On the Other Side of the Fence: Property Rights and Productivity in the United States

Abstract

Can well-defined access rights to publicly owned land be as effective as privatization in increasing productivity and wealth? In this paper, I evaluate the impact of public property rights using the 1934 Taylor Grazing Act, which determined secure access rights for ranchers to newly created, large grazing districts in the Western US. Using satellite-based vegetation data, I exploit spatial discontinuities across grazing district boundaries and find that public lands with well-defined access rights for ranchers are at least 10% more productive than lands without. Immediately after establishing grazing districts, ranchers inside these districts held more cattle, reported higher income and farm values than their counterparts outside. Despite ranchers being unable to invest in publicly-owned lands, these magnitudes are similar to outright privatization. Instead, I argue that secure access rights resolve uncertainty around future usage and align the incentives of ranchers and regulators, thus incentivizing sustainable and profitable usage. I provide two results supporting this hypothesis: Areas with stronger pre-reform state capacity show larger increases in vegetation; and, monthly patterns on vegetation are consistent with the adoption of productivity-increasing fallowing practices. I investigate alternative explanations, and find no empirical support for differential initial productivity; negative spillovers; or systematic local manipulation of boundaries.

Grassland tenure reform and grassland quality in China

“…Other studies investigate the impact of property right security on economic and social outcomes, such as investment in cropland (Huntington & Shenoy, 2021), labor allocation and migration (de Janvry et al, 2015), agricultural productivity (Linkow, 2016), and social tensions and disputes (Alston et al, 2000;Deininger & Castagnini, 2006;di Falco et al, 2020). Related to our study, Bühler (2022) finds that grazing lands with well-defined property rights are over 10% more productive than lands without, based on a spatial discontinuities model. Chari et al (2021) study land property reform in rural China and find an increase in land rental activities among rural households and aggregate productivity.…”

The Causal Effects of Enclosures on Production and Productivity

“…Other studies have analyzed the impact of twentieth-century reforms made to equalize land ownership via property rights laws on production. Based on a regression discontinuity design, gains due to well-enforced property rights were shown to be persistent, as land affected by the 1934 act had 10 percent higher productivity 70 years later (Bühler 2023). Enforcement or restriction of private property rights in developing countries has also been found to impact the distribution of household wealth and farm productivity (Adamopoulos and Restuccia 2020;Galiani and Schargrodsky 2010).…”