Epsilon Archive for Student Projects

Abstract

Due to a lack of basic infrastructure, it is common in least developed countries that households spend a considerable share of the hours that they have available per day for production activities on fetching water. This study analyzes the economic impact of time spent by Ethiopian rural farm households on fetching water. In this analysis, both their water-based agricultural production and household consumption decisions are taken into account. For this purpose the agricultural farm household model has been adopted and labor allocation for water collection is incorporated into the model. The agricultural farm household model provides a framework for analysis of farm household economics that integrate the production decision and simultaneous consumption decision since both are made by a single entity at the household level. Based on this analytical framework, an empirical application is presented based on econometric estimates using the Ethiopian Rural Household Surveys (2011) dataset. The analysis is conducted to test the hypothesis that reducing time spent on fetching water frees labor for productive activities such as farm production and contributes to food security positively. The findings confirm that in aggregate production and consumption, reducing time spent on fetching water by one percent leads to an increase in per capita food consumption by 0.165 percent. This total effect of labor allocation for water collection on food security shows that reducing time spent on fetching water can have a significant contribution to food security, and improve development and welfare of the society.