Whether Irrigation has Started to Become a Nuisance Commodity: Relationship between Irrigation and Income Growth using Cross-Country Analysis

Abstract

"The relationship between irrigation development and societal income across 65 tropical countries from Asia, Africa and Latin America for the period of 1972 to 1991 is examined. Macro economic policy and structural factors, like technical change in agricultural sector, change in cereals yield, structural change in the economy, agricultural share in GDP, value added in agriculture; and Institutional characteristics (governance) of each country are also hypothesized to affect on irrigation development at any moment. These factors also shape the relationship between irrigation and societal income level. Results show strong evidence of an environmental Kuznets Curve (EKC) relationship between income and irrigation development trends in a global model combining all the tropical countries, and also for a Asia regional model. That means pace of irrigation development is at faster rate at the initial stage of development, however once the economy get transformed to industrial and service sector, there will be less need for expansion of irrigation than at the earlier stage of development. The global and regional (Asia) analyses are separately conducted to isolate some of the country or regional specific factors influencing irrigation decision at any moment. The results suggest that macroeconomic policy and institutional factors are equally important for explaining the irrigation development."