Property rights and investment in agriculture: Evidence for Ghana

Abstract

This article develops a theoretical framework to examine the relationship between land tenure agreements and households’ investment in land improvement and conservation measures. It then analyzes this relationship with a multivariate probit model based on a survey data from a sample of 560 plots belonging to 246 farmers from 6 villages in the Brong-Ahafo region of Ghana. A major hypothesis tested is that investment in productivity enhancing and conservation techniques are influenced by land tenure systems. The theoretical analysis and empirical results generally reveal that land tenure differences significantly influence farmers’ decisions to invest in land improvement and conservation measures. Furthermore, reduced-form productivity regressions show that tenure differences do affect land productivity.Land tenure; property rights; investment; optimal control; multivariate probit