Risk‐coping, Land Tenure and Land Markets: An Overview of the Literature

Abstract

Over the last decades, a significant amount of literature has been published on informal risk‐coping in developing countries. In this paper, we review how informal risk‐coping has been addressed in the land tenure literature from two main perspectives: a first stream of research looks at how customary tenure and communal property perform key informal risk‐coping functions. A second subset of this literature analyses how informal risk‐coping creates land market imperfections through sharecropping or distress sales. The segmentation of the literature results from the Demsetzian property rights framework. Further research on risk‐coping and land tenure would benefit from examining recent work on property regimes.

Making Secure Land Tenure Count for Global Development Goals and National Policy: Evidence from Zambia

“…The transferability limitations inherent to customary systems are a choice that trades off the benefits, e.g., increased productivity from market exchange, versus the cost, in particular, the danger of landlessness that could result from such an arrangement (Andolfatto 2002). 4 As long as specialization and the associated scope for efficiency-enhancing land transactions remain limited and land relatively abundant, customary institution's advantages for risk sharing (Promsopha 2018), as a social safety net (Baland and Francois 2005) or for oldage insurance (Caucutt et al 2013) together with evidence of limited investment disadvantages (Bruce and Migot-Adholla 1994) are often thought to outweigh the cost of establishing formal systems.…”

Exploring Distressed Cashew‐Nut Farmland Rentals Among Ethnic Groups in Binh Phuoc Province, Vietnam

“…Distressed land rentals generally disadvantage poorer people and can widen the gap between poor and rich farmers. Poor farmers cannot negotiate with tenants and have to rent out land at fixed and cheap prices for several years to overcome economic shocks to meet their immediate needs, but lose their sources of future income (Akram‐Lodhi 2005; Gebregziabher and Holden 2011; Holden and Ghebru 2016; Promsopha 2018; Sadoulet and De Janvry 1995; Sarap 1998; Segers et al 2010; Tesfaye and Adugna 2004; Thai 2018). Richer people take advantage of these opportunities to accrue farmland at a cheap price (Amblard and Colin 2009; Gebregziabher and Holden 2011; Lunduka, Holden, and Øygard 2010; Promsopha 2018; Tikabo and Holden 2003).…”

“…Poor farmers cannot negotiate with tenants and have to rent out land at fixed and cheap prices for several years to overcome economic shocks to meet their immediate needs, but lose their sources of future income (Akram‐Lodhi 2005; Gebregziabher and Holden 2011; Holden and Ghebru 2016; Promsopha 2018; Sadoulet and De Janvry 1995; Sarap 1998; Segers et al 2010; Tesfaye and Adugna 2004; Thai 2018). Richer people take advantage of these opportunities to accrue farmland at a cheap price (Amblard and Colin 2009; Gebregziabher and Holden 2011; Lunduka, Holden, and Øygard 2010; Promsopha 2018; Tikabo and Holden 2003). In many rural areas of Vietnam, distressed land rentals are operating because some farmers face challenges such as illness or death of family members, insufficient food supplies, droughts, and other natural catastrophes (Akram‐Lodhi 2004; Promsopha 2015; Thai 2018).…”

“…Idiosyncratic and covariate risks are the common causes of the participation in distress land rentals, usually disadvantaging poorer farmers (Akram‐Lodhi 2005; Promsopha 2018; Salemink 2003; Thai 2018; Van de Walle 1999). Covariate risks are experiences from which the whole community in a geographic area suffers (droughts, floods, market failures, and plagues) while idiosyncratic risks affect households or people individually (e.g., loss of assets, acute diseases, unemployment, death of breadwinners, and others) (Ward and Shively 2015).…”

“…These risks often lead to income fluctuations and consumption unpredictability among poorer farmers, who usually have a limited ability to manage their household economies, preventing them from building up their savings or accumulating valuable assets (Nguyen 2007; Phung and Waibel 2009; Tran 2015). Poorer farmers must find a way to smooth their consumption expenditure; therefore, they spend savings, sell available assets, rely on natural forests, or borrow from relatives and banks (Gebregziabher and Holden 2011; Holden and Otsuka 2014; Nguyen et al 2019; Nguyen, Lawler, and Paul 2020; Promsopha 2018). When these options are unavailable or depleted, desperate farmers participate in distress land rentals where they do not have as many options to negotiate with lessees to obtain their expected prices (Gebregziabher and Holden 2011; Holden and Otsuka 2014; Lunduka et al 2010; Segers et al 2010).…”