Adapting to climate change with (in)complete land property rights: Evidence from the Greece land registry reform

Abstract

This paper questions the role of land property rights in coping with heat damage in agriculture. Taking advantage of a staggered cadastral reform in Greece between 2011 and 2019, we show that farmers receiving the reform offset most crop losses induced by higher heat exposure. This pattern is consistent with our theory indicating that farmers with better land property rights switch from land-extensification (i.e., adjustment of farmland area) to land-intensification strategies (i.e., adjustment of other inputs), ultimately reducing heat damage on crop yields. Our preferred estimates indicate that farmers without the reform respond to an additional degree day above 28°C by enlarging crop area from 0.2 to 0.4 percent, while those with better land property rights do not adjust along this margin. Conversely, farmers with the reform increase labor and irrigation by 0.4 and 0.2 percent respectively for an additional degree day, while those without do not adjust these inputs. Finally, farmers with the reform rely more on machinery by 0.1 percent for an additional degree day, while they reduce it by 0.2 without the reform. These results underline the crucial role of institutions in encouraging societies to adapt to climate change.