Land transactions in post-socialist Bulgaria Violeta Dirimanova BULGARIA Prague, 7-11 June 2004 IDARI Workshop

Problem background Land reform started in the beginning of 1990 Liquidation of the old cooperatives Reallocation of the land to original owners or their inheritors 1.8 million landowners Half of farms are less then 2 ha

Fragmentations in Bulgaria Average farm’s and plot’s size

Observation 1: the results of restructuring Type of farms and share of land

Observation 2: the results of bargaining and contracting Share cropping Substance farmers (renting out/leasing out) Cooperatives (leasing contract) Large commercial farmers (renting contract)

Observation 3: “Felt” Negative Effect Land fragmentation Land degradation Land abandonment Low productivity Few formal land transactions

The research problem Agricultural reform in Bulgaria has led to land fragmentation The government has been unsuccessful in its attempts to solve the problem

Main research questions What is the relation between land fragmentation and my observations? How does land fragmentation affect actors behavior and what does it have to do with market development and low productivity? What is the potential role of government to deal with land fragmentation, and what are the alternatives?

Sub-questions What type of problem is land fragmentation and the effect on the economic system? What is the rational behavior when the rights are fragmented? How do people exchange their rights? How can costs of exchanging ownership and user rights be minimized in Bulgaria?

Purpose of the study To propose institutional options for solving land fragmentation caused problems on the basis of analyses of land transactions, the actors’ behavior and institutional settings

Theoretical model GOVERNANCE STRUCTURE  MARKET  HIERARCHY  COOPERATION PROPERTY RIGHTS  FORMAL  INFORMAL RELATIONAL CONTRACTING BETWEEN ACTORS CONTRACT CHARACTERISTICS OF ACTORS INSTITUTIONAL SETTINGS LAND TRANSACTIONS

Theoretical background Transaction Cost Theory (Coase, Williamson) Theory of Property Rights (Barzel) Theory of Agricultural Contracting (Hayami and Otsuka)

Proposition and research hypothesis Main proposition: Agricultural reform has led to land fragmentation and the current land transactions further deepened the problem. Sub-proposition 1: Land fragmentation has an impact on what is rational in contacting. Sub-proposition 2: Land fragmentation has an impact on restructuring process on farming structure. Sub-proposition 3: Land fragmentation has ‘negative’ effects.

Methodology (1) Legislation and literature Developing empirical study –set of ‘comparative’ single studies –semi - structural interviews –two stages – pilot and main interview –social network method – frequencies of land transactions Combination between qualitative and quantitative method

Methodology (2) Use empirical data and structure land transactions as “bargaining games” between owners and users (Hanisch 2003) Analyze what is rational behavior in different bargaining situations (Hanisch 2003) Analyze policy options in their impact on alternative ‘solutions’ of these games

Thank you very much for your attention!