Determining Minimum Compensation for Lost Farmland: A Theory-Based Impact Evaluation of a Land Grab in Sierra Leone

Hansen, Marc Victor, Conteh, Mohamed Sorrie, Shakya, Martina and Loewenstein, Wilhelm, Determining Minimum Compensation for Lost Farmland: A Theory-Based Impact Evaluation of a Land Grab in Sierra Leone. IEE Working Paper 211. Bochum 2016

62 Pages Posted: 21 Apr 2016

See all articles by Marc Hansen

Marc Hansen

Ruhr University of Bochum - Institute of Development Research and Development Policy

Mohamed Conteh

Independent

Martina Shakya

Institute of Development Research and Development Policy

Wilhelm Loewenstein

Ruhr University of Bochum - Institute of Development Research and Development Policy; Ruhr University of Bochum - Faculty of Economics

Date Written: April 19, 2016

Abstract

The land grabbing issue has produced a plethora of debates ranging from ethical conduct of land grabbing agents, specifically concerning displacement, to evidence for and against positive externalities such as technological spill-overs and construction of infrastructure. An underexplored topic is the valuation of agricultural land and the compensatory payments made to land users, distinct from land owners, for the loss of their source of food security. This paper establishes a theoretical framework for the valuation of agricultural land from the perspective of land users, based on a household production function. For the analysis data were collected in a survey of 203 households in the land grab affected area in the Northern Province of Sierra Leone during 2013. It shows that, for the case of a specific land grab in Sierra Leone, the compensatory payments received by land users are far below the value of the land lost and as such the lease income is unable to allow these households to maintain their previously, already tenuous, levels of food security. A clear distinction is made between land owners and even more vulnerable nonlandowning land users who depend on the agricultural land for their food security and livelihoods. The household level analysis showed that in addition to the level of compensation received by the average household being insufficient to maintain a priori welfare levels the distribution of compensation significantly favoured the wealthier households. Since the value of the land and the rent distribution were set in local positive law the project could correctly call itself fully compliant but the land grab still resulted in significant welfare losses. The methodology implemented by this ex-post study can identically be applied to an ex-ante scenario allowing land grabbing agents to define a minimum compensatory payment to land users not based on asymmetrical bargaining power but on actual land value to this vulnerable section of the local population.

Keywords: Land Grabbing, Large Scale Land Leases, Productivity Method, Theory-Based Impact Evaluation, Smallholder Farmers, Customary Land Rights, Welfare Changes, Sierra Leone

JEL Classification: D13, D61, H43, Q12, Q15

Suggested Citation

Hansen, Marc and Conteh, Mohamed and Shakya, Martina and Loewenstein, Wilhelm, Determining Minimum Compensation for Lost Farmland: A Theory-Based Impact Evaluation of a Land Grab in Sierra Leone (April 19, 2016). Hansen, Marc Victor, Conteh, Mohamed Sorrie, Shakya, Martina and Loewenstein, Wilhelm, Determining Minimum Compensation for Lost Farmland: A Theory-Based Impact Evaluation of a Land Grab in Sierra Leone. IEE Working Paper 211. Bochum 2016, Available at SSRN: https://ssrn.com/abstract=2767081

Marc Hansen (Contact Author)

Ruhr University of Bochum - Institute of Development Research and Development Policy ( email )

Building GB, Room 1/59
Bochum, D-44801
Germany

Mohamed Conteh

Independent

Sierra Leone

Martina Shakya

Institute of Development Research and Development Policy ( email )

Universit├Ątsstra├če 150
Bochum, NRW 44780
Germany

HOME PAGE: http://Development-Research.org

Wilhelm Loewenstein

Ruhr University of Bochum - Institute of Development Research and Development Policy ( email )

Building GB, Room 1/59
Bochum, D-44801
Germany

HOME PAGE: http://development-research.org

Ruhr University of Bochum - Faculty of Economics ( email )

Ruhr University of Bochum
Faculty of Economics
D-44780 Bochum, DE 44780
Germany

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