Impacts of a Mandatory Shift to Decentralized Online Auctions On Revenue from Public Land Leases in Ukraine

Although millions of hectares of public land are transferred to private parties each year, often with unsatisfactory results, evidence on mechanisms to achieve better outcomes is scant. This paper analyzes the impact of a 2021 reform in Ukraine that -after earlier digitization efforts did not produce desired results- mandated use of transparent online auctions by local governments rather than a central agency to lease rights to public agricultural land. The shift to a collusion-proof electronic auction system led to a near-instantaneous doubling of lease revenue. Had all public land Ukraine transferred since 2015 auctioned using post-reform mechanisms, local governments would receive incremental lease revenue of US$500 million per year. This suggests that in countries with large public land reserves, reforms that ensures rights to such land are allocated transparently, competitively and in a decentralized way could improve social, economic, and environmental outcomes