Does Land Lease Tenure Insecurity Cause Decreased Productivity and Investment in the Sugar Industry? Evidence from Fiji

Reshmi Kumari and Yuko Nakano

Tsukuba Economics Working Papers from Faculty of Humanities and Social Sciences, University of Tsukuba

Abstract: Does land lease tenure insecurity cause decreased productivity and investment in the sugar industry? To answer this question, the present study examined the impact of weak formal tenure lease arrangements on tenants Einvestment and the productivity of sugarcane in Ba province, Fiji. After controlling for potential endogeneity in the choice of lease tenure using instrumental variables (IV), it was shown that tenants under insecure lease tenure (expiring in 0 E years) achieve significantly lower yields of sugarcane, by 9 E1 tonnes per hectare, and plant smaller areas of new sugarcane, by 0.19 E.25 hectares on average, than do tenants under secure lease tenure. Insecure lease tenure also negatively affects chemical fertilizer use, although this impact is not statistically significant. An intervention to improve tenure security would likely enhance the production efficiency of and investment in the Fijian sugarcane industry.

Date: 2015-03
New Economics Papers: this item is included in nep-agr and nep-eff
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Journal Article: Does land lease tenure insecurity cause decreased productivity and investment in the sugar industry? Evidence from Fiji (2016)
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