Adaptation to natural disasters through the agricultural land rental market: evidence from Bangladesh

In this paper, produced as part of the Pathways to Resilience in Semi-arid Economies (PRISE) project, the authors examine the effects of natural disasters on agricultural households who make rent-in or rent-out transactions in the land rental market.

The authors take an econometric approach that accounts for the effects of disaster exposure both on the adjustments in the quantity of operated land (i.e. extensive margins) and agricultural income conditional on the land quantity adjustments (i.e. intensive margins).

Using a household survey dataset from Bangladesh, they find that farmers were able to ameliorate their losses from exposure to disasters by optimising their operational farm size through transactions in the land rental market. They also find that although larger farmers receive higher total benefits, rent-in transactions help the smallholder farmers especially either to overcome or reduce their losses. These results suggest that the land rental market may be an effective instrument in reducing disaster risks, and post-disaster policies should take this role into account more systematically.

The results presented in this paper are robust to alternative definitions of exposure, alternative estimation methods, and alternative definitions of welfare measures.

This paper updates an earlier version published in May 2016.

ISSN 2515-5717 (Online) – Grantham Research Institute Working Paper series
ISSN 2515-5709 (Online) – CCCEP Working Paper series