Measuring the Poverty Reduction Potential of Land in Rural Mexico

While access to land is back high on the policy agenda as an instrument to attack poverty, strong reservations have been expressed as to whether this strategy can indeed be effective. To help shed light on this important debate, this paper establishes the conditions under which access to land can help reduce poverty in rural communities where poverty is extensive. We use for this purpose household data gathered in 1997 by the Mexican Program for Education, Health, and Nutrition. Results show that access to even a small plot of land can raise household welfare significantly: Using non-parametric regression methods to estimate the relationship between land and welfare, we find that, for small landholders, an additional hectare of land increases welfare on average by 1.3 times the earnings of an agricultural worker. In addition, the marginal welfare value of land depends importantly on a household's control over complementary assets and on the context where assets are used: For non-indigenous small farmers with at least primary education and access to a road, the welfare benefit of additional land is on average seven times higher than for those without these attributes.