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

We examine the effects of natural disasters on agricultural households that make rent-in or rent-out transactions. Our econometric approach accounts for the effects of disaster exposure on the adjustments in the quantity of operated land and agricultural income conditional on the land quantity adjustments. Using a household survey data set from Bangladesh, we find that farmers were able to partially ameliorate their losses from exposure to disasters by optimizing their operational farm size through these land rental transactions. Land rental market may be an effective instrument in reducing disaster risks, and postdisaster policies should consider this role more systematically. (JEL Q24, Q54