Poverty is of multidimensional characteristics affecting nearly a billion world population. Especially, a third of sub Saharans fall under poverty. The emergence of climate change coupled with the incidence of drought, are worsening the situation. The only option to escape this challenge is through the development of water resource projects. In attempting to do so, Ethiopia has yet developed not more than 5% of the irrigation potential. Much of this is owned and poorly managed by small holder farmers. The purpose of this study is thus to investigate whether small scale irrigation schemes contribute to poverty reduction or not. Based on 313 sample households from the Rift Valley Lake Basins, it was observed that irrigation improved household income and contributed to poverty reduction. However, the enhanced poverty impact of irrigation was constrained due to unsatisfactory performance and imperfect market. Thus, enhancing the capacity of water user associations through provision of training, market linkage and finance are a necessary step to improve irrigation performance towards poverty reduction.
Key words: Ethiopia, lake basin, rift valley, binomial logit.
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