Working Paper

"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. In consistence with previous literature I find no evidence of land ownership consolidation. Finally, I find evidence that high level of historical fragmentation and lower religious diversity results in lower land consolidations and adaptations. These evidence suggest that frictions land consolidation can substantially limit the climate change adaptation process in developing countries. 

“Underinvestment in a Profitable Adaptation Technology: The Role of Market Access”

Abstract: Ricardian theory suggests that farmers can potentially mitigate the effects of climate change induced shocks by reallocating their lands according to evolving comparative advantage. However, switching to a new farming requires the development of marketing intermediaries that provide forward linkages for the new output. Hence, barriers to market access faced by the intermediaries can potentially result in under adaptation to climate change. This paper studies this issue in the context of salinity intrusion in coastal Bangladesh. While a profitable technique to adapt to salinity intrusion is reallocating lands from crop farming to salinity resistant aquaculture, switching to aquaculture requires the development of a new market with intermediaries. Using exogenous variation in relative mean sea level over time as an instrument for salinity intrusion and colonial transportation network as an instrument for transportation cost, I show that high transportation costs to ports result in under reallocation of land to salinity resistant aquaculture. Furthermore, the mechanism that drives this underinvestment is the double marginalization by the middlemen in areas with high transportation costs. This extracts away the surplus that would have otherwise incentivized farmers to switch to aquaculture. The results suggest that public investment in transportation infrastructures can have a complementary effect on private adaptation by providing better market access.

Works in Progress

Taking the second moment into account: Effects of increased weather variability from climate change on farming decisions and outcomes in Bangladesh with Jared Stolove

Adapting to Drinking Water Scarcity in Coastal Bangladesh through an Entrepreneurship Approach with Ahmed Mushfiq Mobarak  

Livelihood adaptation to climate change through diffusion of resilient farming technologies at scale with Ahmed Mushfiq Mobarak  

Approaches to Studying Adaptation in Early Climate Change Battlegrounds with Ahmed Mushfiq Mobarak and Matthew Kahn