"The Role of Land Market in Achieving the Scale for Adaptation to Climate Change: Evidence from Bangladesh"
Abstract: Farmlands in developing countries are highly fragmented and land market frictions have caused historical stagnancy in farm size consolidation. Hence, smallholders in developing countries might fail to adapt to climate change if it involves switching to a farming technique with relatively higher economies of scale. This paper studies this issue in the context of salinity intrusion in coastal Bangladesh. While a technique to adapt to salinity intrusion is reallocating lands from crop farming to salinity resilient aquaculture, the latter has relatively higher economies of scale compared to that of the former. Hence, if there is no consolidation, farmers operating fragmented land parcels would fail to adapt, resulting in a higher productivity dispersion over time. Exploiting an exogenous variation in soil salinity level arising from a hydrological feature of coastal Bangladesh, I employ both fuzzy regression discontinuity design and instrumental variable approaches and show that there is a significant increase in the farm size and the amount of land allocated to aquaculture in the areas affected by high level of salinity intrusion. Moreover, I find evidence that farmers achieve the required scale for land reallocation solely through rental market transactions. There is no evidence of land ownership consolidation and high level of historical fragmentation in land ownership slows down the land reallocation process. Finally, I find evidence that lower religious diversity results in lower rental market transactions and adaptations. These evidence suggest that frictions in sales and rental market transactions can substantially limit the adaptation process in developing countries.
Works in Progress
Creating water entrepreneurs as a scalable solution to climate change induced drinking water crisis in coastal Bangladesh with Ahmed Mushfiq Mobarak
Livelihood adaptation to climate change through diffusion of resilient farming technologies at scale with Ahmed Mushfiq Mobarak
Taking the second moment into account: Effects of increased uncertainty from climate change on farming decisions and outcomes in Bangladesh with Jared Stolove