Farming under irrigation management transfer scheme and its impact on yield and net returns in Ghana

•Participation in IMT schemes can significantly enhance rice yield and income.•Participation in IMT schemes is affected by both observed and unobserved drivers.•Water availability at critical stages of production improves yield and net returns.•Productive farmers have comparative advantage in irrigation water productivity.•Improvement in water supply is perceived to increase yield and net returns. This article analyses smallholder irrigation management transfer (IMT) scheme participation and its impacts on yield and net farm returns of rice farmers in northern Ghana. We apply the endogenous switching regression and control function approaches to account for both observed and unobserved policy-relevant drivers of farmers’ decision to participate in IMT and potential endogeneity. Our results show that farmers’ participation in the IMT scheme can enhance their rice yields by 39.56 % and net farm returns by 24.52 % in Ghana. The increased in yield and net returns are linked to the perceived improvement in water supply and availability of water at critical stages of production as well as personal, farm, institutional and location characteristics. Farmers’ decision to operate under IMT schemes are influenced by both observed and unobserved drivers. Large scale rice production tends to be viable under IMT schemes. We discuss the policy implications of IMT scheme participation and recommend succinct policies based on its impact on the welfare of smallholder farmers in developing countries.