How pro-poor are land rental markets in Ethiopia?

Land rental markets can potentially improve the access to land for land-poor households that possess complementary resources that can enable them to utilize land efficiently. Land rental markets can also enable landowners who are poor in non-land resources to rent out their land such that their land is utilized more efficiently and they themselves can get a better income and improved welfare from their land resource. This report assesses the land rental market that is dominated by a reverse tenancy system with relatively poorer landlords and less poor tenants. This market has largely developed informally in Ethiopia but has also been shaped by the changing land policies. We assess how pro-poor it is and whether interventions potentially can make it even more pro-poor and welfare enhancing or whether a “hands off” policy is preferable. If we can detect a significant market failure, there is room for intervention. However, there are also a number of current interventions in the market. We assess whether these achieve the intended outcomes or rather should be lifted or modified.Population growth, economic growth, and structural transformation in agriculture may change the role of land from being the most important safety net and livelihood opportunity to become an important resource for agricultural transformation and development. The non-farm sector in Ethiopia has grown rapidly in recent years and provides new employment opportunities and this reduces the pressure on land as the only and main source of livelihood. Our study of land rental markets in Ethiopia covers communities in Tigray, Oromia and SNNP regions focuses particularly on the period 2006 to 2012, but draws on data and research that goes back to 1998 in Tigray and utilizes information from landlords and tenants and other rural households with male and female representatives, local Land Administrative Committee (LAC) members and local conflict mediators with long experience in handling local land disputes.In this report, we review the relevant literature and fill important gaps in this literature. These gaps include a) the stated reasons of landlords and tenants for partner choice and contract choice in the land rental market and their attitudes and preferences regarding regulation and formalization of land rental contracts; b) we investigate land access of youth in the land rental market; c) we assesses how joint certification of husbands and wives has affected participation in the land rental market; and d) how increasing population pressure and land scarcity affects land access and the land rental market over time.