To own or not to own? Land tenure security and production risk in small-scale farming

Abstract

While the impact of land tenure security on farm yield has been extensively investigated in the literature, little is known about the role tenure security plays in mitigating risk exposure. Using a nationally representative dataset collected through a multistage stratified random sampling of 1820 maize farmers in Nigeria during the 2014/2015 production season, we fill this knowledge gap by analysing the treatment effect of land ownership on production risk, measured by expected yield, yield variability (variance), and downside risk (skewness). To do so, we employ an endogenous switching regression model to sufficiently tackle selectivity bias that may arise from observed and unobserved factors. Our findings reveal that land ownership raises maize yield by 1.6% and reduces variability and downside risk by 95% and 164%, respectively. The robustness of these findings is established by further analyses using propensity score matching and inverse-probability-weighted regression adjustment approaches. Moreover, we find that the impacts of land ownership differ across landowners with different farmer characteristics and farm-level factors. Our results suggest that promoting policies that seek to encourage secure land tenure arrangements can be effective in mitigating production risk and crop failure, particularly in small-scale farming.