The Role of Infrastructure in Mitigating Poverty Dynamics: The Case of an Irrigation Project in Sri Lanka

Abstract

Although it is known that access to physical infrastructure enhances household welfare, there are hardly any micro-econometric studies that analyze the role of infrastructure in mitigating chronic and transient poverty. This paper aims to bridge this gap in the existing literature by evaluating the impact of a large-scale irrigation project implemented in Sri Lanka. We extend the seasonal consumption smoothing model of Paxson (1993) by introducing endogenous credit constraints. We collected unique household-level monthly panel data over a period of two years. According to the point estimates, with irrigation accessibility, per capita food and non-food consumption expenditures increase by around 20% and 45%, respectively, on average, and the probability of binding credit constraint is reduced by 5.6% during the dry season. The latter result implies that irrigation enhances households' access to the credit market which, in turn, contributes to further reduction in transient poverty. These empirical results suggest that irrigation infrastructure has a positive impact on reducing both chronic and transient poverty. The structural estimation results support the validity of our theoretical framework.

Social Capital Formation and Credit Access: Evidence from Sri Lanka

“…While farmers receive land of homogeneous size, land transactions were prohibited during the surveys. However, Sawada et al (2010) show that irrigation access improved credit access by enhancing the collateral value of land.…”

“…The Ridiyagama area from the right bank was also included as an old irrigated area. A multistage stratified random sampling strategy was used to select the sample based on a complete list of all households in the six strata (Sawada, Shoji, Sugawara, & Shinkai, 2010).…”

How Access to Irrigation Influences Poverty and Livelihoods: A Case Study from Sri Lanka

“…Data for this analysis was gathered from a series of surveys that we have carried out in this area from the year 2000. An initial evaluation study was commissioned between 2000 and 2002 to assess the impact of irrigation infrastructure on poverty alleviation (Hussain et al 2002;Sawada et al 2010;Sawada et al 2012;Shoji et al 2012). In 2005, a section of the project coverage area; i.e.…”

Motives behind community participation: Evidence from natural and artefactual field experiments in Sri Lanka

“…Our study area is the Walawe Left Bank in Sri Lanka, where the government had initiated the Walawe Left Bank Irrigation Upgrading and Extension Project with financial assistance from the Japanese Government (JBIC Institute, 2007; Sawada, Shoji, Sugawara, & Shinkai, 2014; Sellamuttu, Aida, Kasahara, Sawada, & Wijerathna, 2014). 2 In this project, an old irrigation system was rehabilitated and a new irrigation system was constructed.…”

“…In the final round we also conducted artefactual field experiments to collect data on individual and social preferences. Applying a multistage stratified random sampling strategy that used a complete list of all households in each stratum, we initially selected 870 representative sample households to survey from the approximately 75,000 residents of the entire Walawe Left Bank area (Sawada et al, 2014). 3 Thus, the survey gives us data that is representative of the whole Walawe Left Bank area 4…”