Land reform in Zimbabwe: Farm level effects and cost-benefit analysis

There is widespread agreement on the need for land reform in Zimbabwe as a means of reducing poverty. This paper assesses the potential consequences of a land-reform scheme that draws on proposals from Zimbabwe's government in 1998 and 1999. The authors analyze the impact of the reform on resettled farm households and as a development project for which they conduct cost-benefit analysis. The analysis, which considers costs and benefits during a 15-year period, relies on a set of models of family farms that are typical of those that would benefit from land redistribution. The cost-benefit analysis is more comprehensive, also considering the different costs and benefits that affect the government. The results of the analysis indicate that a government-supported land reform could be economically viable under what the authors consider as realistic assumptions regarding the performance of the beneficiaries and the costs that will be faced by the government and other stakeholders. Land reform can generate sustainable livelihoods for the beneficiaries. If viewed as a project, the NPV of the reform is positive for a discount rate that is as high as 20%. The project can also increase employment in the agricultural sector. The analysis takes a long-run perspective, covering a 15-year period. During the first resettlement years, some disruption of agricultural production should be expected. These results are preliminary and based on a partial equilibrium perspective. They are driven by the assumption that the land reform is carried out in a manner that allows farmers on the resettled lands to achieve their productive potential. Such an outcome depends critically on the assumption that the farmers are able to operate in an enabling environment, including critical government support, especially during years 1-5.