Essays on the economics of competing land uses and endogenous tenure security

This dissertation is a compilation of three essays on the economics of land and forest use under endogenous tenure insecurity, incentive based strategies (e.g., payment for carbon sequestration and avoided deforestation), and intergenerational land transfer motive.;The first essay explores, in a dynamic framework, how participation in carbon forestry financed by payment for environmental services (PES) schemes affects the land allocation decision of a smallholder with customary tenure between crop production and tree planting. Customary tenure arrangement presents an interesting feature to the model, because under this arrangement smallholder's risk of eviction is reduced through afforestation. Although there are studies linking the risk of eviction in agriculture and forestry to an agent's land allocation decision among alternative uses, this literature does not include the specific influence of customary tenure, nor does it covers the influence on carbon forestry projects. With this research gap in mind, we analyze the conditions under which a carbon forestry scheme can be targeted to smallholders with customary tenure, and how the incentives for undertaking carbon forestry are affected by any endogenous impact on tenure security through tree planting. The essay also explores how the potential endogeneity of tenure security is likely to influence carbon forestry payments.;The existing empirical literature linking tenure security and forest management is largely inconclusive, implying that requiring absolute tenure security for REDD+ participation may sometimes be ill-advised. The second essay establishes this and shows that, under certain conditions, communities with insecure tenure can be successful providers of REDD+. To this end, this essay considers deforestation of a commonly owned forest in a dynamic game theory setting, allowing for tenure security endogeneity and payment for avoided deforestation. This framework helps identify conditions that yield forest conservation as Markov- perfect Nash equilibrium for endogenously insecure tenure.;The third essay examines the implication of intergenerational land transfer motives on land conservation decision of rural parents. Farmers in general commit scarce resources on land conservation structures. One possible explanation is market incentive; that the improved productivity from soil conservation will be capitalized into land value or that a farmer invests in conservation structures only if it is profitable to do so. However, the market incentive explanation may be ill-suited to the realities particularly present in most farming economies, where land markets are either missing or imperfect. Alternatively, a strong intergenerational land transfer motive could explain a planning horizon for realizing the returns on soil conservation structure investments beyond the farmer's own life time. The latter explanation is the focus of this essay. Specifically, this essay identifies intergenerational land transfer motives and models how each impacts conservation decision of families in farming economies. In addition, recent studies from developing countries found that security of property right is important in explaining variations in smallholder's land conservation investment decision. Using our framework, we show that tenure security impacts land conservation investment decision of parents by weakening or strengthening this land transfer consideration. In this essay we also carry out empirical analysis of data from Ethiopia. Ethiopia presents an ideal case to test the theory as land degradation is alarming and inheritance is the only means of transferring land in perpetuity.