• smallholder farmers
• Ethiopia
• institutional innovation
• irrigation system governance
• sustainable livelihood

A substantial portion of Ethiopia's economy is based on agriculture, which generates around 36.3% of GDP and 76% of export earnings. Although rainfed agriculture is a significant source of production, farmers are ill-prepared to handle environmental shocks, which have catastrophic impacts on household food security and poverty levels. Ethiopia's smallholder rainfed-based farming system won't be able to provide the country's food needs because of the unpredictable, insufficient, and unevenly distributed nature of rainfall; limited use of the available water resources; degraded soil and diminished fertility; limited assets; drought; and effects of climate change. Soil moisture stress brought on by protracted dry spells, short rainy seasons, and even a complete lack of rain is one of the key factors in Ethiopian rainfed agricultural systems that result in crop failure.
To break the relationship between agricultural performance and rainfall, increasing public and private investment in irrigation development has been identified as one of the most important initiatives. Since 1991, the Ethiopian government has prioritized irrigation-based agricultural development to address the issues of water shortages. Moreover, in Ethiopian government policy documents, irrigation development is cited as a key strategy for fostering sustainable economic growth, rural development, agricultural transformation, eliminating poverty, improving livelihood outcomes, boosting resilience, and raising the nutritional standards of the rural community. Irrigation development has received major funding to improve the livelihood outcomes of smallholder poor farmers. However, several community-run small-scale irrigation systems perform poorly in terms of boosting livelihoods, recovering costs, and maintaining the project due to poor irrigation water governance, water scarcity, inadequate physical infrastructures, weak water user associations, a lack of access to suitable technologies, inputs, market, and credit, weak institutional innovation, and a lack of financial and technical capacity for sustained management and operation of schemes.
Irrigation benefits are not sufficient despite substantial investment, efforts of numerous stakeholders such as farmers, government, and donors, and purposeful government policy assistance. Due to this, the financial returns on investment and the impacts of the current irrigation systems in lowering poverty, providing food security, and raising the income of smallholder-poor households are inadequate, and the anticipated high economic returns are not realized. As a result, some smallholder poor households in the country are unable to improve their living conditions and remain poor despite having access to and using irrigation water. There is essentially little difference in improving livelihood outcomes such as in the level of food security between those who utilize irrigation and those who rely on rainwater.
Therefore, this study aims to investigate the constraints that prevent smallholder poor households from improving their livelihood outcomes, examine how irrigation system governance influences irrigation scheme performance, and study the role of institutional innovation as an institutional intervention mechanism in enhancing the influence of irrigation in improving the livelihoods of smallholder farmers who are unable to improve their livelihoods outcomes and remain poor despite their access to and use of irrigation in the Cole I irrigation scheme in the Toke Kutaye district of Oromia National Regional State of Ethiopia using SLF, SESF and institutional innovation as a theoretical framework. A qualitative research design was used. For the empirical study, 42 one-on-one interviews and 19 FGDs were conducted.
Smallholder farmers who use the Cole I irrigation system are unable to enhance their livelihood and continue to live in poverty due to vulnerable situations such as shocks including drought, insect pests, crop and human diseases like COVID-19, HIV, and cancer, and changes in the price of farm inputs and output. Additionally, trends like population growth, a shift in the pattern of land ownership, soil degradation, and seasonality such as a shift in rainfall and price seasonality of both farm inputs and outputs, affect farmers' livelihood improvements. Moreover, farmers are unable to improve their livelihoods because they lack the necessary assets. Farmers’ ability to enhance their livelihood is impacted by the availability of labor in the household. Moreover, these farmers lack the necessary knowledge for the use of full-package farm inputs and efficient use of water. Smallholder farmers using the Cole I irrigation scheme have poor human capital due to a lack of access to education.

The association is formally established by the government and has a legal framework in terms of constitutional rules. However, due to the government and IWUA’s inability to enforce these constitutional provisions, they do not affect the collective and operational choice rules. Moreover, water regulations are not properly implemented at the ground level to bring agricultural transformational change. In a setting of collective choice, the association is governed by the general assembly. This collegial body rarely attains consensus and decisions made lack relevance and opportunity. Moreover, the association engages in various operational-level activities such as water sharing, information exchange, and infrastructure maintenance. Moreover, there is a lack of efficient monitoring and sanctions in the scheme. Members in the association interact at the operational-level activities for information exchange. However, the information exchange is not effective leading to disputes. The sources of conflict are unfair water distribution among various WUGs. Poor irrigation water management due to farmers’ limited knowledge causes water-wasting practices like providing crops with an excessive amount of water using furrow irrigation, which decreases soil aeration and increases nutrient leaching, affecting both the overall performance of crops and farmers' income. Agriculture extension services fail to give farmers the skills farmers need for the efficient use of water due to weak agricultural policies and the government's lack of focus on irrigated farming.
The introduction of the Adama Irrigated Wheat Production Initiative by the Oromia Regional National State into the Cole I irrigation system has several impacts on the livelihood improvement of farmers who are unable to improve their livelihoods and remain poor despite their access to and use of irrigation. Moreover, the federal government has introduced the Agricultural Production Contract Farming Proclamation as a comprehensive legal framework that enables the transfer of technology, knowledge, and skills as well as market linkage since the current laws are insufficient to address the nature of agricultural production contracts. These institutional innovations aim to increase production and productivity to improve farmers’ livelihoods by removing production and marketing constraints they have been facing in irrigated farming. Moreover, this wheat initiative aims to create enabling environments to achieve wheat self-sufficiency, stop wheat grain import from abroad, and substitute the demand with local production.
In addition, irrigated wheat contract farming supports smallholder farmers to get access to better agricultural extension services, which is one of the limiting factors in the scheme. The government is focusing on delivering effective extensions to bring agricultural transformation to improve farmers’ livelihoods. The proper delivery of extension service is one of the packages of the Initiative to reduce the problem of smallholder farmers in getting extension services. Moreover, it aids farmers in using full-package farm inputs to produce surplus output. This helps the country to replace wheat grain it had been importing from abroad by producing its wheat via irrigation as a large area of land that has the potential for wheat production is under cultivation. Also, farmers get access to farm machinery such as tractors which is difficult for smallholder farmers to use on fragmented land. Additionally, farmers get access to credit for the use of full-package farm inputs. The credit institution gives credit vouchers to farmers that help them to take fertilizer from the farmers’ cooperative to protect them from spending on unintended objectives and helps them to improve yield, revenue, and livelihoods as access to credit is one of the limiting factors for smallholder poor farmers.
Smallholder farmers who have access to and use the Cole I irrigation scheme are unable to improve their livelihoods and continue to live in poverty due to inadequate human, financial, physical, social, and natural assets. Our findings based on SESF demonstrate that the federal, regional, and local governments are weak in developing appropriate irrigation policies, regulations, and programs and putting them into practice. The association's network also favours resource-rich members and impedes equitable water allocation. Moreover, the system of land and water property rights is unfair to citizens and prevents the sustainable use of water resources. The thorough analysis of the Cole I IWUA governance system reveals the insufficiency of institutional, collective, or operational rules in the scheme and the ineffective enforcement of those rules, which encourage farmers to use water unfairly and obstruct the sustainability of irrigation water use. Institutional innovation creates an enabling environment for farmers by removing the production and marketing restrictions that prevent them from improving their livelihoods using irrigation. The irrigated wheat production initiative enables farmers to use full-package farm inputs as per recommendations to increase productivity. Additionally, the initiative incorporates cluster farming to help all farmers gain access to improved extension services and enhance their knowledge and abilities.