also notced for varables such as total land sze, farmng experence, age and gender of household head n favor of non-partcpants. Examnng dfferences between partcpants growng rce and maze under rrgaton and non-partcpants, the results show that there were statstcally sgnfcant dfferences for varables such as famly sze, rce yeld, maze yeld, agrcultural ncome and daly per capta calorc ntake n favor of partcpants growng rce and maze. In addton, there were statstcally sgnfcant dfferences n varables such as total land sze, farmng experence, age and gender of household head n favor of non-partcpants. Despte the non-partcpants havng larger land holdngs, the rce yelds for both groups of partcpants were above those attaned by non-partcpants. Informal ntervews wth non-partcpants revealed that floods and droughts affected rce yelds. Statstcally sgnfcant dfferences for some varables are seen between partcpants growng rce under rrgaton and those growng both rce and maze. Households only growng rce are more lkely to be female-headed, have larger total land holdngs, and the head s more lkely to have gone to school. Between the youth and adults, the descrptve statstcs also showed that there were statstcally sgnfcance dfferences n total land sze, maze yeld, farmng experence, and age of household head n favor of adults. However, the descrptve statstcs show that there was no sgnfcant dfference n rce yelds, agrcultural ncome and daly per capta calorc ntake between the youth and adults. In term of gender of household head, the descrptve statstcs show that there are statstcally sgnfcant dfferences n total land sze, and maze yeld between female and male-headed households n favor of male-headed households. However, t was notced that there are no statstcally sgnfcant dfferences n annual agrcultural ncome and daly per capta calorc ntake between male and female-headed households. Lastly, the descrptve statstcs ndcate that there are statstcally sgnfcant dfferences n famly sze, total land sze, rce yelds, maze yelds, annual agrcultural ncome and daly per capta calorc ntake between hgh and low ncome households. The dfferences were n favor of hgh ncome households. One nterestng observaton was on access to credt. For all the margnalzed groups, the descrptve statstcs show that there were no statstcally sgnfcant dfferences n the amount of credt obtaned. However, t was notced that ndvduals pad hgh nterest rates (at least 400 percent). Further probng revealed a smlar fndng that for every MK1000 (US$5.95) borrowed; a farmer s supposed to pay a bag of rce n return. Ths practce s commonly referred to as Chgoboza. Ths practce s detrmental to low ncome households, as they are left n a poverty cycle. Table 3. Parwse correlaton coeffcents of selected varables Varables Irrgaton partcpaton Agrcultural ncome (MK) Daly per capta calorc ntake Age of household head ** Famly sze 0.1** 0.09*** Credt amount (MK) ** 0.10 Land sze (ha) -0.3* 0.6* Rce yeld (kg/ha) * 0.5* Maze yeld (kg/ha) * 0.10** Farm experence Female head of household -0.4* Household head has some prmary educaton 0.00* -0.09*** 0.0 Agrcultural ncome 0.8* * Per capta daly calorc ntake per day from maze and rce 0.19* 0.08** * -- Observatons Results n Table 3., show that rce and maze yelds are postvely correlated wth agrcultural ncome and daly per capta calorc ntake. We also fnd that partcpaton nto BVIS s postvely correlated wth agrcultural ncome and daly capta calorc ntake. The postve correlaton ndcates that rrgaton mght ncrease agrcultural ncome and per capta calorc ntake of benefcares. 7

10 To assess the mpact of rrgaton on food securty and poverty, the PSM technque wth probt was used to estmate the propensty scores of households partcpatng n BVIS. However, there s no consensus on what type of covarates should be ncluded n the dscrete choce models when estmatng propensty scores (Austn, 011). For ths study, varables were chosen that strongly nfluence partcpaton n the rrgaton scheme but weakly nfluence agrcultural ncome or daly per capta calorc ntake. These are descrbed n Annex 1. The study also followed Rosebaum and Rubn s (00) procedure called blockng, where the propensty scores were dvded nto blocks among the groups. The blockng was done to mprove the balancng of covarates. The propensty scores for the blocks among the groups were not dfferent between rrgaton scheme partcpants and non-partcpants, thereby satsfyng the balancng condton of propensty scores suggested by Becker and Ichno (00). Followng Lee (006), the standard bas was used to test the balancng condton for the entre blocks due to the non-normalty of the data n these blocks. Another mportant assumpton that also was adhered to s the common support and overlap assumpton to ensure that households wth the same X or Z values have a postve probablty of beng ether partcpants or non-partcpants (Heckman, LaLonde, and Smth, 1999). In ths regard, the common support for partcpants on the full sample was and 0.977, wth 8 percent of the sample beng outsde the common support regon. Ths sub-sample was dropped from the analyss. The common support for partcpants growng rce was between and 0.810, wth 5 percent of the 331 households beng dropped from the analyss as they volated the tenet of common support. The common support for partcpants growng both rce and maze was between and 0.930, wth 33 percent of the 34 households beng dropped from the analyss as they volated the tenet of common support. The common support for margnalzed partcpants was between and 0.848, wth 7 percent of the 41 households beng dropped from the analyss as they volated the tenet of common support. In addton, there was a perfect overlap between partcpants and non-partcpants.(see Annexes to 5.) Consderng that the common support and overlap condton are met, the balancng of covarates was done between partcpants and non-partcpants. Calendo and Kopeng (005) provde several procedures of testng the balancng condton, ncludng standard bas, t-test, jont sgnfcance, pseudo-r and stratfcaton. However, the varables used n our probt model were not normally dstrbuted, hence the use of t-test could have led to msleadng results (Lee 006). Therefore, the study used the standard bas to test the balancng condton for the varables whch were not normally dstrbuted. After matchng, all the varables lsted n Annex 6 had a standard bas of less than 0 percent, ndcatng there was a balance between covarates of partcpants and non-partcpants for the groups. 4. EMPIRICAL RESULTS 4.1 The mpact of rrgaton on poverty The study assessed the mpact of rrgaton on poverty usng household agrcultural ncome as the outcome varable. Thus, the Average Treatment Effect (ATT) was estmated usng equatons (6a) and (6b) n the regon of common support (see Annex to 5). The ATT s were derved usng three matchng estmators, namely, nearest neghbor, radus, and kernel matchng. The three matchng estmators were used to check the consstency of the PSM results. Endogenous swtchng regresson was used to adjust estmates of household agrcultural ncome for sample selecton bas. The σ j and ρ j coeffcents were statstcally sgnfcant, ndcatng that endogenous swtchng was approprate and that sample selecton bas was present (use Annex 7). Table 4.1 shows both bas-adjusted and unadjusted estmates of the ATT from three matchng methods. For the sake of brevty, we report n the text prmarly the results from nearest neghbor matchng only. Rosenbaum and Rubn (1985) suggest that a standardzed dfference that s greater than 0 percent should be consdered as large. 8

11 Table 4.1 Average treatment effect for annual household agrcultural ncome for rrgaton scheme partcpants, MK Full sample (n =41) Treatment Rce partcpants (n=331) Rce & maze partcpants (n=34) Bas adjustment No Yes No Yes No Yes Nearest Neghbor Kernel Radus ATT Control Mean ATT Control Mean ATT Control Mean 90,61* (1,088) 46,697* (13,71) 73,68*** (1,189) 51,440*** (9,766) 115,367 (18,717) 80,600** (15,808) 9,179 71,93 41,046 7,684 8,497 60,015 87,047** (15,153) 4,619 38,808 77,365** (16,08) 57,941** (14,511) 114,438** (19,608) 71,080 (55,565) 3,39 87,639** (15,649) 76,009 33,457 19,34 6,580 65,987 4,879 (31,060) 6,897 (17,389) 60,6*** (14,473) 1,990** (3,091) 78,56*** (1,174) 35,8 81,806 44,609 19,581 30,67 74,34 Table 4.1 ndcates that there were dfferences between bas-adjusted and bas-unadjusted estmates mplyng that the PSM s senstve to the unobserved characterstcs. The bas-adjusted estmates are consstently lower than the estmates obtaned when bas s not controlled for. Overall, the bas-adjusted results usng nearest neghbor matchng on the full sample ndcate that partcpants n the rrgaton scheme earned on average MK 46,697 above what they could have earned f they dd not partcpate n BVIS. The results were sgnfcant at the 10 percent level. Ths represents a 65 percent ncrease n annual agrcultural ncome. Growng only rce under rrgaton ncreases the average agrcultural ncome of the partcpatng households over those not engagng n any rrgated producton by MK 51,440 usng the bas-adjusted nearest neghbor matchng method. Ths result s statstcally sgnfcant at the one-percent level. Ths represents an ncrease a 185 percent ncrease n annual agrcultural ncome. The results ndcate that partcpants growng only rrgated rce earn more agrculture ncome annually than what they could have earned f they dd not partcpate n the rrgaton scheme. The results usng nearest neghbor matchng were consstent wth those of kernel and radus matchng. For partcpants growng both rrgated rce and maze, there are large dfferences between the bas-adjusted and bas-unadjusted estmates, wth all bas-adjusted estmates beng lower than the unadjusted estmates. The bas-adjusted estmate usng the nearest neghbor method shows that usng rrgaton to produce both rce and maze ncreases the annual agrcultural ncome of partcpants by MK80,600. The estmate s statstcally sgnfcant at the 5 percent level. Ths represents a 134 percent ncrease n annual agrcultural ncome over what they would have earned f they only concentrated on ran fed agrculture. Through comparng the estmates from the two groups who grew crops under rrgaton, we notced that growng both rce and maze under rrgaton ncreased agrcultural ncome by 34 percent for the farmng household over ther counterparts that only grew rce under rrgaton. Ths was because partcpants growng both rce and maze had maze to consume and a balance of rce to sell, whle partcpants growng rce only had to allocate some of ther rce for consumpton and some for sale. 4. The mpact of rrgaton on food securty The study also assessed the mpact of rrgaton on household food securty usng the three matchng estmators. For the sake of brevty we use the results from nearest neghbor matchng method. In ths regard, daly per capta calorc ntake from maze and rce consumpton was used as the outcome varable. Table 4. shows both bas-adjusted and unadjusted estmates of the ATT from three matchng methods. 9

12 Table 4. Average treatment effect for daly per capta calorc ntake from maze and rce, kcal Full sample (n =41) Treatment Rce partcpants (n=331) Rce & maze partcpants (n=34) Bas adjustment No Yes No Yes No Yes Nearest Neghbor Kernel Radus ATT 84** (167.4) 103** (44.) 81** (138.9) 131** (59.9) 467** (35.6) 1** (60.) Control Mean ATT 47*** (91.9) 109* (6.6) 349*** (8.7) 105** (35.9) 376*** (19.8) 96.3** (43.6) Control Mean ATT 397*** (85.1) 11*** (4.5) 353*** (79.8) 106*** (34.8) 36*** (116.5) 133*** (43.4) Control Mean The results n Table 4. showed that rrgaton has a postve mpact on the daly per capta calorc ntake of partcpants. Overall, the bas-adjusted estmate usng nearest neghbor matchng showed that rrgaton ncreased the daly per capta calorc ntake for partcpants by 103 klocalores. Ths represented an average ncrease of 10 percent more than what partcpants would have consumed f they dd not partcpate n the rrgaton scheme. The results from the nearest neghbor matchng method were consstent wth the other matchng methods. We also assessed whether farmng households growng rce n the rrgaton scheme had hgher daly per capta calorc ntake than what they would consume n they dd not partcpate n rrgaton. From the results, both of the estmates from the three matchng methods were sgnfcantly dfferent from zero statstcally. The results usng nearest neghbor matchng ndcate that partcpants growng rce consumed on average 131 klocalores from maze and rce more than what they would have consumed f they dd not partcpate n the rrgaton scheme. Ths represents an average ncrease of 13 percent. The results from nearest the neghbor matchng were consstent wth the results from the other matchng methods. Smlarly, for partcpants growng both rce and maze under rrgaton, the estmate usng nearest matchng showed that growng more than one crop under rrgaton relatve to those not growng crops wth rrgaton led to an ncrease n daly per capta calorc ntake by 1 klocalores. Ths result ndcates that partcpants growng rce and maze daly consume 11 percent more calores from maze and rce than what they would have consumed f they dd not partcpate n the rrgaton scheme. The results from nearest neghbor matchng were consstent wth the results from the other matchng methods. Results further ndcate that there was no dfference n daly per capta calorc ntake for those growng more than one crop and those only growng rce under rrgaton. As stated earler, partcpants only growng rce consumed most of ther rce and had lttle rce to sell when compared wth ther counterparts growng more than one crop. Ths s one attrbutng factor that makes the daly per capta calorc ntake to be ndfferent between the two groups. These results conforms to those of other studes by Dllon (007); Mangson (007); Omlola (009); and Gebregzabher and Namara (009) whch ndcate that rrgaton has a postve mpact on food securty and poverty. 4.3 Do margnalzed households beneft from partcpatng n BVIS? PSM n combnaton wth endogenous swtchng regresson was also used to assess whether margnalzed households beneft from partcpatng n BVIS. The study focused on benefts n terms of household agrcultural ncome only. The analyss s run on sub-group data for female headed households, low ncome households, and youths, as ndcated n Table 4.3. However, we use the results from the nearest neghbor matchng method to present our fndngs. 10

13 Table 4.3 Average treatment effect for annual household agrcultural ncome for margnalzed group member households partcpatng n rrgaton scheme, MK Full sample (n =41) Youth (n =194) Treatment Female-headed (n=99) Low-ncome households (n=6) Bas adjustment No Yes No Yes No Yes No Yes Nearest Neghbor Kernel Radus ATT Control Mean ATT Control Mean ATT Control Mean 90,61* (1,088) 46,697* (13,71) 101,55 ** (18,145) 58,373 *** (17,183) 80,35*** (,560) 55,430*** (15,789) 11,53 (4,48) 11,405 (9,14) 9,179 71,93 39,614 7,544 51,006 64,154 1,405 57,178 87,047** (15,153) 4,619 38, ,551 (18,061) 58,19*** (17,865) 93,148** (16,713) 53,167*** (15,88) 13,73** (3,755) 8,891 (10,93) 3,39 87,639** (15,649) 76,009 34,087 71,445 38,10 65,75 19,05 59,691 4,879 (31,060) 115,585** (19,54) 59,335 (18,791) 84,034 ** (17,54) 53,167*** (15,88) 11,066*** (4,031) 10,46 (9,119) 35,8 81,806 35,035 71,58 45,630 65,75 0,950 58,10 The average bas-adjusted ATT for youth estmated usng the nearest neghbor method was MK58,373. The ATT was sgnfcant at the 5 percent level. Ths ndcates that rrgaton has a sgnfcant postve mpact on the agrcultural ncome of youth-headed households. In other words, the youth benefted from rrgaton and earned about 81 percent more annual agrcultural ncome than what they could have earned f they dd not partcpate n the rrgaton scheme. The average bas-adjusted ATT for female-headed households estmated usng the nearest neghbor method was MK55,430. The ATT was sgnfcant at the one-percent level. Irrgaton s shown to have a postve mpact on the agrcultural ncome of the female headed households. The female headed households benefted from rrgaton and earned about 86 percent more annual agrcultural ncome than what they could have earned f they dd not partcpate n BVIS. In addton, constructon of 13 boreholes wthn the 14 vllages as part of the BVIS project s lkely to have reduced the tme that women spend to fetch water, entcng greater partcpaton from female headed households n agrcultural actvtes wthn BVIS. The results were consstent wth the other matchng methods. The average bas-adjusted ATTs for low-ncome households estmated usng all three methods of analyss were not sgnfcantly dfferent from zero statstcally. However the unadjusted ATTs usng the kernel and radus methods were both statstcally sgnfcant and postve, ndcatng that rrgaton had a postve mpact on agrcultural ncome of the lowncome households. Consderng that we used smlar observed covarates to derve the propensty scores, t was possble to compare these between the sub-groups. It was notced that the youth earned more agrcultural ncome than the other margnalzed groups. The low-ncome households earned the least agrcultural ncome among the margnalzed groups. However, the sgnfcant dfferences n annual agrcultural ncome earned between the dfferent margnalzed groups provdes evdence that there are some flaws n the desgn and operaton of BVIS as low-ncome households are beneftng less than ther counterpart tradtonally margnalzed groups female-headed households and youth-headed households. 4.4 Insghts for mprovng BVIS operatons The study also used qualtatve approaches (key nformant and nformal ntervews) to gan nsghts and lessons that could be used to mprove the operatons of the BVIS and to desgn better nterventons. Accordng to Baker (000), ntegratng quanttatve and qualtatve evaluatons methods can often be the best vehcle for meetng the nformaton needs of a program. Avalablty of adequate rrgaton water s the man determnant of whether crops can be produced at least twce a year. Intervews wth key personnel of the scheme and farmers were done to understand f there s adequate water supply at BVIS. It was observed that only one-quarter of the scheme was utlzed durng the dry season due to nadequate water supply. Ths resulted n few partcpants growng a combnaton of rrgated crops. Staff from the scheme management ndcated that the constructon of new rrgaton schemes upstream had resulted n low water supply at 11

14 BVIS. Ths has compromsed the ablty of BVIS members to grow a combnaton of crops at least twce a year. Ths ndcates a reversal n the operatons of BVIS, as Chdant-Malunga (009) ndcated that rce was grown n the scheme twce every year. Further probng revealed that gudelnes for the grantng of water abstracton rghts were not adhered to by the rrgaton schemes upstream. In addton, scheme partcpants growng ther crops on the one-quarter of the BVIS area that receved water n the dry season also faced problems of water dstrbuton. It was reported by some of the farmers that members of the BVIS water management sub-commttee expected to receve brbes from farmers requrng water. If the farmers dd not oblge, ther crops would not receve water. Thus, scheme partcpants wth hgher ncome are favored to get water to rrgate ther crops n the dry season, snce they are able to pay members of the water management sub-commttee who makes decsons on the dstrbuton of water. Ths fndng concurs wth work by Chdant-Malunga (009). The problem of water supply has prompted the European Unon to fnance the constructon of a dam to supply adequate water to BVIS durng the dry season. In terms of marketng, t was observed that farmers do not engage n any value-addton wth ther harvested rce. Hence, they sell t at low prces. Moreover, the BVIS cooperatve does not provde a proper market for rce for partcpants. For nstance, the cooperatve only sells about one thousand bags of paddy rce out of the 60,000 harvested by scheme partcpants annually. Most of the paddy rce s sold at low prces of around MK40 per kg at the farm gate to vendors who normally dctate prces. The majorty of farmers do not use the cooperatve to market ther rce due to delays n payment from the rce buyers. Furthermore, t was commonly found through ntervews wth traders who were buyng rce at the BVIS that they sell the rce to schools and hosptals based on agreed contracts. Ths mples that the traders are takng advantage of the mperfect nformaton on market opportuntes and a lack of sklls n contractual relatonshps among the BVIS cooperatve members and ts leadershp. Thus, f cooperatves can strke busness partnershps wth schools, hosptals and prsons for those nsttutons to purchase rce drectly from the cooperatve; member farmers of the cooperatve are lkely to realze more compettve prces for the rce that they offer for sale. However, the government and other stakeholders wll need to provde capacty buldng to cooperatves n the areas of busness partnershps and contract relatonshps. Fnally, our qualtatve studes found that the BVIS cooperatve does not provde credt facltes to benefcares due to nadequate captal. The annual fees, water fees per plot, and sellng shares charged to farmers by the BVIS cooperatve have not been revewed snce 008. It s these fees and charges from whch comes the captal for the operaton of the BVIS cooperatve. 5. CONCLUSIONS AND POLICY RECOMMENDATIONS Ths study assessed the mpact of rrgaton on household food securty and agrcultural ncomes usng a PSM method usng probt n combnaton wth an endogenous swtchng regresson. Overall, the fndngs revealed that rrgaton had a postve mpact on household food securty and agrcultural ncomes. However, the mpact on daly per capta calorc ntake per day was smlar among both groups of partcpants. In contrast, partcpants growng both rce and maze earned more annual agrcultural ncome than dd ther counterparts growng rce only. The study also found that margnalzed households female and youth-headed households and low-ncome households earned more annual agrcultural ncome than what they would have earned f they dd not partcpate n rrgated crop producton. Evdence from ths study elcts several crucal ssues that are mportant to future studes and also to the desgn, operaton, and up-scalng of rrgaton projects n Malaw. Frst, our fndngs provde emprcal evdence that rrgaton nterventons that allocate unform peces of land and construct water facltes for benefcares wll reduce poverty, as evdenced by the margnalzed groups attanng hgher ncome than what they could have earned f they dd not partcpate n BVIS. However, despte the margnalzed households beneftng from rrgaton, the study found that there are some flaws n the desgn and operaton of BVIS, as low-ncome households are beneftng less than youth-headed and femaleheaded households. Evdence from ths study of the BVIS also showed that there were some flaws n ether the desgn or operaton of BVIS n the areas of marketng, provson of credt facltes, and water supply and allocaton. Several polcy recommendatons can be drawn from the study fndngs. Frst, gven that rrgaton reduces poverty, rrgaton nterventons should be extended to other areas n Malaw. However, when expandng rrgaton, t s mportant to consder the growng of a combnaton of crops such as maze (staple food) and other cash crops, such as rce, as opposed to growng a sngle crop. Second, evdence from BVIS shows that there s poor marketng by the rrgaton cooperatve, as the majorty of farmers sell ther farm produce to ndvdual traders. It s mportant for cooperatves to promote bulk marketng of farm produce under contracts wth nsttutons (.e. schools, prsons, hosptals) or larger prvate traders (both local and foregn). 1

15 Contract relatonshps wll assure supples and sales over the entre year or growng season and mnmze ndvdual sellng of farm produce at low prces. However, n order to foster busness partnershps and contract relatonshps, government and other stakeholders should provde capacty buldng n these areas. Thrd, the fndngs also reveal that the BVIS cooperatve does not provde credt facltes to members due to nsuffcent captal that results from the low charges and fees collected by the cooperatve. The study recommends that charges and fees be perodcally revewed accordng to prevalng market condtons n order to assst the cooperatves to provde credt facltes. It s envsaged that the provson on credt facltes wll reduce the Chgoboza practce. Fnally, evdence from ths study shows that BVIS s facng problems of water supply due to the constructon of other rrgaton schemes upstream. The Mnstry of Irrgaton and Water Development should strengthen the allocaton of water abstracton rghts to safeguard older rrgaton schemes and mnmze the problems of water supply n future rrgaton schemes. The study focused on the drect mpact of rrgaton on household food securty and ncome. However, consderng that rce s sold to traders and consumers n other areas wthn Malaw, there may be other ndrect mpacts. Therefore, future studes should also focus on the spllover effects of rrgaton nterventons. In addton, future research should also analyze the sources of ncome dsparty among the low and hgh-ncome households partcpatng n such rrgaton schemes. 13