Scandinavian Working Papers in Economics

EfD Discussion Paper,
Environment for Development, University of Gothenburg

No 22-14: Adaptive Investment with Land Tenure and Weather Risk: Behavioral Evidence from Tanzania

Martine Visser (), Leonard Le Roux (), Chalmers Kyalo Mulwa (), Byela Tibesigwa () and Mintewab Bezabih Ayele ()
Additional contact information
Martine Visser: Environmental-Economics Policy Research Unit, University of Cape Town, South Africa.
Leonard Le Roux: Sciences Po, Paris, France
Chalmers Kyalo Mulwa: University of Cape Town
Byela Tibesigwa: University of Dar es Salaam
Mintewab Bezabih Ayele: Environment and Climate Research Center, Policy Studies Institute, Addis Ababa, Ethiopia.

Abstract: Two important risks faced by many smallholder farmers in Sub-Saharan Africa are erratic weather patterns and insecure land tenure. It is likely these risks will increasingly interact as projections of more erratic weather make small-scale farming more difficult and demand for rural land grows. This paper asks how farmers in Western Tanzania view these compound risks and the influence this has on levels of investment in adaptive agricultural technologies and the demand for land certification in a labin-the-field setting. Presenting novel data from a series of framed decision tasks linked to a household survey, this paper explores the relationship between individual risk preferences, adaptive investment, and the demand for land certification from a group of 650 rural households in Kigoma, Tanzania. While adaptive investment increases with weather-related risk, we find it responds negatively to land tenure risk. Individual risk preferences and past experiences of real-world land disputes play significant roles in adaptive investment. We also find that demand for land certification is high; investment increases significantly after certification; and risk-averse individuals show much larger increases in investment after obtaining land certification.

Keywords: agricultural investment; climate change adaptation; tenure risk

JEL-codes: C91; C93; D80; O13; Q15

Language: English

55 pages, September 1, 2022

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