Irrigation Scheme Size and Its Relationship to Investment Return: The Case of Senegal River Valley

Abstract

AbstractDespite the boost in rice production over the last decade in sub-Saharan Africa (SSA), increased production is required to satisfy the demand from rapidly growing urban populations. To enhance rice production in SSA, it is critically important to increase investment in irrigation, as it played a major role in advancing the rice Green Revolution in Asia. However, the question of whether large-scale irrigation is more efficient than small-scale projects has remained contentious. The objective of this chapter is to make a positive contribution to the debate by providing empirical evidence from the Senegal River Valley (SRV), where many irrigation schemes coexist. Based on a survey of 173 farmers’ groups that use irrigation schemes of different sizes, OLS regression analyses are used to examine the association between the size of the irrigation scheme and investment performance, which is defined as annual rice income per hectare minus the annual depreciation cost of investment in the irrigation scheme per hectare. After controlling for factors that may influence investment performance, it is found that irrigation scheme size is positively associated with investment performance due to the economy of scale involved in the unit cost of investment. However, the positive association is non-linear and becomes negative beyond 1600 ha. The analyses also show that government-financed irrigation schemes perform worst. Therefore, even if investment in large-scale irrigation is justified, the questions of who will invest and how it will be managed are also important factors affecting the performance of large-scale irrigation schemes.