Are Irrigation Rehabilitation Projects Good for Poor Farmers in Peru?

This paper analyzes changes in
agricultural production and economic welfare of farmers in
rural Peru resulting from a large irrigation infrastructure
rehabilitation project. The analysis uses a ten-year
district panel and a spatial regression discontinuity
approach to measure the causal effect of the intervention.
While general impacts are modest, the analysis shows that
the project is progressive--poor farmers consistently
benefit more than non-poor farmers. Farmers living in
districts with a rehabilitated irrigation site experience
positive labor dynamics, in terms of income and agricultural
jobs. Poor farmers increase their total income by more than
$220 per year compared with the control group, while rich
farmers do not experience such an income gain. The results
also show crop specialization patterns in the economic
status of farm households; poorer farm households increase
their production of staple crops, such as beans and
potatoes, while non-poor beneficiary farmers cultivate more
industrial crops. Findings from this evaluation have
important implications for pro-poor policy design in the
agricultural sector.