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Abstract

This study develops Computable General Equilibrium (CGE) model of the Indonesian economy to analyze the impact of agricultural infrastructure development, in particular irrigation, on national and sectoral outputs and households incomes. This research methodology develops and uses an Indonesian social accounting matrix database. The results show that the total economic output and welfare increase, and the more irrigated agricultural sectors i.e. paddy sector have greater output increase than the less irrigated sectors when the increase of investment on irrigation infrastructure also followed by the increase on paddy productivity. Household groups of agricultural workers and households of non-agricultural, low level income workers in rural areas, experience a higher increase in incomes than the other house hold groups.

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