Tenure Security and Land-Related Investment : Evidence from Ethiopia

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. While they find 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. In
Ethiopia, government action to increase tenure security and
transferability of land rights can significantly enhance
rural investment and productivity.