Abstract/Summary

This paper is based on data from 220 selected households surveyed during 2008-2010 and is intended to shed some light on the relationship between irrigation and household assets such as durable assets, livestock, farm equipment, cows and buffalo, and pull/plough animals. Since irrigation is widely seen as being an endogenous variable, the Instrumental Variable Regression Model is used to measure the effect of irrigation on household assets. Empirical results suggest that irrigation is unlikely to have a positive impact on the amount of durable assets, livestock, farm equipment, cows and buffalo and pull/plough animals. However, our analysis indicates that human capital does play a critical role in durable assets accumulation. These results could reflect the fact that irrigation systems in Cambodia do not function well enough to have a significant impact on household assets accumulation. Under these circumstances, investment in irrigation should be focussed more on achieving a balance between the expansion of irrigation systems and improvements in irrigation system efficiency, i.e. ensuring the availability of water in both wet and dry seasons, establishing appropriate levels of water for effective irrigation and ensuring equitable water allocation across the regions. Our findings provide further support for the widely held view that increased investment in a combination of human capital and irrigation infrastructure could have a stronger impact on the amount of household assets than investment in the development of infrastructure alone.