Social Capital Investment and Rural Development: The Case of Irrigation Systems In Eastern Visayas, Philippines

The provision of social goods is one form of government intervention because the allocations of scarce resources through the market system have flaws.(Stiglitz,2000) Furthermore, there are types of goods and services that the private sector would not undertake due to massive capitalization and lesser profitability compared to other alternative projects. For instance, a profit maximizing private firm will not produce a good or provide a service without a corresponding assurance that these are paid and they are able to recover their investment. Eastern Visayas is relatively an agricultural region. As a rice-producing area in the country, the region has been a recipient of government budget for irrigation facilities. This is in pursuance of Republic Act 6978 otherwise known as an “Act to Promote Rural Development by providing for an Accelerated Program within a Ten Year Period for the Construction of Irrigation Projects.” Irrigation facilities are government projects intended for the farmers and built with the objective of increasing rice production. The reality of time dictates that the government must be prudent in allocating and distributing the limited financial resources for social goods and services. Given the enormous government spending on the various irrigation facilities in Leyte, an evaluation on how the government is able to recoup its expenditure through the amortization and service payment made by the farmers is imperative. In this manner, people would know whether or not government funds are being used efficiently and effectively and if the intended objectives of promoting rural development are realized. Using benefit cost analysis; this paper evaluated 10 irrigation facilities in Eastern Visayas. Secondary data from the National Irrigation Administration were used in the analysis and findings showed that the government is not able to recover its direct cost incurred in these irrigation facilities.