Large-Scale Land Acquisitions and Rural Development: Empirical Evidence from Ethiopia Giulia Barbanente – Erasmus University of Rotterdam Emma Aisbett – University of Hamburg

Background: Large-scale land acquisitions Land transfer to foreign investors with area over 200 ha food price crisis Food and energy security Africa first continent for land acquired

Background: Land tenure in Sub-Saharan Africa 10% Formal rural property rights Customary land rights systems (communal) Potential conflict with foreign investors Regulatory measures: Land titling/certification

Theoretical Framework(s): The enclosure movement (Cohen and Weitzman, 1975) Evolutionary theory of property rights (Platteau, 1996) A welfare enhancing framework (Deininger et al. 2011)

Ethiopia Property rights setting The constitution Certification reform Promotion of land acquisitions Land bank Financial incentives for investors Standardized contracts The case of Gambella Top recipient of land acquisitions in Ethiopia 32% of the region ‘suitable for investment’ Displacement of indigenous populations Contracts of land acquisition...

Contracts of land acquisition (i) Analysis of three contracts for land acquisition in Gambella ( ) Cotton and soya production Signatories: Ministry of agriculture and foreign investors (India and Turkey nationals)

Contracts of land acquisition  Low price of land  3-year grace period before payment  25 year contract with renewal option  ‘Full and exclusive use’ of land to the investor  Vague environmental requirements  Rural populations or subnational/regional authorities not mentioned in the contract

The dataset: sources Land Matrix land acquisitions Year of signature of the contract Location (regional level) Size of land acquired (hectares) Nationality of the acquirer LSMS-ISA rural development 4,000 households in rural Ethiopia Two rounds of interview: 2011 and 2013 Ethiopian National Statistical Agency

Variables Dependent variables at the household level Field: Area (hectares) Value of field if rented to 3d party(Birr) Certification (y/n) Credit access: Loans obtained (y/n) Value of loans obtained (Birr) Household expenditure: food expenditure in the past 7 days Non-food expenditure in the past year Work: Agricultural work (hrs/w) Other work (hrs/w) Wage work (hrs/w) Control variables: household size, gender and education, distance from market, elevation and annual precipitation

Econometric approach Gambella and Benishangul-Gumuz: ‘treatment’ regions Matching with Coarsened Exact Matching Dependent variable: outcome of each variable in 2013 in the treatment regions relative to the outcome in the other regions value as control Results with and without geographic controls Quantile regressions applied to the matched data to investigate distributional implications

Results Outcomes in regions with substantial land acquisitions since 2010 relative to the other regions: weighted least squares (SATT) estimated for matched samples

Results Outcomes in regions with substantial land acquisitions since 2010 comparison to other regions: 25 th percentile estimates for matched sample

Results Outcomes in regions with substantial land acquisitions since 2010 comparison to other regions: 75th %ile estimates for matched sample

Conclusion Centrality of Ethiopian property rights system in attracting land acquisitions In Gambella indigenous populations are displaced while the region is at the center of the Ethiopian policy to attract foreign investors Standardized contracts offer favorable conditions to foreign investors Quantitative results show significant decrease in average field area, number of certificates, land value and agricultural work in Gambella and Benishangul Decrease in field area and higher food expenditure strongest in the 25 th percentile, increased non-food expenditure and lower agricultural work for the 75 th percentile

Way forward Strengthening institutional framework for Ethiopia Improve explanation of empirical section Better connect results to the theory Extend quantitative research to other countries for comparative perspective

Thank you

Preliminary observations: land area Average 25 percentile 75 percentile

Preliminary observations: land value Average 25 percentile 75 percentile

Preliminary observations: household expenditure Average 25 percentile 75 percentile

Preliminary observations: agricultural work Average 25 percentile 75 percentile

Preliminary observations: agricultural work Average 25 percentile 75 percentile