Research Project (Ongoing)

Contribution of Infrastructure Aid to Poverty Reduction and Sustainable Development

The benefits of irrigation infrastructure include rising incomes and accumulation of social capital, including a general trust of beneficiaries. However, various issues such as environmental impacts have been pointed out, for example, land salinization. In this study, we examine the contribution of infrastructure aid to poverty reduction and sustainable development through a quasi-experimental analysis of long-term household microdata.

Five panel surveys (2000, 2001, 2007, 2009 and 2020) were conducted at the beneficiary area of a project titled “Walawe Left Bank Irrigation Upgrading and Extension Project” in Sri Lanka funded by Japanese ODA loan. The project aimed to develop the regional economy by enhancing farmers’ production, promoting employment opportunities, and supporting livelihoods. It aimed to do so by stabilizing irrigation water distribution on the left bank of the Walawe River in southern Sri Lanka. Various field experiments such as the trust game, public goods game, dictator game, and a game on risk and time preferences were conducted during the five panel surveys. The major findings of the study were as follows:

i. Access to irrigation has contributed broadly to reducing both chronic and transient poverty by enhancing permanent income and eliminating the negative impact of transient poverty by reducing downside expenditure risks.
ii. Investment and accumulation of social capital (e.g., social relations, networks, and organizations that create social norms) by participating in community activities improves access to credit markets. If both function sufficiently well, people can escape the poverty trap.
iii. Collective actions such as irrigation maintenance motivate the accumulation of social capital. However, farmers who do not own their land tended to refrain from participating in collective actions. This means nonmonetary contributions including labor supply cause the problem of free-riding.
iv. “Trust in others,” a critical aspect of social capital, and the number of years farmers have had access to irrigation were significantly correlated. “General trust” is accumulated through habit formation.

Based on the results of those previous studies, this study plans to explore the following points:

i. Whether income increases over a long period due to the construction of irrigation, knowledge and skills (human capital) passed down through generations, and trust and networks (social capital) with others through irrigation operation are accumulated, and how those factors affect long-term poverty reduction among farmers in the irrigation scheme.
ii. Whether assistance for infrastructure has led to the long-term upgrading of the industrial structure from the agricultural sector to the nonagricultural sector (business) in the region.
iii. How long-term ecological change such as the expansion of elephant damage due to deforestation in the surrounding area affects the irrigation scheme.