Land tenure, investment, and agricultural production in Nicaragua

While there is a consensus in Nicaragua that the security of property rights is a fundamental constraint to the long run development of the agricultural sector, there has been little empirical analysis to date of the relationship between land rights and rural economic activity.Using household level data collected between December, 1997– April, 1998 within the regions of Leon and Chinandega (known administratively as Region II), this paper investigates the relationship between rural land rights and agricultural credit, investment, and rural incomes (on farm and off farm).Results indicate total credit received was significantly and negatively related to female-headed households and households with no documented form of land rights. While there is no significant relationship in the data between investment (defined as either total investment or just agricultural investment) and land rights and household characteristics, tenure status is significantly related to the number of trees on the property (a form of long-term land investment).Results indicate that off-farm income is significantly and positively related to the education level of household heads and the lack of any form of documented land rights. Farm income, defined for the purposes of this study as gross agricultural revenues, is shown to be increasing in the degree of tenure security, the education of the household head, farm size, and individual operation, and decreasing in the years since acquiring the property.In sum, these results indicate that improved clarity and enforcement of rural property structures can have a positive impact on rural credit access and farm profitability.[author]