Land tenure and productivity: Farm level evidence from Papua New Guinea

Does land tenure form affect farm level productivity? The answer, from farm level data for oil palm from the Hoskins project in West New Britain province of Papua New Guinea, is in the affirmative. Analysis of farm level output, controlling for all measured inputs, shows systematic differences in productivity across three land tenure types; namely, farms under customary purchase agreements (CP), those under the land settlement scheme (LSS), and those under village owned land schemes (VOP). The evidence is that productivity is higher under the CP and LSS schemes compared to the VOP arrangement. The empirics suggests that the higher productivity is due to benefits from economies of scale enjoyed by farms with improved tenure security and from the absence of sharing of income and harvesting effort that is present on farms with insecure tenure.