Transactions Costs and New Institutions: Will CBLTs Have a Role in the Saskatchewan Land Market?

Abstract

Increases in farm foreclosures in the last decade have created pressures for individuals and organisations to seek alternatives to the traditional debt financing of farm land. A model of a Community Based Land Trust (CBLT) was developed by Brown, Gray and Molder as an alternative form of land tenure. The transaction cost economics literature suggests that a new institution will be adopted only if the institution results in an overall reduction in transaction costs. This paper evaluates the CBLT proposal by comparing the transactions costs with this form of tenure with the transaction costs of the more traditional form of tenure. The qualitative analysis revealed that no existing form of land tenure clearly dominates the CBLT thus porn a transaction cost perspective, the CBLT may have some probability of acceptance in the marketplace.