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Importance of irrigated agriculture to the Ethiopian economy: capturing the direct net benefits of irrigation

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  • Hagos, Fitsum
  • Makombe, Godswill
  • Namara, Regassa
  • Awulachew, Seleshi Bekele
Abstract
Irrigation development is seen as one of the means to reduce poverty and promote economic growth. While a lot of effort is exerted towards irrigation development, little attempt is done to quantify the contribution of irrigation to national income in Ethiopia. This study is an attempt to quantify the actual and expected contribution of irrigation to the Ethiopian national economy for 2005/06 cropping season and 2009/10 using adjusted net gross margin analysis. Our results show that irrigation in the study sites generates an average income of about USD 323/ ha. This compares to the calculated gross margin for rainfed which is USD 147/ha. This indicates that after accounting for annual investment replacement cost net gross margin from irrigation is more than twice higher than gross margin from rainfed agriculture. On the contribution of irrigation to national economy, in 2005/06 smallholder irrigated agriculture contributed about 262.3 million USD. This accounts for about 4.46 percent of the agricultural GDP in 2005/2006 and 1.97 percent of the total overall GDP. The total income earned from large scale schemes is estimated to be about 74.0 million USD. This accounts for about 1.26 percent of the agricultural and 0.5 percent of the total GDP respectively. Overall, the contribution of irrigation to agricultural and total national GDP was about 5.7 and 2.5 percent during the 2005/06 cropping season. As a result of expansion, by the year 2009/2010 the expected contribution of smallholder managed irrigation to national economy, assuming that exiting cropping pattern, and the average gross margin values for different crop categories are still valid, is expected to increase from USD 262.3 million in 2005/2006 to about USD 414.2 million in 2009/2010, which accounts to about 5.5 percent of the agricultural GDP and 2.3 of the overall GDP for the same year. On the other hand, the contribution coming from the large scale sugar growing estates in 2009/2010 is estimated to be USD 217.5 million which amounts to 2.9 and 1.2 percent of the agricultural and overall GDP respectively. Similarly the contribution coming from large scale commercial farms growing crops other than sugar cane is expected to increase to USD 35.8 million in 2009/2010 which accounts to 0.4 and 0.2 percent of the agricultural and overall GDP respectively. This implies that large scale commercial farms will contribute about 3.3 and 1.4 of the agricultural and overall GDP respectively. In summary, our results indicate that under conservative estimates the future contribution of irrigation to agricultural and overall GDP will be about 9 and 3.7 percent respectively. When some of the assumptions related to cropping pattern, input and output prices, 128 and efficiency levels are relaxed, the contribution of smallholder managed irrigation to agricultural and overall GDP will vary between 4 to 6 and 1.8 to 1.9 percent respectively. Similarly, the contribution from large scale irrigation to agricultural and overall GDP will be in the range of 3 to 6 and 1.2 to 2.5 percent respectively. Overall, the future contribution of irrigation to agricultural GDP will be in the range of 7 to 12 percent while the contribution to overall GDP will be in the range of about 4 percent. To enhance the contribution of irrigation to national economy, besides increasing the presence of physical water infrastructure, however, there is a need to: i) improve provision of agricultural inputs, ii) promote high value crops through the extension system, iii) create good market conditions, and iv) increase the efficiency of small and large schemes.

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  • Hagos, Fitsum & Makombe, Godswill & Namara, Regassa & Awulachew, Seleshi Bekele, 2008. "Importance of irrigated agriculture to the Ethiopian economy: capturing the direct net benefits of irrigation," Conference Papers h044133, International Water Management Institute.
    • Handle: RePEc:iwt:conppr:h044133
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    Cited by:

    1. Zewdie Habte Shikur, 2020. "Agricultural policies, agricultural production and rural households’ welfare in Ethiopia," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-21, December.
    2. Haris Abdullah & Hafiz Umar Farid & Maira Naeem & Nadeem Zubair & Zahid Mahmood Khan & Huzaifa Shahzad & Pervaiz Sikandar & Muhammad Abrar & Aamir Shakoor & Muhammad Mubeen, 2023. "Investigating On-Site Energy Consumption Patterns Using Vertical Electrical Sounding (VES) and Geographic Information System (GIS) Techniques," Sustainability, MDPI, vol. 15(24), pages 1-18, December.
    3. Hagos, Fitsum & Makombe, Godswill & Namara, Regassa & Awulachew, Seleshi Bekele, 2008. "Importance of irrigated agriculture to the Ethiopian economy: capturing the direct net benefits of irrigation," IWMI Conference Proceedings 246409, International Water Management Institute.
    4. Welde, Kidane & Gebremariam, Hintsa Libsekal, 2016. "Effect of different furrow and plant spacing on yield and water use efficiency of maize," Agricultural Water Management, Elsevier, vol. 177(C), pages 215-220.
    5. Mourad, Khaldoon A. & Yimer, Sadame Mohammed, 2017. "Socio-economic Potential of Rainwater Harvesting in Ethiopia," Sustainable Agriculture Research, Canadian Center of Science and Education, vol. 6(1), February.
    6. Amjath-Babu, T.S. & Krupnik, Timothy J. & Kaechele, Harald & Aravindakshan, Sreejith & Sietz, Diana, 2016. "Transitioning to groundwater irrigated intensified agriculture in Sub-Saharan Africa: An indicator based assessment," Agricultural Water Management, Elsevier, vol. 168(C), pages 125-135.
    7. Bachewe, Fantu Nisrane & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu Seyoum, 2015. "Agricultural growth in Ethiopia (2004-2014): Evidence and drivers:," ESSP working papers 81, International Food Policy Research Institute (IFPRI).
    8. Belete, Belainew & Melak, Surafel, 2018. "Impacts of Small-Scale Irrigation Technology on the Nutritional Wellbeing of Children in the Amhara National Region of Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 27(01), April.
    9. Ambachew, Sissay & Alamirew, Tena & Melese, Assefa, 2014. "Performance of mungbean under deficit irrigation application in the semi-arid highlands of Ethiopia," Agricultural Water Management, Elsevier, vol. 136(C), pages 68-74.
    10. Descheemaeker, K. & Bunting, S. W. & Bindraban, P. & Muthuri, C. & Molden, D. & Beveridge, M. & van Brakel, Martin & Herrero, M. & Clement, Floriane & Boelee, Eline & Jarvis, D. I., 2013. "Increasing water productivity in Agriculture," Book Chapters,, International Water Management Institute.
    11. Desale Kidane Asmamaw & Pieter Janssens & Mekete Dessie & Seifu A. Tilahun & Enyew Adgo & Jan Nyssen & Kristine Walraevens & Derbew Fentie & Wim M. Cornelis, 2021. "Soil and Irrigation Water Management: Farmer’s Practice, Insight, and Major Constraints in Upper Blue Nile Basin, Ethiopia," Agriculture, MDPI, vol. 11(5), pages 1-19, April.
    12. Bachewe, Fantu N. & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu S., 2018. "Agricultural Transformation in Africa? Assessing the Evidence in Ethiopia," World Development, Elsevier, vol. 105(C), pages 286-298.
    13. World Bank, 2017. "Ethiopia Country Environmental Analysis," World Bank Publications - Reports 33947, The World Bank Group.
    14. Asres, Sisay B., 2016. "Evaluating and enhancing irrigation water management in the upper Blue Nile basin, Ethiopia: The case of Koga large scale irrigation scheme," Agricultural Water Management, Elsevier, vol. 170(C), pages 26-35.
    15. Shimelis Beyene & Teshome H. Regassa & Belaineh Legesse & Martha Mamo & Tsegaye Tadesse, 2018. "Empowerment and Tech Adoption: Introducing the Treadle Pump Triggers Farmers’ Innovation in Eastern Ethiopia," Sustainability, MDPI, vol. 10(9), pages 1-12, September.
    16. Emerta Aragie & Jean Balié, 2021. "Public spending on agricultural productivity and rural commercialization: A comparison of impacts using an economy‐wide approach," Development Policy Review, Overseas Development Institute, vol. 39(S1), pages 21-41, August.
    17. Unknown, 2012. "Investing in agricultural water management to benefit smallholder farmers in Ethiopia. AgWater Solutions Project country synthesis report," IWMI Research Reports 158354, International Water Management Institute.
    18. Mengistu Assefa Wendimu & Peter Gibbon, 2014. "Labour markets for irrigated agriculture in central Ethiopia: Wage premiums and segmentation," IFRO Working Paper 2014/06, University of Copenhagen, Department of Food and Resource Economics.
    19. Nigus, Halefom & Nillesen, Eleonora & Mohnen, Pierre, 2018. "The effect of weather index insurance on social capital: Experimental evidence from Ethiopia," MERIT Working Papers 2018-007, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    20. U. Chipfupa & E. Wale, 2020. "Linking earned income, psychological capital and social grant dependency: empirical evidence from rural KwaZulu-Natal (South Africa) and implications for policy," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-18, December.
    21. Godswill, M. & Namara, Regassa & Hagos, Fitsum & Awulachew, Seleshi Bekele & Ayana, M. & Awulachew Bossio, Deborah, 2011. "A comparative analysis of the technical efficiency of rain-fed and smallholder irrigation in Ethiopia," IWMI Working Papers H044123, International Water Management Institute.

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