A Hard Row to Hoe: Farming on the Brazilian Amazon Frontier under Incomplete Property Rights
24 Pages Posted: 3 Sep 2008 Last revised: 9 May 2016
Date Written: September 2, 2008
Abstract
Many farmers in the Brazilian Amazon do not have clear titles to their land. Therefore, using an infinite-horizon representative agent model, this paper analyzes how improved property rights influence the farmer’s investment in the land, as well as the farmer’s consumption and debt. Three channels through which property rights affects these variables are identified through the analysis. Two involve the expenditure the farmer incurs to defend the land claim, and the third involves the interest rate premium the farmer faces when borrowing without a clear title to the land. Variants of the model allow for labor to defend the land claim and for endogenous property rights. The findings suggest a need and direction for further, empirical research, particularly with regard to informal institutional arrangements, measures of property rights, and the means by which they are defended.
Keywords: Agricultural investment, credit, property rights
JEL Classification: D23, K11, O13, Q15
Suggested Citation: Suggested Citation
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