C07 - Determinants of land-use change and welfare impacts among rural farm and non-farm households

Over the past few decades, tropical lowland rainforest areas in Jambi have experienced a dramatic change in land use, involving major economic, social, and environmental transformation processes. The goal of this project is to better understand the socioeconomic drivers and impacts of these landuse changes, with a particular focus on impact heterogeneity and the role of different types of institutions. We will build on and further extend household and village level survey data collected during the first phase of the CRC. Analysis of these data suggests that changes in factor markets - especially land and labour markets - significantly influence the type and intensity of land use. The two competing crops in Jambi - rubber and oil palm - are different with respect to factor use; rubber is more labour-intensive, while oil palm is more capital-intensive. Thus, labour-scarce farm households have incentives to either switch to oil palm or involve labourers in rubber through sharecropping or other types of labour contracts, depending also on the property rights over land. In the second phase, the relationships between institutional change and farmers` land-use decisions will be analysed more explicitly, using panel econometric models. Two rounds of farm household data are available by the end of the first phase, a third round will be collected in the second phase. Household level data will be combined with village and district level data to analyse the co-evolution of factor market institutions and land-use change.
Impacts of land-use and institutional change on household welfare will also be evaluated. Welfare impacts will be examined in terms of household income, assets, consumption, and nutrition, accommodating possible spatial and temporal impact heterogeneity. Differencing techniques and instrumental variable models will be used to control for endogeneity in impact assessment. We will also analyse effects on income distribution among different types of households, especially between migrants and the autochthonous population, as the transformation processes might be affecting these groups differently. Furthermore, we will collect additional survey data from non-farm households to examine effects of land-use changes on local land and labour markets, thus gaining a broader understanding of rural development effects and pathways. The panel structure of the surveys will also allow us to analyse temporal impact variability. This project will continue to share agricultural plot and household level data with other CRC projects for complementary analysis and integrated modelling.