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Investment profitability and economic efficiency of the drip irrigation system: Evidence from Egypt*

Modern irrigation systems are key to improving the productivity of water and land units. This study assesses the economic aspects of the drip irrigation system (DIS) by calculating the investment profitability and economic efficiency of the DIS for growing tomatoes in Egypt. One hundred tomato farmers were surveyed. Financial discounted criteria were used in addition to data envelopment analysis to estimate the economic efficiency of growing tomatoes using the DIS. The results showed that investment in the DIS is lucrative, with an increase of 67% in the net return per hectare, compared with results using non‐drip irrigation. The benefit–cost ratio amounted to 1.35, the net present value was US$1720, and the internal rate of return was 44%. The data envelopment analysis results revealed that most farms achieved technical and allocative efficiencies; however, cost and scale efficiencies still need improvement. These results could guide policymakers when designing irrigation transformation strategies that involve the use of micro‐credit to encourage small farmers to change from conventional irrigation systems to DISs. Agricultural extension agencies should organize intensive training programmes for small farmers on how to operate and maintain the DIS. These policies will accelerate the adoption of irrigation modernization and help vulnerable farmers maximize productivity and achieve sustainability in the use of limited resources.