Date of Award:

1972

Document Type:

Thesis

Degree Name:

Master of Arts (MA)

Department:

Applied Economics

Department name when degree awarded

Agricultural Economics

Advisor/Chair:

Allen LeBaron

Abstract

Farm budgets based on survey data a r e used to calculate the net revenue for average irrigated and unirrigated farms for four tenure classes on the Milagro irrigation project, Ecuador. Differences in net revenues between irrigated and unirrigated farms within each tenure class are assumed to be the return to investment in irrigation capital, assuming homogeneity of all other production factors.

The internal rate of return is calculated on investment in irrigation capital assuming returns to such an investment are the difference in net revenues between irrigated and unirrigated farms. Investment in such capital is found to be highly profitable assuming the opportunity cost of capital is 12 per cent. However, small size farms (minifundios) are relatively more profitable than larger farms.

Also, the pure economic profit (rent) accruing to each hectar of land is determined. This is done by finding the water tariff that causes the internal rate of return to fall to 12 per cent and subtracting the current water tariff per hectar (S/. 200) from the maximum tariff. The difference is rent per hectar, which is greater for small farms than larger ones. However, when total land area by tenure class is considered, larger farms capture the greatest share of the economic rent from the project.

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