Consolidating land through rental swaps: Experimental evidence from Uganda
Speaker: Prof Tom Wilkening
Affiliation: University of Melbourne
Location: Room 214, Chamberlain Building (#35), St Lucia Campus
Zoom: https://uqz.zoom.us/j/82603079317
Abstract: Can market design be used to improve agriculture rental markets and facilitate welfare improving trades? To explore this question, we map ownership of agriculture land in Uganda and identify bilateral land swaps that can consolidate agriculture land. We elicit the prices at which farmers are willing to participate in these rental swaps using an incentive compatible trading mechanism that, in some cases, induces real trades. We find that, on average, farmers are willing to pay just under 10% of the rental price to farm consolidated plots. These consolidation gains exceed estimated trade frictions in many transactions resulting in a positive expected surplus in 40% of the land-consolidating swaps that we offer. Our results suggest that small-cycle swaps can improve welfare outcomes in locations where land is fragmented, and we use our data to evaluate potential larger market redesigns. Simple matching algorithms that use fixed prices based on differences in land sizes can induce 22% of the efficient trades identified. Both subsidies and more complicated designs that incorporate farmer-reported prices appear to improve outcomes relative to simpler designs where prices are based solely on observables.
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