Land policy reform and land rental markets in Ethiopia : equity, productivity and welfare implications

Abstract

The land holding system in most developing countries is not purely an economic affair. It is very much intertwined with people’s culture and identity. That is partly why land-related issues usually generate intense emotional reactions particularly in rural areas. Obviously, for rural residents of most developing countries,l and is a primary means of production used to generate a livelihood for households.It is also an important asset that farmers use to further accumulate wealth when possible and,equally importantly, what they transfer in the form of wealth to future generations (Deininger and Binswanger1999). Accordingly, the size of the land they own, the feeling of security that they have on their holdings, and the process through which land disputes are adjudicated all affect the households’ income, their incentive to work and invest, their desire to use their land in a sustainable manner,and even their social and economic status in their respective communities. In predominantly agrarian societies, all these factors combine to affect agricultural output and productivity and, along with it, the socio-economic welfare of its citizens.