Coping with Drought by Adjusting Land Tenancy Contracts: A Model and Evidence from Rural Morocco

We explore vulnerability to drought in Morocco by analyzing household coping responses to a severe drought. We find that nearly 25% of households increased or decreased their cultivated land via short-term land tenancy arrangements. We use this pattern to motivate a model in which drought shocks induce the reallocation within communities of usufruct rights to land. We show how different liquidity constraints can lead some households to invest in crop production as others divest. Empirical analysis finds some support for the model but also highlights how pre-existing tenancy arrangements strongly determine a household’s reliance on land tenancy markets for coping.