1 CDRI Research Workshop 29 January 2010

2 Related Project  Poverty Dynamic Studies (PDS), funded by the World Bank Objective of the project: Identify the transient and chronic poor and determinants of poverty and help design the policies and assess the effectiveness of intervention. Research members: Dr. Hossein, Sovannarith, Vuthy, (Runsinarith) Kimsun, Chhun, Dalis, and Dorina; (Sothea and Neath: Qualitative)

3 Related Project (Cont.) Jalan and Ravallion (2000): Different policies have different implications for each of these two types of poverty.  Longer-term investments in the land and (human and physical) capital of the poor are likely to reduce chronic poverty.  Insurance and income-stabilisation schemes that help protect households against income shocks will clearly be important when poverty is transient, though these policies may also have implications for chronic poverty by lowering the costs of insurance.

4 Related Project (Cont.) In addition to the main objective of the projects, five Sub-Research Policy Topics have been proposed 1. Impact of rising food prices on food security, agricultural production and poverty reduction (Submitted to the World Bank last year and published in ADR ) 2. Micro-financial development, growth and poverty reduction 3. Land ownership, tenure security and productive use of land 4. Improved road access, agricultural production and marketing and income diversification 5. Labour movement/migration, growth and poverty reduction

5 Research Interests Land ownership, tenure security and productive use of land Labour movement/migration, growth and poverty reduction

6 Land Tenure, Investment and Productivity  Literature review: The World Bank (2004) argued that land tenure, in the form of certificates or application receipts, significantly raise crop yields (by 65%), value of land (sale value by 38%; rental value by 57%), and household consumption (by 24%). This analyse is based on CSES 2003/04. Deininger (2005) used CSES 2003/04 to investigate the effect of property rights in rural Cambodia and found that the title increase land value (measure as households’ own estimates of value) and that higher share of land with title leads to higher consumption.

7 Land Tenure, Investment and Productivity Markussen (2008) used CSES 2003/04 to investigate the effects of property rights on agricultural productivity, access to credit, land rental market activity and availability of common property resources and found that plots held with a paper documenting ownership in rural Cambodia have higher productivity and land value than other plots, and property rights have weak effects on access to credit. Introduction private property rights leads to decrease availability of common property resources.

8 Land Tenure, Investment and Productivity  A conceptual and empirical framework In the attempt to conceptualize the economic model linking land tenure, investment incentives and productivity, Besley (1995) develops theoretical framework based on three main hypothesizes articulated in the traditional views (Demsetz, 1967; Alchian and Demsetz, 1973; Feder et al. 1988):

9 Land Tenure, Investment and Productivity (1) land title could increase security of tenure for farmers and enhance their willing to make medium- to long-term investments on their land, (2) land title can be used as collateral to improve access to credit, (3) land title could increase agricultural productivity

10 Land Tenure, Investment and Productivity

11 Land Tenure, Investment and Productivity  Data PDS Panel Data (827 households): Details information on land by plot is not available CSES 2007 (3593 households)  Model and estimation strategy Following Markussen (2008), we assume that the agricultural production function take the Cobb-Douglas form can be written as:

12 Land Tenure, Investment and Productivity where Y hj is the output on plot j in household h p the price of output Q the sown area L household labor input V variable inputs other than household labour K is the agricultural assets and A a measure of total factor productivity which depends on vectors of plot, household, and village characteristics (x, z and v, respectively)

13 Land Tenure, Investment and Productivity We assume further that total factor productivity A(.) take the following functional productivity: Property rights, R, are modeled as an element in x hj. In this perspective, property rights increase productivity by affecting total factor productivity. Rights give strong incentive for productivity enhancing investment.

14 Land Tenure, Investment and Productivity Transforming equation (1), the empirical model for estimation can be written as: The model is specified at the plot level.

15 Land Tenure, Investment and Productivity CSES 2003/04  Labour and other inputs are available only at the household level. CSES 2007  Labour are available at household level  Other inputs such as seeds, fertilizers, hired labour etc. are available at plot level Agricultural assets  Markussen (2008) measured “agricultural assets” as the value of agricultural specific assets such as cattle, buffaloes, horses, ploughs, threshers, and carts.  We use agricultural assets index (Principal Component Analysis)

16 Land Tenure, Investment and Productivity It is widely noted that Ordinary Least Squared (OLS) estimation may yield biased estimation due to the property right variable is endogenous. We apply an instrumental variables (IV) estimators, Two Stage Least Squares (2SLS). Following Besley (1995), Deininger and Castagnini (2004), and Markussen (2008), we use dummy for the mode by which a plot was acquired as instruments for property rights.

17 Land Tenure, Investment and Productivity  Empirical result (Excel file...)  Property right: R refers to a paper to certify ownership (1=plot held with a paper, 0=otherwise)  Paper consists of application receipt, land investigation paper, certificate (title), rental contract, and other Thank you for your attention and comments