Does awareness about land tenure security (LTS) increase investments in agriculture? Evidence from rural households in Vietnam

Abstract

Although previous studies have shown the importance to agricultural investments of awareness about land tenure security (LTS), to date, little quantitative evidence has been published regarding the effects of awareness about LTS. This study contributes to the current research by showing the causal effect on agricultural investments of awareness about LTS. In detail, we examine whether awareness about the increase in the duration of agricultural land-use rights improves farmers’ investments in agriculture. Under the new land law passed in November 2013 in Vietnam, the usage duration of annual cropland and aquaculture land increased significantly from 20 years to 50 years, which makes Vietnam a compelling case study for testing this hypothesis. We use panel data from the Vietnam Access to Resources Household Survey (VARHS) collected in 2010, 2012, 2014 and 2016. The balanced panel data include 1834 households. Difference-in-difference with fixed effects (DID-FE) is employed to estimate the causal impacts. We find that awareness about the increase in the duration of agricultural land-use rights increases investments in irrigation/soil conservation/water conservation and the adoption of organic fertilizer, which supports the positive impacts of awareness about LTS on sustainable investments.