Impact of Productive Safety Net Program on the Livelihood of Farm Households: The Case of Erer Woreda, Harari Regional State, Ethiopia

The main objective of this study was to assess the impact of productive safety net program (PSNP) on the livelihood of farm households of participants in Erer district, Harari Regional State of Ethiopia. A multi-stage sampling technique was used to select 192 households with equal number of beneficiaries and non-beneficiaries of PSNP. The study used both primary and secondary data sources. Primary data were collected using semi-structured questionnaire. Relevant secondary data were also collected from different sources. Descriptive statistics and an econometric model called propensity score matching have been applied to describe household characteristics and evaluate the impact of PSNP on the livelihood of farm households. Logit model was applied to identify factors affecting participation in PSNP and estimate propensity score. Propensity score results revealed that family size, livestock holding, irrigation access, access to credit and off/non-farm income was the variables that affect household’s participation in PSNP negatively and significantly. In contrast age and dependency ratio affect participations in PSNP positively and significantly. The covariates balancing test that was checked using pseudo R2 , mean standardized bias and t-test suggests that the matching algorithm, which was chosen, Kernel bandwidth (0.2) is relatively best estimator for the data at hand. Finally, the average treatment effect on the treated (ATT) was performed. Result of ATT shows that as compared to non-participant households, participation in PSNP have a positive and significant impact on beneficiaries’ annual agricultural income and consumption expenditure. Participation in PSNP increased the annual agricultural income and consumption expenditure by 9.7 percent (739.10 ETB) and 5.8 percent (663.35 ETB) respectively. This shows that the program has brought significant livelihood improvement on households participating in the program and hence has to be encouraged in the future