Land Regularization and Technical Efficiency in Agricultural Production: An Empirical Study in Andean Countries

Abstract

This study evaluates the impact of land tenure security on technical efficiency of smallholder farmers in the three countries of the Andean region, Bolivia, Ecuador and Peru. Using cross-sectional data for 5,288 smallholder farmer households, we employ a multi-stage methodology, including propensity score matching, selectivity bias-corrected stochastic production frontier, and meta frontier analysis to address concerns relating to endogeneity. Results reveal that farmers who hold a formal land title on average exhibit technical efficiency that is 38.6% higher than among farmers without legal title, though effects and magnitudes vary by country. Furthermore, we explore the pathways through which tenure security may affect technical efficiency and find that possessing legal title is associated with higher likelihood of accessing credit and making productive investments in land. Our findings imply that comprehensive land regularization is crucial to enhancing agricultural productivity levels among smallholder farmers in the region.