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Irrigation, Technical Efficiency, and Farm Size: The Case of Brazil

Gabriel A. Sampaio Morais (), Felipe F. Silva (), Carlos Otávio de Freitas () and Marcelo Braga
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Gabriel A. Sampaio Morais: Public Policy and Sustainable Development Institute (IPPDS), Universidade Federal de Viçosa (UFV), Viçosa, Minas Gerais 36570-900, Brazil
Felipe F. Silva: Agricultural Sciences Department, Clemson University, Clemson, SC 29634, USA
Carlos Otávio de Freitas: Departamento de Ciências Administrativas, Universidade Federal Rural do Rio de Janeiro (UFRRJ), Seropédica, Rio de Janeiro 23890-000, Brazil

Sustainability, 2021, vol. 13, issue 3, 1-21

Abstract: In developing countries, irrigation can help to decrease poverty in rural areas through increased employment in the agricultural sector. Evidence shows that irrigation may increase farm productivity and technical efficiency. In this paper, we estimate the effect of irrigation on farm technical efficiency in Brazil using the 2006 Agricultural Census dataset on more than 4 million farms. We estimate a stochastic production frontier at farm level, considering potential selection bias in irrigation adoption. We find that farms using irrigation are on average 2.51% more technically efficient compared to rain-fed farms. Our findings also suggest that while small farms are more efficient than medium and large farms, the largest difference in technical efficiency between rain-fed and irrigated farms is among large farms. Our results indicate that policies that seek to support expansion of irrigation adoption has also the potential to achieve greater rural development given the estimated effects estimated in this paper among very small and small farms, which are more than 70% of the farms in Brazil.

Keywords: irrigation; entropy balancing; stochastic production frontier; technical efficiency (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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