Land Markets and Agricultural Land Use Efficiency and Sustainability: Evidence from East Africa

Land markets, including land sales and short-term land rentals, have an important role to play for efficient and sustainable land management and agricultural development, especially where markets for other factors of production are imperfect or missing. This study utilises data from the highlands of Ethiopia, Kenya and Uganda to examine the impact of land markets on various types of land investment and management practices, crop yield, and land quality. The results highlight the relative long-term versus short-term return to different types of investment and practices, where those with longer-term benefits such as trees, manuring, and composting are preferred on more tenure-secure plots, while those with immediate or season-to-season benefits such as drainage structures or chemical fertilizers are preferred on rented plots. The impact on agricultural productivity is mixed and context specific. Regarding land quality outcomes, there is reason to believe that plots traded on short-term markets in Kenya and Uganda tend to be of inferior quality, supporting the hypothesis of movement of land from households to those with higher capital/land ratios.