Location specificity, settler type and productive efficiency: A study of the Mahaweli project in Sri Lanka

Abstract

Increasing agricultural production and the reduction of rural inequality in income distribution are major goals of irrigated land settlement in developing countries. We discuss the levels and determinants of observed differences in technical and allocative efficiency among farmers and the resulting inequality in a major irrigated land settlement scheme in Sri Lanka. The analysis is carried out in three seperate stages. First, stochastic frontier production functions are estimated. Then, farmer‐specific measures of efficiences are obtained on the basis of these functions. Finally, these efficiency measures are regressed on several explanatory variables. Differences in human capital endowments among settler types as well as uneven distribution of water are important determinants of farmer efficiency.