Community managed hydropower, spillover effect and agricultural productivity: The case of rural Nepal

This study investigates the spillover effect of community owned micro hydropower on agricultural production at the household level in rural Nepal using a stochastic production frontier estimation technique. Using field based data, we employ propensity score matching and covariate balancing techniques to avoid any selection bias. We find that community owned micro hydropower contributes to an increase in agricultural production by 36.5 percent, and helps households gain about 4.9 percent in production efficiency. However, these households produce only about 67.86 percent of potential output. While estimating the inefficiency parameters, our study suggests that the community organizations formed by micro hydropower beneficiary households contribute to reduce inefficiency in agricultural production.