Poverty and Land Redistribution

    1. Study Information

       

      This section discusses the 2014 article “Poverty and Land Redistribution” by Malcolm Keswell and Michael Carter1.

      This paper examines South Africa’s Land Redistribution for Agricultural Development (LRAD) program. The paper exploits features of LRAD program implementation to extract exogenous variation in whether, and for how long, applicant households enjoyed land transfers. Individuals self-select into the LRAD applicant pool, and are then subjected to a screening process that encompasses multiple stages. This screening process leads to a homogenization of sorts among the applicant pool. Applicants with similarly high chances of succeeding as farmers are kept in the applicant pool, while applicants with little chance of success are dropped from the pool. This administratively filtered subset of the applicant pool ends up receiving land transfers at different points in time leading to a variation in the duration of treatment. The paper studies the effect of the program by exploiting the plausibly exogenous component of this variation.

      To achieve identification, the study employs generalized propensity score (GPS) methods that allows them  to match transfer beneficiaries based on observable characteristics that are likely to influence both treatment duration and its impact. They analyze beneficiary data under two alternative statistical strategies.

      The study looked at male and female-headed households.

    2. Questions posed
      • What are the poverty reduction impacts of land redistribution?
      • Are the impacts greater than cash transfers?
    3. Description of intervention

      This paper studies the impact of South Africa’s Land Redistribution for Agricultural Development (LRAD) program. LRAD makes land purchase grants to landless farm workers and labor tenants. The program does not mandate redistribution of land from rich to poor, but rather operates through markets on a willing buyer–willing seller basis. LRAD is intended to provide land to black South Africans with an interest in farming, especially women. The program requires applicants to live on or near the land they wish to acquire through the program. Individuals who hold public office, civil servants, or relatives of such individuals are ineligible.

    4. Context of findings

      During the colonial period and the apartheid era that followed, Black South Africans were dispossessed of their land rights. The dispossession had basically eliminated peasant smallholders. In South Africa in the mid-1990s, land reform was initially pursued as a restitution of legal rights, with lesser attention to securing the economic benefits typically associated with land reform efforts. The result was an ineffective program. Reacting to this reality, the South African government overhauled its land reform approach in 2001, creating the LRAD program.

      The program works on the basis of a grant that is awarded to beneficiaries on a sliding scale. The minimum grant of 20,000 South African rands requires a matching contribution of 5000 rand (in cash or in-kind). The maximum grant of 100,000 rand requires a matching contribution amount of 40,000 rand. In practice, grants are pooled into a fund that is administered on behalf of a small group of beneficiaries. These funds are then used to purchase land, which becomes the property of the beneficiaries.

    5. Key findings

      The intended targeting of women by the LRAD program does not seem to be borne out by the data, as approved female-headed households have a lower probability than male-headed households of finally gaining access to LRAD grants than do male-headed households.

      Binary treatment effect estimates, which compare treated with approved but untreated households stuck in the administrative pipeline, show that land transfers boost household living standards by 25%. Continuous treatment estimates, which are based on exploiting different treatment durations among the sets of LRAD applicants who actually received land transfers, show that living standards initially dip with the land transfers, but then after three years rise to levels that imply a 50% increase in living standards of the treated households who entered the program with poverty line standards of living.

    NOTES
    1. Keswell M., Carter M.R., (2014) Journal of Development Economics, 110, pp. 250-261.