Environment for Development Publications

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The Environment for Development Initiative 

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The Emergence of Land Markets in Africa 

RFF Press | December 2008
Stein T. Holden, Keijiro Otsuka, and Frank M. Place, editors
High poverty rates and the need for increased agricultural productivity remain acute in rural areas across sub-Saharan Africa. A new book from RFF Press marks the first systematic attempt to address emerging land markets in Africa and their implications for poverty, equity, and efficiency.

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Who Should Set the Total Allowable Catch? Social Preferences and Legitimacy in Fisheries Management Institutions
We develop a decision making model based on constraints that are typically encountered in fisheries management when setting the total allowable quota. The model allows us to assess the differences in outcomes when the decision is made by different management institutions under uncertain conditions. We consider social preferences under uncertain stock conditions and measure the social expected costs raised by different institutions. We take into account stakeholder participation and we include the notion of “legitimacy cost” as the actions stakeholders may take when they do not recognize decisions made by the authority as the right decisions. Within this context, economic policy choices are discussed in terms of what type of institutions will generate a higher expected welfare depending on social preferences and legitimacy costs in specific contexts. We also discuss what aspects should be considered when designing stakeholder and scientific boards in the total allowable catch (TAC) setting process.


The Land Certification Program and Off-Farm Employment in Ethiopia
Land tenure security has long been touted as key to increased performance of the agricultural sector in developing countries. At the same time, off-farm employment is seen as a strategy to diversify rural economies. This paper utilizes household level panel data to analyse the impact of a land certification program on farmers’ off-farm participation and activity choices in the Central Highlands of Ethiopia. Identification of the program’s impact relies on the sequential nature of its implementation and application of the Difference-in-Differences strategy. Our results suggest that certification is a significant determinant of participation in off-farm employment. However, the impact differs substantially between different types of off-farm activities. While land certification is associated with an increased probability of participation in non-agricultural activities requiring unskilled labor, it reduces the probability of engaging in work on others’ farms. In addition, the effect of the program depends on the size of landholdings. The differences in the responsiveness of different off-farm activities to both certification and farm size indicate the need to recognize the complex relationships between reform policies that enhance land tenure and the non agricultural sub-sector in rural areas. In light of similar previous studies, the major contributions of the paper are twofold: assessment of the effects of enhanced land tenure security on activities outside agriculture and evaluation of the role of farm size in determining off-farm participation.
Investigating the Sensitivity of Household Food Security to Agriculture-Related Shocks and the Implications of Informal Social Capital and Natural Resource Capital
Resource-poor rural South Africa is characterised by high human densities due to the historic settlement patterns imposed by apartheid, high levels of poverty, under-developed markets and substantially high food insecurity. This chronic food insecurity, combined with climate and weather variability, has led to the adoption of less-conventional adaptation methods in resource-poor rural settings. This paper examines the impact of agriculture-related shocks on the consumption patterns of rural households. In our assessment, we are particularly interested in the interplay among social capital (both formal and informal), natural resource capital and agriculture-related shocks. We use three years of data from a relatively new and unique panel of households from rural Mpumalanga Province, South Africa, who rely on small-scale homestead farming. Overall, we make two key observations. First, the agriculture-related shocks (i.e., crop failure from poor rainfall and hailstorms) reduce households’ food availability and thus consumption. Second, natural resource capital (e.g., bushmeat, edible wild fruits, vegetables and insects) and informal social capital (ability to ask for food assistance from neighbours, friends and relatives) somewhat counteracts this reduction and sustains households’ dietary requirements. In general, our findings suggest the promotion of informal social capital and natural resource capital as they are easier, cheaper and more accessible coping strategies, in comparison to other more technical and capital-intensive strategies such as insurance, which remain unaffordable in most rural parts of sub-Saharan Africa. However, a lingering concern centers on the sustainability of these less conventional adaptation strategies.
A Diagnostic Tool for Estimating the Incidence of Subsidies Delivered by Water Utilities in Low- and Medium-Income Countries, with Illustrative Calculations
It is conventional wisdom that poor households use less water than rich households, and intuition suggests that an increasing block tariff with a lifeline block will target subsidies to poor households. In this paper, we provide a simple diagnostic tool that a water utility can use to estimate the distribution of subsidies to households in different income quintiles and to check whether this intuition about the incidence of subsidies is correct in a specific local service area. The results of our illustrative calculations show that subsidies delivered through the most common tariff structures are very poorly targeted to poor households. This finding holds regardless of the specific characteristics of the tariff structure used to calculate households’ water bills. We also find that the higher the correlation between household income and water use, the lower the proportion of total subsidies received by poor households.
Profitability of Biofuels Production: The Case of Ethiopia
This research investigates the profitability of biofuels production in Africa, taking Ethiopia as a case in point, and suggests an oil price threshold beyond which biofuel may be profitable. Specifically, the study analyzes the viability of bioethanol from molasses and biodiesel from other feedstock in the context of Ethiopia, using data from a biofuels investment survey by EEPFE/EDRI in 2010, and makes estimates based on field visits. We draw on investment theory as our underlying conceptual framework and we employ unit cost analysis for our empirical analysis. Findings reveal that, while bioethanol production (from molasses) in Ethiopia can be quite viable, the viability and competitiveness of biodiesel production will largely depend on the cost and price of feedstock. In particular, if the world oil price is expected to vary between $US42 and $US200 per barrel, biodiesel firms in Ethiopia must be able to produce at less than $US1 per liter. This suggests that viable alternatives of coproduction through value addition from byproduct seedcake and intercropping options need to be considered to enhance profitability of biodiesel production. Moreover, research and development efforts and knowledge support to the biofuels industry, including a search for better adaptive and better yielding varieties and good oil quality biofuels crops, as well as better regulatory framework and follow-up, are necessary. Overall, the biofuels industry can be viewed as a way out of poverty but a lot remains to be done to enhance its viability. This is a case study involving a few observations because of the small size of the universe of producers studied; hence, further analysis is called for as the sector expands.
The Economic Impact of Weather Variability on China’s Rice Sector
This paper provides the first county-level analysis of the impacts of weather variability on rice yield in China, by compiling a unique panel on irrigated single-season rice and daily weather data. We found that temperature and solar radiation had statistically significant impacts on rice yield during the vegetative and ripening stages, while the effects of rainfall on yield were not significant. In contrast to nearly all previous studies focusing on rice production in tropical/subtropical regions, we discovered that higher daily minimum temperature during the vegetative stage increased rice yield in China. Consistent with other studies, higher daily maximum temperature during the vegetative and ripening stages reduced rice yield in China, while the impacts of solar radiation on rice yield varied across the plant’s growth stages. Adaptation of rice production to higher temperatures effectively reduced the adverse impacts of weather variability on rice yield. Combined, our results indicate that weather variability caused a net economic loss of $25.2 million to $60.7 million to China’s rice sector in the past decade, depending on model specifications and econometric estimation strategies.
Resistance to the Regulation of Common Resources in Rural Tunisia
We examine the effect of the introduction of uniform water-charging for aquifer management and provide evidence using a survey-based choice experiment of agricultural water users in rural Tunisia. Theoretically, we show that the implementation of the proposed second-best regulation would result both in efficiency gains and in distributional effects in favour of small landholders. Empirically, we find that resistance to the introduction of an effective water-charging regime is greatest amongst the largest landholders. Resistance to the regulation of common resources may be rooted in the manner in which heterogeneity might determine the distributional impact of different management regimes.