Heterogenous impacts of property rights on the climate-smart investments of farming households: Empirical evidence from Nigeria

Abstract

Climate-induced extremities deplete agricultural yield and reshape investment incentives. Mitigating the adverse effects of climate change on food systems requires increasing commitments to climate-smart investments (CSIs). Property Rights (PRs) create incentives to utilize resources optimally. However, unless such rights are enforceable, CSIs may remain low. In this study, we specifically interrogated the role of institutions in strengthening or undermining the resilience of food systems by assessing how different land-use rights (formal, semi-formal and informal) impact farming households’ incentives to embrace climate-smart adaptation measures. Data for this study were obtained from the fifth wave of the General Household Survey (GHS) Panel for Nigeria. Data from 1199 farming households were analyzed using the Endogenous Switching Regression (ESR) model. Our results show that holding formal PRs have higher positive correlates with investments in climate-smart adaptation measures than in the counterfactual scenario, and, farming households without such rights exhibit higher positive correlates with investments in climate-smart adaptation measures than in the counterfactual scenario. By contrast, residence in communities that allocate non-formal (semi-formal and informal) PRs significantly improves the CSIs of farming households than in the counterfactual scenario. However, the positive impact on CSIs is significantly lower for farming households in communities that do not allot non-formal PRs than in the counterfactual scenario. Therefore, extending the frontier of non-formal PRs such that communities that hitherto do not wield such rights become empowered to allot them is a core pathway through which institutions in Nigeria can foster extensive commitments to climate-smart adaptation measures among farming households.