The Effect of Small-Scale Irrigation on Smallholder Farmers' Livelihoods: A Case Study ofDugda District, Oromia, Ethiopia

Irrigation is a crucial tool for reducing risks related to rainfall variability in smallholder subsistence farming systems. This study examined how practicing small-scale irrigation (SSI) influences the key livelihood assets- human, physical, natural, financial, and social capitals- of farm households in Ethiopia’s upper Awash sub-basin. The analysis used household-level survey data from 396 sample households. A Propensity Score Matching (PSM) model was employed to pair SSI user and non-user groups. Differences in the five livelihood capitals were estimated using PSM’s Nearest Neighbor, Radius, Kernel Mahalanobis, and Stratification matching methods. Results showed that participation in SSI has improved the capital assets of farm households. Compared to non-users, irrigation users had better outcomes in the variety of food consumed (0.28 ± 0.13 SE), crop types produced (0.60 ± 0.17 SE), expenditures on land rent and agricultural inputs (3118 ± 877 SE Ethiopian Birr [ETB]), and on-farm (9024 ± 2267 SE ETB) and non-farm (3766 ± 1466 SE ETB) incomes. Challenges such as the involvement of local brokers in the market value chain and the lack of farmers’ marketing cooperatives have limited the benefits of irrigated agriculture. Therefore, expanding SSI schemes for non-user farmers should focus on improving water management and productivity, establishing fair water allocation institutions between upstream and downstream areas, and reducing the influence of brokers in marketing irrigation products as future policy directions.