Irrigation infrastructure and trust: Evidence from natural and lab-in-the-field experiments in rural communities

Abstract

Does irrigation infrastructure lead to trust, and how does this happen? We approach these questions by testing two processes of trust formation: particularized trust built on repeated interactions of rational individuals and generalized trust based on arational habits. To identify the causal relationship between farmers’ irrigation infrastructure access and trust, we conducted an incentivized trust game with beneficiaries of the irrigated land settlement program in rural Sri Lanka, where land allocation was arguably random. Two findings emerged. First, trust among community members monotonically increases with each farmer’s years of access to irrigation, regardless of social relationships. Second, the nexus between irrigation access years and trust does not necessarily differ between in-group and out-group members. These findings suggest the relative significance of generalized trust formation by habits in irrigated communities, although we cannot fully rule out the possible particularized trust formation through repeated interactions. Since generalized trust is essential to facilitate market transactions, our finding is especially relevant when formulating infrastructure investment policies in developing countries.