Evaluating the impact of market-assisted land reform in Brazil

Abstract

This paper evaluates the impact of land reforms on household agricultural investments, livelihood strategies, and income levels in Brazil. Given the persistence of rural poverty in Northeast Brazil and the existence of both land and credit market failures, land reforms remain important policy tools for alleviating poverty and increasing growth. This paper evaluates the impact of the recent National Program of Land Credit, a controversial market-assisted land reform program that provides access to land through private land markets. Household-level panel data covering similar beneficiary and control groups allows for identification using both propensity score weighting and difference-in-difference methodologies. The evidence indicates that the Land Credit successfully transitions households into agriculture, with land holdings and investments increasing as a result of the program. As with many earlier land reform programs in Latin America, the new wave of market-assisted land reforms does not increase access to private credit. While land reforms have the potential to drive redistribution, poverty reduction, and growth, these findings suggest that ensuring greater access to credit, irrigation, and higher return economic activities remains important.