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Security of Property Rights and Transition in Land Use

Author

Listed:
  • Denys Nizalov

    () (Kyiv School of Economics/ University of Kent)

  • Suzanne Thornsbury

    () (USDA Economic Research Service)

  • Scott Loveridge

    () (Michigan State University)

  • Mollie Woods

    () (Michigan State University)

  • Olha Zadorozhna

    () (Lazarski University)

Abstract

Price and yield uncertainty are traditional considerations in agricultural markets and their impact on development. Agricultural producers in transition economies face an additional risk factor – changes in the institutional protection of property rights. This paper illustrates how institutional uncertainty may affect investment, land use, and crop mix patterns. In particular, in the Ukrainian example, the rights of tenants are viewed as uncertain in anticipation of establishment of an open market for sale of agricultural land. Establishment of the land market in Ukraine has been postponed several times over the last fifteen years and a significant number of lease contracts are not formalized. A large panel of farm-level data was used to show that a higher share of rented land is associated with a lower share of land used for investment intensive perennial crops controlling for prices and other factors. The difference in response to uncertainty is found to be significant among three crop types: perennials, grains and oil crops. The implication is that the lower level of protection of use rights and uncertainty regarding the future regulation of land sales market leads to under-investments in more capital intensive crops. As a result, tenants deviate from the optimal crop mix, reducing the productivity of tenant farms. Farms under 200 ha are affected the most negatively as they are less likely to be able to access the level of legal and political protection enjoyed by large farms. As a result, Ukraine faces significant losses in the value of agricultural production and GDP in the short and longer run.

Suggested Citation

  • Denys Nizalov & Suzanne Thornsbury & Scott Loveridge & Mollie Woods & Olha Zadorozhna, 2015. "Security of Property Rights and Transition in Land Use," Discussion Papers 54, Kyiv School of Economics.
  • Handle: RePEc:kse:dpaper:54
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    File URL: http://repec.kse.org.ua/pdf/KSE_dp54.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Chen, Kunqiu & Long, Hualou & Liao, Liuwen & Tu, Shuangshuang & Li, Tingting, 2020. "Land use transitions and urban-rural integrated development: Theoretical framework and China’s evidence," Land Use Policy, Elsevier, vol. 92(C).
    2. Mo, Jiawei, 2018. "Land financing and economic growth: Evidence from Chinese counties," China Economic Review, Elsevier, vol. 50(C), pages 218-239.
    3. Dengyu Yin & Xiaoshun Li & Guie Li & Jian Zhang & Haochen Yu, 2020. "Spatio-Temporal Evolution of Land Use Transition and Its Eco-Environmental Effects: A Case Study of the Yellow River Basin, China," Land, MDPI, Open Access Journal, vol. 9(12), pages 1-24, December.
    4. Rahmat Aris Pratomo & D. Ary A. Samsura & Erwin van der Krabben, 2020. "Transformation of Local People’s Property Rights Induced by New Town Development (Case Studies in Peri-Urban Areas in Indonesia)," Land, MDPI, Open Access Journal, vol. 9(7), pages 1-25, July.
    5. Yuanyuan Yang & Wenkai Bao & Yuheng Li & Yongsheng Wang & Zongfeng Chen, 2020. "Land Use Transition and Its Eco-Environmental Effects in the Beijing–Tianjin–Hebei Urban Agglomeration: A Production–Living–Ecological Perspective," Land, MDPI, Open Access Journal, vol. 9(9), pages 1-24, August.
    6. Wang, D. & Qian, W., 2018. "Gains and losses: Does farmland expropriation harm farmers welfare?," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277301, International Association of Agricultural Economists.
    7. Legesse, Befikadu A. & Jefferson-Moore, Kenrett & Thomas, Terrence, 2018. "Impacts of land tenure and property rights on reforestation intervention in Ethiopia," Land Use Policy, Elsevier, vol. 70(C), pages 494-499.

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    More about this item

    Keywords

    property rights; agricultural development; crop mix; transition economy; Ukraine;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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