Improving the effectiveness of aid: an evaluation of prospective Mekong irrigation investments

Large irrigation systems seem to be the logical add-on investment to the hydropower projects which are being planned in the Mekong Basin. Economic evaluations of irrigation schemes to date have not considered environmental costs and uncertainties about utilization. Comparisons between economic returns and poverty alleviation benefits from irrigation and from investments in other sectors are also sparse. A benefit–cost analysis of prospective irrigation investments in Lao PDR considering all these factors found that farm-scale irrigation investments performed better than large-scale investments. The benefit–cost ratio and head-count poverty reduction from large-scale irrigation investment were also substantially lower than for education, road construction and agricultural research and development.