Transaction Cost Economics of Rice Irrigation Systems in Tanzania: Implications for Collective Action

The institution mechanisms for the organisational and coordination aspects in a collective action (CA) on irrigation systems of Tanzania have not been given sufficient attention. Consequently, smallholder rice irrigation systems, which are either traditional improved or modern schemes, perform poorly in operations and maintenance of infrastructures, water management, respect of bylaws and regulations. Contrary to the collective incentives previously studied in managing the irrigation systems, the novelty of this study is the focus of analysis on the transaction costs (TC) of collective action and the factors, which influence the institutional quality based on individual resource user incentives. The study combined cross sectional and panel data designs to address the different objectives. Using different econometric analyses techniques (Heckman sample selection, Mixed effect linear model, SFA and 2SLS) in each objective, four major findings emerged: Self-selection effect has greater impact on CA survival; the TC related to contact, and control influence the institutional quality; CA affect the technical efficiency and allocation of factors of production; and farm household objectives was an important incentive for CA coordination. The study concludes that self-selection effect factors are important criteria for CA member recruitment, and that the institutional quality is improved by managing TCs. CA leads into technical inefficiency and over use of factors of production. Farm household objectives influence coordination efficiency. The study recommends consideration of self-selection effect factors, and TCs-contact and control increase, along with TCs attributes asset specificities: site specificity like soil fertility, water, market access, and human capital assets development on technologies application and agri business oriented production for successful CA