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 an oil palm project in 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, those under the land settlement scheme, and those under village-owned land schemes. The empirics suggest that the higher productivity is due to benefits from economies of scale and absence of income sharing enjoyed by farms with improved tenure security.