AbstractAgricultural investment projects may generate important downstream benefits for the regions in which they are located. Using a semi‐input‐output model of the regional economy, an attempt is made to quantify the downstream benefits generated by an irrigation project in Malaysia. In aggregate the project's downstream effects on regional income were of an order similar to its direct effects, but the main beneficiaries of the downstream benefits were the nonfarm households. Each dollar of downstream income probably was supported by just over a dollar of additional investment in the local economy.