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Volume 2, Issue 4      October-December, 2014

IMPACT OF SMALL-SCALE IRRIGATION ON FARM HOUSEHOLDS’ TECHNICAL EFFICIENCY: THE CASE OF EASTERN OROMIA, ETHIOPIA
 
Beyan Ahmed1* and Jema Haji.2
1Department of Agricultural Economics, Haramaya University. 2 Department of Agricultural Economics, College of Agriculture and Environmental Science, Haramaya University, Dire Dawa, Ethiopia
 
ABSTRACT
This study evaluated the impact of small-scale irrigation on farm households‟ technical efficiency of production in Eastern, Oromia, Ethiopia. Both primary and secondary data were collected for the study. Primary data were collected from 200 sample respondents drawn from both participant and non-participant households in 2012 production year. Stochastic production frontier model was used for technical efficiency estimation and Propensity score matching method was applied to analyze the impact of small-scale irrigation on the farm household‟s technical efficiency with the help of logistic regression function to estimate propensity scores. In matching processes, kernel matching with band width of 0.5 was found to be the best matching algorism. Households that participate in irrigation practice have got an improvement of 8.92% in technical efficiency than those households that were not participating in irrigation practice. Participation in irrigation has a significant, positive and robust impact on the outcome variables. The sensitivity analysis also showed that the impact estimates are insensitive to unobserved selection bias. All results obtained from different models revealed the positive impact of irrigation on farm household technical efficiency. Therefore, policy makers should give due emphasis to the aforementioned variables to increase participation in irrigation farming and improve the livelihood of rural households.
Keywords: Irrigation, technical efficiency, propensity score matching and stochastic frontier.
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