This study aimed to determine factors affecting decision to participate in small scale irrigation and itsimpact on income of rural farm households. The primary data were collected from randomly selected 195 household of which 90 are participants and105 are non-participants based on proportion of population size. Secondary data were collected from different reports, reviews and related literatures. For analysis of the data both descriptive statistics and econometric model were used. Result from the econometric model showed thatsex and fertilizer usage of the household influenced positively and significantly the probability of household participation whereas, off/non-farm income, distance from irrigation scheme and distance from the nearest marketplace influenced negatively the probability household participation. On the other hand, propensity score matching (PSM) indicated that participation in irrigation use has increased annual household farm income by 6408.46 Ethiopian Birr for participant households than non-participant households, which was significant at 1% level and the sensitivity analysis showed that impact estimates for this study for each outcome variables were insensitive to unobserved selection bias. Thus, the findings from this study indicated, irrigation has potential role to raise households income and that calls for the governmental and non- governmental organization effort should continue support to possible.
Keywords: Household, Farm Income, PSM, Small Scale Irrigation.