Resource information
Report finds that land rights in Ethiopia are highly insecure, and higher tenure security and transferability could enhance investment and agricultural productivity. Trying to identify and implement measures to increase producers’ tenure security could have a large pay-off in terms of rural productivity and poverty reduction.The authors use a large data set from Ethiopia that differentiates tenure security and transferability to explore determinants of different types of land-related investment and its possible impact on productivity. There is some support for endogeneity of investment in trees, this is not the case for terraces. Transfer rights are unambiguously investment-enhancing. The large productivity effect of terracing implies that, even where households undertake investments to increase their tenure security, this may not be socially efficient. The report findings suggest: the impact of land rights on investment incentives varies significantly across different types of improvements and the balance between their productivity- and security-enhancing effect. This implies that, even in situations where households undertake certain investments (eg tree planting) with the express purpose of enhancing tenure security, government interventions to better define and enforce land rights may still be useful. While registration of land rights without prior legal clarification of the nature of such rights may not increase tenure security, a clear policy statement as to the nature of land rights would not only do so but could also provide tenure security in a more-cost effective way, thereby freeing households to focus on truly productivity-enhancing activities.In Ethiopia, transferability had a larger impact than tenure security on households’ investment incentives. Exploration of the determinants of households’ perception of their land rights would be of interest to uncover possible reasons underlying this rather surprising phenomenon and the implications it has for land policy. Research is also needed on the scope, determinants, and impact of different modalities of land transfers would be warranted.in addition to the robustness of the investment-enhancing impact of greater tenure security and transferability of land rights across specifications, the magnitude and potential productivity-enhancing impact of this effect is surprising and in contrast to most of the recent literature which finds that investment effects, if at all significant, are often quantitatively very small. Although most of these conclusions are based on short term investments using relatively small and regionally concentrated samples. Methodologically, it would be of considerable interest to explore whether a focus on investment with a longer gestation period, incorporation of producers’ subjective perception of their land rights, and greater regional variation, may lead to a revision f the conclusions from this literature in other African countries as well.[adapted from author]
