Impact of urbanization on the welfare of farm households: Evidence from Adama Rural District in Oromia regional state, Ethiopia.

Urbanization is a widespread phenomenon with varying causes, patterns, and effects across countries. However, existing studies have overlooked the specific impact of urbanization on households near urban areas by failing to compare them with households in more distant regions. This study examines the impact of urbanization on rural household welfare in the Adama Rural District of the Oromia Region, Ethiopia. A multi-stage sampling technique was employed, selecting a sample of 397 households from two distinct categories. Of these households, 148 were located near the urban center, while 249 were far away. The study utilized descriptive and inferential data analysis methods and employed the propensity score matching technique to investigate the impact on farm households. Data was collected through questionnaires to gather cross-sectional information, supplemented by qualitative insights from Key Informant Interviews. The findings revealed that households near urban areas had a significantly lower mean annual consumer expenditure of 5207 ETB compared to 8092 ETB spent by families in distant areas. The results from propensity score matching further indicated that households near urban centers experienced lower annual consumption expenditures than those located further away. These results highlight the influence of urbanization on the welfare of rural farming households near urban areas. To address the negative effects of urbanization on these households, city administrations, and regional governments need to prioritize the development and implementation of alternative livelihood support strategies. Additionally, the study emphasizes the necessity of implementing policies that mitigate farmland loss while considering the socioeconomic factors impacting farmers in the region.