Land Price Effects of Informality, Farm Size, and Land Reform
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Washington, DC: World Bank
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This paper uses a rich set of
geo-coded administrative and remotely sensed data on more
than 1 million agricultural land transactions in Ukraine to
explore how informality, size, and recent land reforms
affect land prices. Three main findings are highlighted.
First, absence of registered rights generates large negative
externalities, the size of which plausibly exceeds the cost
of registering all land. By contrast, informality of lease
contracts is a choice that may enable owners to evade
regulatory obstacles that prevent them from renegotiating
contracts to obtain more favorable terms. Second, while land
market liberalization generated significant indirect
benefits, gains are unevenly distributed. Furthermore,
competition in sales markets remains limited, pointing to
scope for measures—including reducing the transaction costs
of selling land and accessing mortgage finance, improving
publicity of pending land sales, and use of electronic
auctions—to enhance the reforms’ impact on efficiency and
equity. Third, size at the parcel, field, and farm levels is
associated with higher per hectare prices, pointing to scope
for market-based land consolidation and growth of
medium-size farms to increase land values and productivity.
Achieving this potential will require measures to limit
speculative land acquisition and exercise of market power by
making local land markets more competitive and using
market-based land valuation as a basis for taxing land on a
recurrent basis and any capital gains due to land appreciation.
Palabras clave
LAND MARKET, PRICES, LAND REFORM, MARKET POWER, PRODUCTIVITY