Can Social Capital Boost Irrigation Capital: Empirical Evidence from North China

Abstract

Due to the decentralization reform of irrigation system management in many developing countries, how to increase farmers’ investment in collective irrigation projects to improve irrigation efficiency is an important policy question for countries that rely on irrigation but are facing water shortage problems. Using data from the China Water Institution and Management (CWIM) survey, this study aims to explore the relationship between social capital and farmers’ participation in collective irrigation projects. We first construct measures of all three most studied dimensions of social capital: trust, networks, and norms. Then we examine if social capital has any predictive powers of individual farmers’ contribution decisions as well as their contributions aggregated at the village level. We also investigate farmers’ choices between different forms of contributions (labor versus cash). Our results suggest that all three dimensions of social capital explain farmers’ contribution decisions. Governance quality of local irrigation systems and the norm of cooperation have strong predictive powers of farmers’ decisions to contribute. Strongly agree other villagers can be trusted is positively correlated with farmers’ decisions to contribute cash instead of the labor and the share of total cash investment at the village level contributed by farmers.