Distribution of benefits of irrigation induced technological changes and commodity markets : new evidence

A plethora of literature exists on irrigation development. However, only a few studies analyse the distributional issues associated with irrigation induced technological changes (IITC) in the context of commodity markets. Furthermore, these studies deal with only the theoretical arguments and to date no proper investigation has been conducted to examine the long-term benefits of adopting modern irrigation technology. This study investigates the long-term benefit changes of irrigation induced technological changes using data from Sri Lanka with reference to rice farming. The results show that (1) adopting modern technology on irrigation increases the overall social welfare through consumption of a larger quantity at a lower cost (2) the magnitude, sensitivity and distributional gains depend on the price elasticity of demand and supply as well as the size of the marketable surplus (3) non-farm sector gains are larger than farm sector gains (4) the distribution of the benefits among different types of producers depend on the magnitude of the expansion of the irrigated areas as well as the competition faced by traditional farmers (5) selective technological adoption and subsidies have a detrimental effect on the welfare of other producers who do not enjoy the same benefits (6) the short-term distributional effects are more severe than the long-term effects among different groups of farmers.