Land markets, property rights, and deforestation in Indonesia

Presenter: Dr. Vijesh Krishna

Abstract:

The paper examines the emergence and functioning of land markets and possible implications for deforestation in Sumatra, Indonesia, using micro-level data. While the evolution of land markets is generally expected to enhance deforestation, we do not observe such association, mainly due to two reasons. First, land market transactions occur in cultural and spatial isolation from forest land appropriation. Residents of transmigrant villages are found more involved in land market transactions than those of autochthonous villages. The plots that are traded in the market also differ from the plots that are developed through direct appropriation, especially with respect to their location. Second, the emergence of speculative land markets, which could accelerate deforestation, is evaded through institutional constraints, primarily weak property rights. The de facto property right protection under customary law might be providing sufficient internal tenure security for most households; but the sense of external tenure security is low for the land that cannot be titled, leading to undervaluation of directly appropriated forest land. Clearing the forest land for trading in the land market is financially less lucrative for the farmers than engaging in cultivation of plantation crops in the converted land. We observe that while land markets under low external tenure security have not enhanced deforestation in Sumatra, they have been also unable to deter forest appropriation.

About the author:

Vijesh Krishna is a Senior Research Fellow in the Department of Agricultural Economics and Rural Development of Georg-August University of Göttingen, Germany. His current research interests include evolution of factor markets and institutions in relation to land use changes, and the welfare impacts associated. He works also on biodiversity economics. Before joining University of Göttingen, Vijesh was working as Production and Resource Economist at the International Maize and Wheat Improvement Center. He was also a Ciriacy-Wantrup Post-Doctoral Fellow in the University of California, Berkeley.

https://www.uni-goettingen.de/en/353807.html