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The overall goal of our paper is to understand the impact that irrigation in China has had on grain production and incomes, in general, and income and poverty alleviation in poor areas, in particular. The paper seeks to meet three objectives. First, we describe the relationship among irrigation status, yields and household crop revenue. Second, we seek to understand the magnitude and nature of the effect that irrigation has on yields and crop revenue. Finally, we seek to understand the impact that irrigation has on incomes in poor areas. Our analysis shows that irrigation contributes to increases in yields for almost all crops and in income for farmers in all areas. The importance of crop income in poor areas and the strong relationship between crop revenue and irrigation provides evidence of the importance of irrigation in past and future poverty alleviation in China. We also show that in the majority of the villages that invested in new irrigation, returns are positive even after accounting for increases in capital and production costs.

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