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How does the land tenure policy impact farmland rental markets?

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  • Yang, Xinyue
  • Odening, Martin

Abstract

A reliable regulatory framework is essential for facilitating efficient and sustainable land rental markets by stabilizing farmers' expectations, particularly in emerging land markets. This study examines the effect of land tenure policy in China on the transaction volume and price of agricultural land rental. Using a unique and large panel database and a time-varying DID approach with two-way fixed effects, we examine China's 2009-2018 land certification policy, which is currently the world's largest land certification project. The policy aims to improve the stability of farmland use rights. The econometric analysis shows that the policy has significantly increased the amount of land rented by households. Our research shows that the certification policy has different effects on groups with different levels of tenure security and market development. In addition, we find that the policy can gradually increase the rental price of lessors while increasing the leased area, thereby increasing the income of lessors. These findings highlight the importance of land tenure systems for the development of land markets. Policymakers should focus on improving the institutional environment for land markets to unfold their potential as efficient allocation instrument.

Suggested Citation

  • Yang, Xinyue & Odening, Martin, 2024. "How does the land tenure policy impact farmland rental markets?," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344283, International Association of Agricultural Economists (IAAE).
    • Handle: RePEc:ags:iaae24:344283
    DOI: 10.22004/ag.econ.344283
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