Property Rights and Land Disputes: Theory and Evidence from Ethiopia

This paper investigates the link between insecure property rights and land disputes using farm-household panel data from Ethiopia. We offer two main contributions. First, we develop a novel theoretical framework of land disputes. Our model predicts that in difficult times (i.e. when water is scarce), bargaining is more likely to breakdown—and dispute to arise— if property rights are ill-defined. Second, guided by our theo- retical framework, we empirically assess the causal relationship between land tenure security and clashes. Our identification strategy relies on the gradual rollout of a land certification program at the village level and on the exogenous variation in water availability, a trigger of land disputes. We find that having tenure security reduces the likelihood for a farm-household to experience land disputes by about 40%. We also show that secure property rights are more likely to reduce land disputes when households face adverse weather shocks, hence by reducing the vulnerability to water scarcity. We further document that water scarcity has a stronger impact on land disputes when the marginal value of land is larger