The importance of property rights for food security: Evidence from developing countries

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1 The importance of property rights for food security: Evidence from developing countries Kimlong Chheng PhD Scholar Arndt-Corden Department of Economics Crawford School of Public Policy PhD Conference 2015 Australian National University 24 th /Nov/2015 Food crisis in East Africa in 2011 (Courtesy: British Red Cross) 1

2 Plan of talk The importance of property rights for food security: Evidence from Developing countries Introduction and motivations Research questions and objectives Literature review Conceptual framework Empirical model and strategy Measurements of food (in)security and property rights Data sources Results Conclusion (Future works) 2

3 Introduction and motivations Undernourishment is very high: 795 million undernourished world-wide; 780 million for developing countries (FAO, 2015) Undernourishment takes the forms of: insufficient caloric intake, poor dietary quality, protein deficiency, insufficient intakes of proteins and micronutrients (e.g.: iron, vitamin A, zinc, iodine, and other minerals) Undernutrition causes 45% of under-five child deaths, equal to 3.1 million deaths globally (UN Children s Fund, 2014) 3

4 Examples of food security programs Over US$ 22 billion was committed for agricultural development and food security at G-8 Summit in The U.S. Government s global food security initiative Feed the Future aims to combat global hunger, malnutrition, and poverty. The New Alliance for Food Security and Nutrition: launched at G-8 Summit in 2012 to increase private investment in African agriculture. Over $3.75 billion committed. Picture above: Children race into the drop zone to gather any food or seeds that were spilled during the air drop in Leer, South Sudan (Source: AFP on CNBC dated 12 th October 2015) 4

5 Cross-country variation in food security is substantial 5

6 Research questions and objectives Is there any link between property rights security and food security? To what extent do property rights account for the differing food security outcomes? 6

7 Why Property Rights? In areas where food insecurity is an issue, property rights seem to be an issue as well. For example: - Land acquisition of 40 million hectares in 2009 in Africa - Land dispossessions and expropriation by the state since 1990 in Zimbabwe - Land acquisition of 3.1 million hectares by a Korean firm in Madagascar in Lack of proper land ownership and low agricultural productivity and on-farm investment in Ethiopia - Rapid large-scale land transformations and displacement of farmers in China (Barret, 2013) - Massive land acquisitions also happen in Cambodia, Indonesia, Honduras, and Guatemala (Keyman, 2014) 7

8 Prevalence of undernourishment and property rights in Burundi Mozambique Congo, Rep. Namibia Sierra Leone Tanzania Swaziland Mali Bolivia Guatemala Uganda Kenya Botswana Rwanda Mongolia Malawi India Paraguay Nepal Senegal Ecuador Pakistan Sri Lanka Cambodia Philippines Lesotho Bangladesh Peru Gambia Colombia Barbados El Salvador China Honduras Indonesia Panama Mauritania Costa Rica Brazil Thailand Gabon Tunisia Malaysia Uruguay Egypt Turkey South Africa Mexico Morocco Korea, Rep Chile linear fit 95% CI Property rights protection (log) 8

9 Literature review Existing literature on the links between property rights and food security is theoretical. For examples, Timmer (2000), Birner (2007), and Keyman (2014) Existing studies on property rights examine other impacts rather than food security. For examples: Property rights and agricultural production and productivity: Markussen (2008), Deininger & Jin (2006) Property rights and investment: Carter & Olinto (2003), Besley (1995), Deininger & Jin (2006) Property rights and onset of civil wars: Collier & Hoeffler (1998, 2002 & 2004), Lawson-Remer (2014) Land property rights and poverty and growth: World Bank (2003) 9

10 Existing literature on food security examines different drivers. For examples: - Food insecurity and prices: Warr (2014), Myers (2006) - Trade policies and global food security: Anderson (2013) - Geography and causes of food insecurity: Smith, Obeid, & Jenson (2000) - Food security and climate change: Parry, Rosenweig, Iglesais & Fischer (1999) - Food security and economic growth: Timmer (2000), Myers (2006), and Brinkman, de Pee, Sanogo, Subran, & Bloem (2010) 10

11 Conceptual framework: Factors influencing food security 11

12 Empirical model and strategy I test the following specification: fis it = + β ppr it + γ M it + δ yeardum t regdum i + ε it - fis is food (in)security measures: (i) Prevalence of undernourishment, (ii) Prevalence of food inadequacy, (iii) Depth of food deficit, and (iv) Average dietary energy supply adequacy - ppr is property rights index - M is the set of controls: Household final consumption expenditure per capita (hhfcepc), agricultural land per capita (agrildpc), human capital (hc), openness (open), inflation (infl), agriculture share (agcom), population (pop), latitude (latit), ethnolinguistic fractionalisation (ethno) - Yeardum is year dummy and regdum is regional dummy - ε is error term 12

13 Empirical model and strategy (Cont d) I use the following empirical strategy: First method: OLS for Second method: Between Estimators Additional methods: Random Effects and Fixed Effects Robustness tests: Six other measures of property rights Two other measures of food insecurity and one measure of food security OLS 2011; OLS 5-year intervals 13

14 Measurements of food (in)security (1) Prevalence of undernourishment (pu): Proportion of the undernourished in the population based on minimum dietary energy requirement. (2) Prevalence of food inadequacy (pfi): Proportion of the undernourished in the population based on higher PAL dietary energy requirements to perform normal physical activity. (3) Depth of food deficit (dfd): How much kcal/capita/day that would be needed to lift the undernourished out of undernourishment. (4) Average dietary energy supply adequacy (adesa): Percentage of dietary energy supply over the average dietary energy requirement. 14

15 Measurements of property rights Based on one question in the Global Competitiveness Report (GCR) : Property rights, including over financial assets, are poorly defined and not protected by law (= 1) or are clearly defined and well protected by law (= 7). Fraser Institute then calculated protection of property rights indicator as: EFWi = ((GCRi 1) 6) 10, and converted from 1-to-7 scale to a 0-to-10 scale. 15

16 Data sources FAO 2014 Food insecurity index Economic Freedom Index of the Fraser Institute Penn World Table 8.0 World Bank DWI 2014 World Bank Doing Business Reports International Property Rights Index Heritage Foundation 16

17 List of developing countries in the sample L. America & the Caribbean (18) 16 Paraguay 30 Gambia East & Southeast Asia (7) 1 Barbados 17 Peru 31 Kenya 46 Cambodia 2 Belize 18 Uruguay 32 Lesotho 47 China 3 Bolivia N. Africa & the Middle East (5) 33 Malawi 58 Indonesia 4 Brazil 19 Egypt 34 Mali 59 Malaysia 5 Chile 20 Jordan 35 Mauritania 50 Mongolia 6 Colombia 21 Morocco 36 Mozambique 51 Philippines 7 Costa Rica 22 Tunisia 37 Namibia 52 Thailand 8 Dominican Republic 23 Turkey 38 Rwanda South Asia (5) 9 Ecuador Sub-Saharan Africa (22) 39 Senegal 53 Bangladesh 10 El Salvador 24 Benin 40 Sierra Leone 54 India 11 Guatemala 25 Botswana 41 South Africa 55 Nepal 12 Honduras 26 Burundi 42 Swaziland 56 Pakistan 13 Jamaica 27 Cameroon 43 Tanzania 57 Sri Lanka 14 Mexico 28 Republic of Congo 44 Togo 15 Panama 29 Gabon 45 Uganda 17

18 Summary statistics Variable name N Mean Standard Deviation Minimum Maximum Property rights protection (ppr) Property rights (pr) Physical property rights score (pprs) Property rights and rule-based governance (prrg) Regulatory restrictions on sale of real property (rrrp) Registering property (regpr) International property rights index (ipri) Household final consumption expenditure per capita (hhfcepc) Population (pop) e e e+09 Agricultural land per capita (agrildpc) e e Agriculture share of GDP (agcom) Openness (open) Human capital (hc) Inflation (infl) Latitude (latit) Ethnolinguistic fractionalisation (ethno) e Prevalence of undernourishment (pu) Prevalence of food inadequacy (pfi) Depth of food deficit (dfd) Average dietary energy supply adequacy (adesa)

19 OLS Results (Developing Countries) Dependent variable Ln prevalence of undernourishment Independent variables Ln property rights protection *** (0.089) Ln household final consumption expenditure per capita *** (0.055) Ln agriculture share of GDP *** (0.067) Ln agricultural land per capita *** (0.017) Ln openness ** (0.079) Ln human capital *** (0.172) Ln prevalence of food inadequacy *** (0.075) *** (0.047) *** (0.055) *** (0.015) ** (0.067) -0.6*** (0.135) Ln depth of food deficit ** (0.121) *** (0.072) -0.62*** (0.077) *** (0.021) *** (0.104) *** (0.212) Year-Region Fixed Effects YES YES YES YES N Countries R Ln average dietary energy supply adequacy 0.061*** (0.016) 0.109*** (0.009) 0.08*** (0.011) (0.003) (0.013) 0.129*** (0.032) ***, **, * denotes a significance level at 1%, 5% & 10%, respectively. Robust standard errors in brackets. 19

20 Between Estimators Panel Results (Developing Countries) Dependent variable Ln prevalence of undernourishment Ln prevalence of food inadequacy Ln depth of food deficit Ln average dietary energy supply adequacy Independent variables Ln property rights protection ** (0.368) ** (0.322) (0.514) 0.155** (0.066) Ln household final consumption expenditure per capita ** (0.177) ** (0.155) *** (0.248) 0.081** (0.032) Ln agriculture share of GDP (0.177) (0.155) (0.247) 0.055* (0.031) Ln agricultural land per capita (0.076) (0.066) * (0.106) (0.014) Ln openness (0.264) (0.231) (0.368) (0.047) Ln human capital (0.595) (0.521) (0.832) (0.106) North Africa & the Middle East dummy *** (0.288) *** (0.252) *** (0.402) 0.193*** (0.051) N Countries R F ***, **, * denotes a significance level at 1%, 5% & 10%, respectively. Standard errors in brackets. Region fixed effects are controlled for by adding the regional dummies. 20

21 Robustness: Ln Prevalence of Undernourishment and Measures of Property Rights Independent variables Ln property rights protection (ppr) *** (0.089) Ln property rights (pr) -0.2*** (0.0484) Ln physical property rights score (pprs) (0.272) Ln property rights & rule-based governance (prrg) *** (0.158) Ln regulatory restrictions on sale of property (rrrp) 0.099* (0.0570) Ln registering property (regpr) 0.242** (0.105) Ln international property rights index (ipri) Ln household final consumption *** -0.67*** *** *** *** *** expenditure per capita (hhfcepc) (0.055) (0.05) (0.091) (0.084) (0.067) (0.073) Year-Region Fixed Effects YES YES YES YES YES YES YES N Countries R *** (0.285) *** (0.086) F n.a ***, **, * denotes a significance level at 1%, 5% & 10%, respectively. Robust standard errors in brackets. The F-statistics in column 1 is somehow not available, and so it is not reported.

22 Robustness BE Panel OLS 5-Years OLS 2011 IV Pooled Dependent Variable Independent Variables Ln property rights protection ** (0.368) Ln HH final consumption expenditure ** (0.177) per capita Ln agricultural land per capita (0.076) Ln agriculture share of GDP (0.177) Ln human capital (0.595) Ln prevalence of undernourishment *** (0.182) *** (0.111) ** (0.036) ** (0.145) (0.352) *** (0.337) -0.42** (0.188) *** (0.038) * (0.218) ** (0.484) 2 nd Stage *** (0.152) *** (0.057) *** (0.017) *** (0.064) -0.67*** (0.171) Year-Region Fixed Effects YES YES YES YES N Judicial independence (IV) 0.32*** (0.025) R F statistics ***, **, * denotes a significance level at 1%, 5% & 10%, respectively. Robust standard errors in brackets. Other control variables are not reported over here 22

23 Conclusion Property rights and food security are significantly associated. Strengthening property rights security by 1% can lead to a reduction in food insecurity by 0.5%-0.8% on average. The relationship holds for different measures of food (in)security. The relationship holds for some different measures of property rights. The checks with various estimation techniques confirm that the relationship remains consistently robust. 23

24 Future works Examine the empirical links between land ownership and food security among rural farm households in Cambodia Cambodia is an illuminating case where: formal land rights and land ownership are unclear land grabs and land disputes are on the rise since mid 1990s food insecurity and deaths of undernourishment are high Use own household survey data for the analysis. Total households: 280 (in 32 villages of 4 provinces) Survey conducted in 2014 Areas of survey (see the map) 24

25 Thank you for your listening and insights 25

26 Random Effects Panel Results (Developing Countries) Dependent variable Ln prevalence of undernourishment Independent variables Ln property rights protection (0.066) Ln household final consumption expenditure per capita *** (0.091) Ln agriculture share of GDP (0.162) Ln agricultural land per capita (0.059) Ln openness (0.093) Ln human capital * (0.489) Ln prevalence of food inadequacy (0.049) *** (0.085) (0.142) (0.041) (0.068) -0.76* (0.388) Ln depth of food deficit (0.079) *** (0.129) (0.207) (0.066) (0.101) (0.555) N Countries R 2 n.a. n.a. n.a. n.a. Ln average dietary energy supply adequacy (0.012) 0.074*** (0.019) (0.031) (0.009) (0.018) 0.225*** (0.079) ***, **, * denotes a significance level at 1%, 5% & 10%, respectively. Robust standard errors in brackets. F-statistics are not available, so they are not reported. 26

27 Fixed Effects Panel Results (Developing Countries) Dependent variable Ln prevalence of undernourishment Independent variables Ln property rights protection (0.097) Ln household final consumption expenditure per capita (0.143) Ln agriculture share of GDP (0.168) Ln agricultural land per capita (0.052) Ln openness (0.086) Ln human capital (1.011) Ln prevalence of food inadequacy Ln depth of food deficit Ln average dietary energy supply adequacy (0.069) (0.118) (0.014) (0.14) (0.183) (0.024) (0.147) (0.215) (0.031) (0.037) (0.059) (0.008) (0.063) (0.096) (0.017) (0.797) (1.252) (0.166) Year & Country Fixed Effects YES YES YES YES N Countries R F ***, **, * denotes a significance level at 1%, 5% & 10%, respectively. Robust standard errors in brackets. Year and country fixed effects are controlled for. 27

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