The impact of farmland property rights security on the farmland investment in rural China

• Published in: Land use policy 2020-09, Vol.97, p.104736, Article 104736
• Main Authors: Cao, Yueming, Bai, Yunli, Zhang, Linxiu
• Format: Article
• Language: English
• Subjects: Agricultural land; Farmland property rights; Households; Investment; Investments; Land use; Land-attached investment; Property rights; Quality control; Rural areas; Rural China; Security; Soil improvement; Soil properties; Soil quality; Soils; Water conservation
• ISSN: 0264-8377; 1873-5754
• DOI: 10.1016/j.landusepol.2020.104736

•Less than one fifth of plots have been invested by the households since the second round of land contract reform.•Security of farmland property rights significantly positive affects the possibility and amount of farmland investment.•Share of farmland retained significantly affects the investment in soil quality improvement and changing use of the plots.•The types of farmland property rights affect investment in water conservancy facilities and changing use of the plots. This paper aims to estimate the effect of the security of farmland property rights on land-attached and long-term investment. Based on the data from a nationally representative sample with 5887 plots of 1175 households among 5 provinces in rural China, we adopt Probit, Ordinary Least Squares / Tobit, and the household fixed effect methods to yield the consistent results. The results show that the security of farmland property rights have significant and positive effects on the possibility and amount of the overall farmland investment. However, it has different effects on the different types of investments. The share of farmland retained significantly affects the investments in soil quality improvement and changing use of the plots but does not affect the investment in water conservancy facilities. The types of farmland property rights affect investments in water conservancy facilities and changing use of plots, but do not affect investment in soil quality improvement. The findings imply that the Chinese government should be the principal investor in water conservancy facilities and enlarge the operational scale of farmland by facilitating farmland transfer to increase private investment.