Does tenure insecurity explain the variations in land-related investment decisions in rural Ethiopia?

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University of Cape Town


We examine the relationship between land tenure security and land-related investments in rural Ethiopia. We control for both household heterogeneity and possible endogeneity of tenure security in estimating the impact of tenure security on investment. Empirical results show that variations in levels of tenure security do not explain the observed differences in investment behaviour among farm households in rural Ethiopia. In contrast, land size, access to labour and extension services, and location are seen to be important determinants of land-related investments. The results suggest that without addressing other barriers to investment, land reforms (titling) may not be sufficient to improve land-related investments.

Muna Shifa: Post-doctoral fellow, Southern Africa Labour and Development Research Unit, University of Cape Town Murray Leibbrandt: Professor, Southern Africa Labour and Development Research Unit, School of Economics, University of Cape Town. Martin Wittenberg: Director, DataFirst and Professor, School of Economics, University of Cape Town. Muna Shifa would like to thank Carnegie Foundation for funding her PhD study at University of Cape Town, and the National Research Foundation (NRF) for funding her post-doctoral research. Murray Leibbrandt acknowledges the Research Chairs Initiative of the South African National Research Foundation and the South African Department of Science and Technology for funding his work as the Research Chair in Poverty and Inequality.