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Irrigation Investments and Agricultural Productivity: Unveiling the Mechanisms and Impacts under Climate Change

Author

Listed:
  • Wang, Zhuanlin
  • Wang, Jinxia
  • Huang, Kaixing

Abstract

Leveraging exogenous government irrigation investments and longitudinal household survey data over 15 years, we investigate how irrigation affects agricultural productivity under climate change. We find that the irrigation investment increased the share of irrigated farmland by 11.0%, which, in turn, increased per-area output by 14.9%, net agricultural income by 15.6%, agricultural TFP by 13.7%, and per-labor output by 36.2%. These effects are driven by four key mechanisms: increased use of high-productivity inputs, expanded cultivation area, labor reallocation from farm work to off-farm work, and mitigation of drought damage. The induced land expansion and labor reallocation explain the much larger increase in per-labor output. A cost-benefit analysis suggests a high rate of return to irrigation investment, with about half of the return stemming from labor reallocation that increased off-farm income. This study highlights the policy relevance of irrigation investments in improving agricultural productivity and accelerating rural transformation under climate change.

Suggested Citation

  • Wang, Zhuanlin & Wang, Jinxia & Huang, Kaixing, 2025. "Irrigation Investments and Agricultural Productivity: Unveiling the Mechanisms and Impacts under Climate Change," MPRA Paper 123705, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:123705
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    File URL: https://mpra.ub.uni-muenchen.de/123705/1/MPRA_paper_123705.pdf
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    More about this item

    Keywords

    irrigation investment; agricultural productivity; labor reallocation; climate change;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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